Who Was Gary S. Becker?
Gary S. Becker was an economist who won the 1992 Nobel Prize for his microeconomic analysis of the impact of economic considerations on human behavior and interaction.
Before Becker, human behavior was primarily analyzed within the framework of other social sciences, such as sociology. His prize-winning research focused on rational choice theory and other aspects of microeconomics as they relate to such topics as investment in human capital, family/household behavior, crime and punishment, addiction, and discrimination in financial markets.
Becker was born in Pottsville, Pennsylvania, in 1930 and died in Chicago in 2014.
- Economist Gary S. Becker developed theories that applied economic reasoning to human behavior and business decision-making.
- His contributions range from the economics of crime to the economics of family life.
- Becker won the 1992 Nobel Price in Economics.
Gary S. Becker In Depth
Becker’s early work explored the competitive disadvantages that businesses create for themselves when they choose to discriminate against certain groups of job candidates based on personal preferences rather than economic factors. He argued that such decisions create higher costs and place the business at a disadvantage to its competitors.
He found that employment discrimination is discouraged by market forces in the most competitive markets but might be more common in less competitive or more highly regulated industries.
Becker helped pioneer the theory of human capital. His 1964 book, Human Capital Theories, argued that education is an investment in human capital and can be analyzed in a similar fashion to investment in physical capital.
Public Finance and Political Economy
Becker theorized that political competition between interest groups can be reduced to a struggle between net tax recipients and net taxpayers. The competition is, therefore, driven by the costs and benefits of predation (by net tax recipients) versus the direct losses and deadweight losses suffered by the taxpayers and the rest of the economy.
He argued that the losses to the economy inevitably increase faster than the benefits to tax predators. That creates incentives to place an upper limit on the degree of predatory taxation that is acceptable in an economy.
Crime and Punishment
Becker analyzed criminal behavior within the framework of economic utility maximization by criminals. That is, he argued that a criminal decides whether or not to commit a crime based on an evaluation of the costs and benefits inherent in the crime. Therefore, crime prevention strategies should focus on the most efficient methods to alter that structure of costs and benefits.
Becker concluded that increasing fines and punishments would be a relatively lower cost approach than increasing spending on prevention programs and surveillance.
Economics of the Family and Household
Becker wrote extensively on the economics of the family and household decision-making.
His theories explain decisions on whether to get married, whether to have children and how many, which goods to produce in the home for consumption or buy on the market, and many other decisions in terms of the economic costs and benefits to the respective members of the family.
One of Becker’s most controversial contributions to economics was his application of economic theory to the persistent problem of organ donation shortages.
He argued that the problem originates in legal prohibitions on compensating organ donors and argued that a regulated market could help overcome it.
Becker earned his Ph.D. from the University of Chicago. Numerous other universities awarded him honorary doctorates for his unique and groundbreaking work.
He taught at Columbia University in New York before returning to the University of Chicago to continue teaching in the departments of economics and sociology and in the business school.
In addition to the Nobel Prize, Becker was awarded the John Bates Clark medal in 1967 and the Presidential Medal of Freedom in 2007.