University of Chicago to establish economics institute

The University of Chicago plans to spend about $200 million to establish the Milton Friedman Institute for the study of economics to attract scholars, students and donors.

The center, named after the economist who taught at the university for three decades, will occupy buildings now housing the Chicago Theological Seminary, according to a statement today. The Institute will start up this year, and the school is beginning to search for a director, the university said.

Friedman, who died in 2006 at age 94, won the Nobel Memorial Prize in 1976 for his study of inflation and monetary policy. The Friedman Institute will encourage interaction among scholars in different areas of economics and related disciplines and aid recruitment and retention of faculty, said Edward Snyder, dean of the university's Graduate School of Business.

"That's going to be an important factor, for people to say `that's where I want to be, this is the center of the universe for economics,"' Snyder said in a telephone interview.

Naming the institute for Friedman will honor the economist, whose libertarian theories helped the spread of capitalist systems of government, and will attract donors from around the world, Snyder said.

"When you think about the big battle between socialism and free markets -- he led the charge on behalf of the University of Chicago," Snyder said. "There are a lot of people who will give back because of his name and effort and legacy."

University of Chicago faculty and alumni have won 25 Nobel Memorial Prizes in economics.

Friedman joined the University of Chicago in 1946 and helped found the so-called Chicago school of economics, which favored limiting the role of government in the economy. In his 1962 book "Capitalism and Freedom," Friedman argued that political liberty stems from economic freedom.

The school said it will raise the majority of the $200 million from alumni and business executives. The university will buy the theological seminary's buildings and provide it with a new home. A search for a director for the institute will begin immediately.