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'Gary Stanley Becker' (born December 2, 1930) is an economist and a Nobel laureate. Born in Pottsville, Pennsylvania, Becker earned a B.A. at Princeton University in 1951 and a Ph.D. at the University of Chicago in 1955. He taught at Columbia University from 1957 to 1968, and then returned to Chicago, where he holds joint appointments with the department of economics and sociology and the graduate school of business. Becker won the John Bates Clark Medal in 1967 and was awarded the Nobel Prize in Economics in 1992.
Becker was one of the first economists to branch into what were traditionally considered topics belonging to sociology, including racial discrimination, crime, family organization, and drug addiction. (Cf. Freakonomics and Rational addiction.) He is known for arguing that many different types of human behavior can be seen as rational and utility maximizing. His approach can include altruistic behavior by defining individuals' utility appropriately. He is also among the foremost exponents of the study of human capital. Becker is also credited with the "rotten kid theorem". He is married to Guity Nashat, an historian of the Middle East whose research interests overlap his own. ^[1]

Contents

Nobel prize

Discrimination

Crime and Punishment

Human Capital

Families

See also

Selected works

External links

Nobel prize

According to the Nobel Prize citation, his work can be categorized into four areas:

★ investments in human capital

★ behavior of the family (or household), including distribution of work and allocation of time in the family

★ crime and punishment

★ discrimination on the markets for labor and goods.
Becker’s Nobel lecture, "Nobel Lecture: The Economic Way of Looking at Behavior", subsequently published in the ''Journal of Political Economy'', reviews his four key areas of research. He explains that his framework of analysis is not a traditional self-interested motivation but rather an analysis based on a set of assumptions and individual preferences. Yes, agents are maximizing welfare but it is based on individual conception constrained by income, time, and imperfect memory and calculation capabilities. Much of his research focuses on the impact of the rising value of time as a result of economic growth.
Becker also received the National Medal of Science in 2000.
Usually considered politically conservative, he wrote a monthly column for ''Business Week'' from 1985 to 2004, alternating with liberal Princeton economist Alan Blinder. In December 2004, Becker started a joint weblog with Judge Richard Posner entitled The Becker-Posner Blog.

Discrimination

Becker often includes a variable of taste for discrimination in explaining behavior. He believes that people often mentally increase the cost of a transaction if it is with a minority they discriminate against. His theory held that competition decreases discrimination. If firms were able to specialize in employing mainly minorities and offer better product or service, such a firm could bypass discrepancy in wages etc. between equally productive blacks and whites or females and males.
Becker’s research found that when minorities are a very small percentage the cost of discrimination mainly falls on the minorities. However, when minorities represent a larger percentage of society then the cost of discrimination falls on both the minorities and the majority. He also pioneered research on the impact of self-fulfilling prophecies of teachers and employers on minorities. Such attitudes often lead to less investment in productive skills and education of minorities.

Crime and Punishment

Becker’s interest in criminology arose when he was rushed for time one day. He had to weigh the cost and benefits of legally parking in an inconvenient garage versus in an illegal but convenient spot. After roughly calculating the probability of getting caught and potential punishment, Becker rationally opted for the crime. Becker surmised that other criminals make such rational decisions. However, such a premise went against conventional thought that crime was a result of mental illness and social oppression.
While Becker acknowledged that many people operate under a high moral and ethical constraint, criminals rationally see that the benefits of their crime outweigh the cost such as the probability of apprehension, conviction, punishment, as well as their current set of opportunities. From the public policy perspective, since the cost of increasing the fine is marginal to that of the cost of increasing surveillance, one can conclude that the best policy is to maximize the fine and minimize surveillance. However, this conclusion has limits, not the least of which include ethical considerations.
One of the main differences between this theory and Jeremy Bentham's rational choice theory, which had been abandoned in criminology, is that if Bentham considered it possible to completely annihilate crime (through the panopticon), Becker's theory acknowledged that a society could not eradicate crime beneath a certain level. For example, if 25% of a supermarket's products were stolen, it would be very easy to reduce this rate to 15%, quite easy to reduce it until 5%, difficult to reduce it under 3% and nearly impossible to reduce it to zero (a feat which would cost the supermarket, in surveillance, etc., that it would outweigh the benefices).

