“Gary Becker, who led the movement to apply economic ideas to areas of life such as marriage, discrimination and crime . . . was one of the most influential and most cited economists of the 20th century.”
Financial Times, May 6
Financial Times, May 6
OK, this is embarrassing – I haven’t a clue who he is.
He was a free-market economist from the University of Chicago who was awarded the Nobel Prize for economics in 1992. He died on May 3 aged 83.
Now I’m even more embarrassed that I don’t know who he is.
Don’t worry. Becker would probably put that down to you lacking the incentive to learn who he was.
What do you mean?
He was known for bringing sociology and the concept of human capital to the study of economics. Before him, economics was mainly focused on the act of buying and selling things. But Becker believed everything from crime and marriage to discrimination and fertility could be linked to how human behaviour responds to pay-offs and costs.
In what sense?
Well, consider one of his most famous observations about crime, based on the idea of the “rational criminal”. He came up with the idea after struggling to park one day – which made him realise a convenient but illegal space might be preferable if the alternative legal space was much more inconvenient. This made him think even a reasonable and upstanding member of the community could turn to crime if the pay-off was greater than the cost.
That sounds a bit like the plot of Trading Places.
You mean because the Duke brothers bet in the 1983 Eddie Murphy movie that, given the right climate and encouragement, even the highly privileged Louis Winthorpe III would take to crime like a fish to water?
Exactly that.
Inasmuch as the costs of behaving badly were greatly reduced for Winthorpe when his reputation was ruined and his job, fiancée and friends lost – yes, it does.
But doesn’t that make it a rather obvious observation?
In hindsight many of Becker’s theories might seem obvious but at the time this sort of thinking was very controversial. He was the first academic to think economics could be applied to non-monetary activities.
So nobody saw human behaviour as a worthwhile topic of inquiry?
Well, they did but not in an economic capacity. It was mostly the sort of thing sociologists studied. One of Becker’s early papers on the incentives that drive democratic systems was even rejected by an economic journal on that basis at the request of an academic peer.
What did he win his Nobel memorial prize for, then?
Officially for extending the domain of microeconomic analysis to a wide range of human behaviour and interaction, including non-market behaviour. But the key things were his work on human capital – the notion, for example, that education can be considered an investment – and his work on what drives discrimination, household dynamics and crime.
What observations did he make about the family?
A lot of his work in this field was focused on the economics of the home, including marriage, parenting and fertility. He looked, for example, at the trade-off faced by working women who wanted children. In his view, the fact that they had increased the monetary value of their human capital meant entering the workforce made it much more costly to have children. He believed this was one of the main factors driving lower fertility rates.
You know, this reminds me of Freakonomics .
As in the hugely successful book by Chicago economists Steven Levitt and Stephen Dubner, which looked at everything from the effects on crime rates of abortion legalisation to the incentives that motivate crack cocaine dealers?
Yes, that’s the one.
The authors were greatly inspired by Becker, and cite him several times. Becker was also a founder of a consultancy the authors set up on the back of the book’s success, and was frequently referred to by them on their Freakonomics blog. Levitt’s digital eulogy sums up Becker’s work wonderfully.
Why, what does it say?
“Of all the economists I’ve ever known, he was the one who was most able to see through the clutter to the basic truths.”
What do you think was the most basic of those truths?
Probably that time itself is money because it’s something none of us can ever have more of.
Izabella Kaminska
Fonte: FT
