I don't know how many people know where the University of Minnesota is located. Many will imagine, and not without reason, that it is in the midst of fields of wheat and soybeans. Maybe they would expect that this public university in a rural setting would be making great advances in techniques of phytopathology and veterinary medicine rather than in the social sciences. And so, they would be surprised to learn that at the end of the 70s, and into the '80s and beyond, it was forging an enormous transformation in economic theory.
Proof of this revolution is clearly shown by the list of winners from this university who have taken home the Nobel Prize in economics. In 2004, Edward Prescott received the prize for having developed, during his years as a professor in Minnesota, "the transformation of policy and research in macroeconomics," said the Swedish Academy. Then in 2007, another University of Minnesota professor, Leonid Hurwicz, received the prize for his theory of mechanism design. After that, in 2011, Christopher Sims and Thomas Sargent were chosen for their contributions to the analysis of cause and effect in macroeconomics.
In a delightful conversation with Edward Foster, professor emeritus in Minnesota, and for many years dean of the economics department, it was easy to identify the factors that converted a couple of floors of a small building in Minneapolis, far from MIT where it wouldn't surprise anyone, into one of the sites that has generated some of the most effervescent ideas in the world.
The first element: rigor. Minnesota was always strong in theory. Foster recalled that Milton Friedman, George Stigler and Robert Shiller were professors at the university, and they all received Nobel prizes later. It was a kind of stew for cultivating ideas, and a source of good research assistants, and why not? For example, Daniel McFadden and Lars Peter Hansen, former students at the university, received the Nobel in 2000.
The second ingredient: the best people. In effect, many of the most revolutionary thinkers passed through there. Not the best professors, but the most innovative, and they even brought...