Human Capital

Becker’s research was fundamental in arguing for the augmentability of human capital. When his research was first introduced it was considered very controversial as some considered it debasing. However, he was able to convince many that individuals make choices of investing in human capital based on rational benefits and cost that include a return on investment as well as a cultural aspect.
His research included the impact of positive and negative habits such as punctuality and alcoholism on human capital. He explored the different rates of return for different people and the resulting macroeconomic implications. He also distinguished between general to specific education and their influence on job-lock and promotions.

Families

Becker’s research on human capital has had many implications for the family such as the marriage market, divorce, fertility. Becker argued that such decisions are made in a marginal cost and marginal benefit framework. For example, he concluded that wealthier couples have higher cost to divorce and thus a lower divorce rate.
A major focus of Becker’s research was the impact of higher real wages in increasing the value of time and therefore the cost of home production such as childrearing. As women increase investment in human capital and enter the work force the opportunity cost of childcare rises. Additionally, the increased rate of return to education raises the desire to provide children with formal and costly education. Coupled together, the impact is to lower fertility rates.
A more controversial issue was Becker’s conclusion that parents often act altruistically towards selfish children by highly investing in a child in an effort to indirectly save for old age. Becker believed that the rate of return from investing in children was often greater than normal retirement savings. However, parents can not know for sure that the child will take care of them. Since they cannot legally bind a child to care for them they often resort to manipulation through instilling a sense of “guilt, obligation, duty and filial love that indirectly, but still very effectively... commits children to helping them out.” Becker even went so far as to say that social security can cause families to be less interdependent by removing the motivation of parents to use altruistic behaviors in incensing their children to care for them.

See also

★ Economic Imperialism

★ Family (economics)

★ Household production function

★ Social capital

★ List of economists

Selected works

★ The Economics of Discrimination, Gary S. Becker, , , Chicago, University of Chicago Press, 1957, 1971, 2nd ed., ISBN 0-226-04115-8 UCP descr

★ Human Capital: A Theoretical and Empirical Analysis, with Special Reference to Education., Gary S. Becker, , , Chicago, University of Chicago Press, 1964, 1993, 3rd ed., ISBN 978-0-226-04120-9 (UCP descr)

★ Gary S. Becker (1965) “A Theory of the Allocation of Time,” ''Economic ]ournal'' 75 (299), pp. 493-517.

★ Crime and Punishment: An Economic Approach, Gary Becker, , , The Journal of Political Economy, 1968

★ A Treatise on the Family, Gary S. Becker, , , Cambridge, MA, Harvard University Press, 1981, 1991, Enlarged ed., ISBN 0-674-90698-5 (HUP descr.)

★ Gary S. Becker (1992). "The Economic Way of Looking at Life" ( Nobel Prize Lecture).

★ Accounting for Tastes, Becker, Gary S., , , Part I: Personal Capital; Part II: Social Capital. Cambridge, MA: Harvard University Press, 1996, ISBN 0-674-54357-2 (HUP descr)

★ On the Interaction between the Quantity and Quality of Children, Gary Becker and H. Gregg Lewis, , , The Journal of Political Economy, 1973

★ The Allocation of Time and Goods Over the Life Cycle, Gary S. Becker and Gilbert Ghez, , , New York, Columbia University Press, 1975, ISBN 0-87014-514-2

★ De Gustibus Non Est Disputandum, Gary Becker and George J. Stigler, , , The American Economic Review, 1977

★ A Theory of Rational Addiction, Gary Becker and Kevin M. Murphy, , , The Journal of Political Economy, 1988

External links

★ The Becker-Posner Blog

★ Homepage at the University of Chicago

★ Profile in the Financial Times

★ Interview by the Minneapolis Fed

★ The Becker Center on Chicago Price Theory

★ Gary S. Becker – Autobiography

★ Podcast featuring Becker Becker discusses human behavior, Adam Smith, and Alfred Marshall on EconTalk.