Saltwater and freshwater economics

In economics, the freshwater school (or sometimes sweetwater school) comprises US-based macroeconomists who, in the early 1970s, challenged the prevailing consensus in macroeconomics research. A key element of their approach was the argument that macroeconomics had to be dynamic and based on how individuals and institutions interact in markets and make decisions under uncertainty. This new approach was centered in the faculties of the University of Chicago, Carnegie Mellon University, Stanford University, Cornell University, Northwestern University, the University of Minnesota, the University of Wisconsin-Madison and the University of Rochester. They were called the "freshwater school" because Chicago, Pittsburgh, Ithaca, Minneapolis, Madison, Rochester etc. are close to the North American Great Lakes. The established methodological approach to macroeconomic research was primarily defended by economists at the universities and other institutions near the east and west coasts of the United States. These included University of California, Berkeley, University of California, Los Angeles, Brown University, Duke University, Harvard University, MIT, University of Pennsylvania, Princeton University, Columbia University, and Yale University. They were therefore often called "saltwater schools". The terms "freshwater" and "saltwater" were first used in reference to economists by Robert E. Hall in 1976, to contrast the views of these two groups on macroeconomic research. More than anything else it was a methodological disagreement about to what extent researchers should employ the theory of economic decision making and how individuals and firms interact in markets when striving to account for aggregate ("macroeconomic") phenomena. In many respects, the saltwater-freshwater dichotomy no longer holds true. In his overview article from 2006, Greg Mankiw writes: An old adage holds that science progresses funeral by funeral. Today, with the benefits of longer life expectancy, it would be more accurate (if less vivid) to say that science progresses retirement by retirement.