THE PROCESS AND PROGRESS OF ECONOMICS

Nobel Memorial Lecture, 8 December, 1982

by

GEORGE J. STIGLER

Graduate School of Business, University of Chicago,

1101 East 58th Street, Chicago, Ill. 60637, USA

In the work on the economics of information which I began twenty some years

ago, I started with an example: how does one find the seller of automobiles who

is offering a given model at the lowest price? Does it pay to search more, the

more frequently one purchases an automobile, and does it ever pay to search

out a large number of potential sellers? The study of the search for trading

partners and prices and qualities has now been deepened and widened by the

work of scores of skilled economic theorists.

I propose on this occasion to address the same kinds of questions to an

entirely different market: the market for new ideas in economic science. Most

economists enter this market in new ideas, let me emphasize, in order to obtain

ideas and methods for the applications they are making of economics to the

thousand problems with which they are occupied: these economists are not the

suppliers of new ideas but only demanders. Their problem is comparable to

that of the automobile buyer: to find a reliable vehicle. Indeed, they usually end

up by buying a used, and therefore tested, idea.

Those economists who seek to engage in research on the new ideas of the

science - to refute or confirm or develop or displace them - are in a sense both

buyers and sellers of new ideas. They seek to develop new ideas and persuade

the science to accept them, but they also are following clues and promises and

explorations in the current or preceding ideas of the science. It is very costly to

enter this market: it takes a good deal of time and thought to explore a new idea

far enough to discover its promise or its lack of promise. The history of

economics, and I assume of every science, is strewn with costly errors: of ideas,

so to speak, that wouldn’t run far or carry many passengers. How have

economists dealt with this problem? That is my subject.

I begin by distinguishing the pre-scientific stage of a discipline from its

scientific stage. A science is an integrated body of knowledge, and it is pursued

and developed by a group of interacting practitioners called scientists. The

validation and extension of that body of knowledge is the intellectual goal of the

scientists, although of course the pursuit of that goal in turn serves whatever

personal goals such as prestige, reputation, and income the scientists seek.

These are only definitions, but I hope they are not strained or unnatural ones.