The Austrian School of economics is a set of laissez-faire, individualistic theories that have gained in popularity since the global economic crisis began in 2007. Austrian economics includes the theory that economies are created by individual motivations, called methodological individualism. Perhaps the most vocal and notable advocate of Austrian economics today is U.S. presidential candidate Ron Paul.
The Austrian School typically shuns economic forecasting and statistical models in favor of a more ideological approach. They argue that since controlled testing of economic theory is virtually impossible, they should be ignored. Austrians claim that individuals can only rank preferences and cannot measure their intensity. They disapprove of statistical methods, attempts at natural experiments, and constructed experiments as relevant, claiming that human behavior is far too complex because humans are active and adaptive subjects, and that mainstream economics can’t confirm cause and effect in real world economic events, because economic data can be tied to multiple potential chains of causation. Most mainstream economists argue that Austrian economists simply prefer to not use stats and math.
While the school of thought is named for the country and its origins in Vienna, Austrian economists are defined by their philosophy.
Notable Austrian Economists
Peter J. Boettke
Eugen von Böhm-Bawerk
Ludwig von Mises