Gary Becker
On December 2nd, 1930, Gary Becker was born. One of the most influential economists of his day, he received the Nobel Prize for Economics in 1992. Much of his influence came about because he used the methods of economics to analyze human behaviour for the first time in areas such as family life, crime and sociology. As a professor of Economics and Sociology at Chicago, he was among the leaders of the so-called third generation of the Chicago School.
In his “The Economics of Discrimination” (1957) he studied racial discrimination in employment, finding that employers who discriminate against minorities deny themselves access to low-wage labour and thus raise their costs and lower their profits. Employers who do not discriminate against minorities, on the other hand, increase their productivity.
His work on crime as equally trail-blazing. He examined how criminals assess rationally how far their likely gains might be offset by the possible costs of being caught and punished. In fact, criminals make economic calculations that can be altered if the chances of apprehension are increased, or the penalties suffered in consequence are raised.
Becker was one of the early and leading exponents of the notion of human capital. Milton Friedman described him as “the greatest social scientist who has lived and worked in the second part of the twentieth century.” Investing in a person’s education and training was similar, Becker said, to investing in new plant and machinery. It was something that, properly done, could be expected to bring returns.
He applied economic analysis to family activities, looking at their division of labour, the allocation of parental time to children, and the steps they gook to maximize preferences. He treated the household as if it were a business engaged in the production of meals, shelter and childcare. His work took economics deep into sociology and anthropology.
We knew him through the Mont Pelerin Society, where he served as its President from 1990-92, and found him always courteous and ready to discuss his ideas, especially with the young people attending its conferences as guests. In addition to his Nobel Prize, he was also awarded in 2007 America’s highest civilian honour, the Presidential Medal of Freedom.
He was a leader among the scholars who took economics out of its abstract academic towers and into the real world of homes and families, and into prisons and crime gangs. In doing so, he and his colleagues had a positive impact on the disciplines they entered, fields such as sociology, criminology, and demography, as well as on economics itself.