Review of “Thinking like an Economist: How Efficiency Replaced Equality in U.S. Public Policy”

Abstract

For scholars interested in American policymaking during the last half century, Elizabeth Popp Berman’s important book will be an indispensable resource. In it, Berman puts forth the thesis that the “style of reasoning” that economists adopted, both explicitly and tacitly, in the period from the 1960s to the 1980s, heavily influenced the design and implementation of federal programs in areas ranging from healthcare, transportation, and housing, to environmental and antitrust regulation and other forms of market governance. This influence came at the expense of policies to promote social equality. Berman’s narrative traces the main antecedents of the economic style of reasoning to two groups: systems analysists at the Rand Cooperation in the postwar period, who advocated a “cost-effectiveness, choice-among-alternatives approach” (p. 59) to government policy planning and decision-making; and academic economists at elite universities in the two decades that followed. In particular, she singles out the role of industrial organization economists at Harvard University in upending accepted views of market regulation, and the role of microeconomic theorists at the University of Chicago, who reformulated price theory in ways that favored free markets over any kind of market regulation.