Here is a list to start with. While the Austrians have always been an 'alternative' school, Chicago emerged from Keynesian shadows and has become mainstream today. Austrians have interesting perspectives on capital-based macroeconomics and boom-bust cycles while Chicago economists have contributed to a whole range of topics including macroeconomics, price theory, asset pricing, etc.
| Austrian | Chicago |
|---|---|
| Believes money should be controlled privately (issuance and circulation). Likewise, banking should be private. |
Believes in central planning of money supply and a somewhat ambivalent view of the track record and performance of the Federal Reserve System. |
| Understands that human behavior can sometimes be irrational. Perfectly comfortable with the boom-bust cycle of the economy and asset prices. |
Strongly believes in the efficient market hypothesis. In finance theory, there is no concept of 'asset bubbles'. Where prices veer away from fair value, they correct instantly. |
| Favors a gold-backed currency system. Even if the government controls the money supply, it wouldn't be able to fund wars in the absence of restricted supply of gold. |
Precisely due to this handicap, Chicago advocates no such restriction on the part of government thereby encouraging intervention of all sorts. |
| Austrian economics believes in a set of logical principles that require no empirical testing. That import tariffs are bad need not be tested with statistical data from several countries. All that needs to be shown is that consumers are worse-off and their subjective value of needs is not better satisfied. |
Chicago economists believe in rationality and optimal choices. Theories are tested against empirical data. New theories are developed based on scientific data. Unlike Austrians who view rationality is bounded by the current circumstances, Chicago economists view rationality as the best/optimal decision. |
Needless to say, both schools believe in free markets and consumer choice. Significant differences exist in the areas of monetary policy and the role of a central bank.