Downs received a B.A. from Carleton College and later a Ph.D. in economics from Stanford University. He is the author or co-author of 24 books and over 500 articles. His most influential books are An Economic Theory of Democracy (1957) and Inside Bureaucracy (1967); widely translated, both are credited as major influences on the public choice school of political economy. Later, Downs concerned himself with housing policy, writing about rent control and housing affordability.

He has served as a consultant to many of the nation's largest corporations, to major developers, to dozens of government agencies at local, state, and national levels (including the Department of Housing and Urban Development and the White House), and to many private foundations. President Johnson appointed him to the National Commission on Urban Problems in 1967, and HUD Secretary Jack Kemp appointed him to the Advisory Commission on Regulatory Barriers to Affordable Housing in 1989.