Gary Becker - The Economist's Economist

A professor at the University of Chicago for more than 30 years, Gary Becker is a founder of the Chicago school of economics. A winner of the John Bates Clark Medal and of the Nobel Prize in Economics, he is also a senior fellow at the Hoover Institution.

Gary Becker - An Economic Approach

(image credit)

Gary S. Becker received the 1992 Nobel Prize in economics for “having extended the domain of economic theory to aspects of human behavior which had previously been dealt with—if at all—by other social science disciplines such as sociology, demography and criminology.”

Becker’s unusually wide applications of economics started early. In 1955 he wrote his doctoral dissertation at the University of Chicago on the economics of discrimination. Among other things, Becker successfully challenged the Marxist view that discrimination helps the person who discriminates. Becker pointed out that if an employer refuses to hire a productive worker simply because of skin color, that employer loses out on a valuable opportunity. In short, discrimination is costly to the person who discriminates.

Becker showed that discrimination will be less pervasive in more competitive industries because companies that discriminate will lose market share to companies that do not. He also presented evidence that discrimination is more pervasive in more-regulated, and therefore less-competitive, industries. The idea that discrimination is costly to the discriminator is common sense among economists today, and that is due to Becker.

In the early 1960s Becker moved on to the fledgling area of human capital. One of the founders of the concept (the other being Theodore Schultz), Becker pointed out what again seems like common sense but was new at the time: education is an investment. Education adds to our human capital just as other investments add to physical capital. (For more on this, see Becker’s article, “Human Capital,” in this encyclopedia.)

One of Becker’s insights is that time is a major cost of investing in education. Possibly that insight led him to his next major area, the study of the allocation of time within a family. Applying the economist’s concept of opportunity cost, Becker showed that as market wages rose, the cost to married women of staying home would rise. They would want to work outside the home and economize on household tasks by buying more appliances and fast food.

Not even crime escaped Becker’s keen analytical mind. In the late 1960s he wrote a trail-blazing article whose working assumption is that the decision to commit crime is a function of the costs and benefits of crime. From this assumption he concluded that the way to reduce crime is to raise the probability of punishment or to make the punishment more severe. His insights into crime, like his insights on discrimination and human capital, helped spawn a new branch of economics.

In the 1970s Becker extended his insights on allocation of time within a family, using the economic approach to explain the decisions to have children and to educate them, and the decisions to marry and to divorce.

Becker was a professor at Columbia University from 1957 to 1969. Except for that period, he spent his entire career at the University of Chicago, where he held joint appointments in the departments of economics and sociology. Becker won the John Bates Clark Award of the American Economic Association in 1967 and was president of that association in 1987.

Reference:  Gary Stanley Becker
 

Gary Becker - Nobel Prize (1992)

Gary Becker

The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel (1992)

Born: 2 December 1930, Pottsville, PA

Died: 3 May 2014, Chicago, IL

Affiliation at the time of the award: University of Chicago, Chicago, IL

Prize motivation: "for having extended the domain of microeconomic analysis to a wide range of human behaviour and interaction, including nonmarket behaviour"

Field: economic sociology, microeconomics

Contribution: Extended the domain of economic theory to aspects of human behavior which had previously been dealt with by other social science disciplines such as sociology, demography and criminology.

Reference: Gary S Becker - Facts
  

Gary Becker - An Intellectual Portrait (9)

"When you were a young man, you were often criticized for doing research that was in some sense immoral: immoral to the extent that economists shouldn't be thinking about these kinds of questions. You often put them in so much stark and dramatic terms; thinking of a child as a consumer durable, for example, didn't necessarily hit everybody well. How important is morality in terms of determining economic analysis? I mean, do you find that when you're doing economic analysis, the morality creeps in?"

~Interviewer Edward Lazear, asking Gary Becker
 

Gary Becker - An Intellectual Portrait (8)

Gary Becker speaks to the effects of educated women on the family: Their families have lower birth rates (i.e. fewer children), but the mothers invest more in teaching their children and helping them prepare for their schooling. So educated women, in Becker's language, are good at producing human capital. 

What about disadvantaged women and their families?
 

Gary Becker - An Intellectual Portrait (7)

Gary Becker studied the family as a fundamental, social unit: "Why do people stayed married or get divorced? How we can better understand changes in fertility rates? Why has the institution of the family changed so radically in recent decades?" This work is simply one area, through which people as a theme for Becker threads. In this clip, for instance, the topic is education and human capital.
  

Gary Becker - An Intellectual Portrait (6)

In this clip Gary Becker speaks in an informed, thoughtful way about political systems and criminal justice vis-a-vis interest groups. The economic approach clearly has applicability across sectors and types of society, but this sort of systematic, analytic approach isn't just the purview of economics. It's an approach many other fields adopt, from social or behavioral science, to physics and technology. At the end of day, therefore, I as a clinical psychologist can tap my training in research and statistics, for example, and take that economic approach that Becker speaks to and undertake fully, without ever calling myself an economist.