Sunday, May 4, 2014

R.I.P. Gary Becker

Gary Becker, one of the biggest name economists ever, passed away last night.

Becker wasn’t just at the top of the field. He was so good that if you took all the Nobel Prize winners, he was at the top (or pretty damn close to the top) of that group.

We don’t cover Becker much in macroeconomics. But here’s what he’s known for:

  • Starting a field on the economics of discrimination. The idea that discrimination Is more common in legally restricted markets (e.g., minimum wages were pushed by unions to keep southern blacks from undercutting northern whites) goes back to Becker’s work in the 1950’s.
  • The idea that some capital is in human form, and that education is a form of investment, goes back to Becker’s work in the 1960’s. Becker didn’t invent that idea, but he was involved in the very early research on that. (FWIW: business professors get dissed by non-business professors, supposedly we get paid too much, and they do what they do for the love of teaching. Becker argued that there are people like me, who might have liked to be a cosmologist or a musician, who rationally choose other fields because they like the monetary returns better).
  • The idea that families make internal tradeoffs based on economics goes back to Becker’s work in the 1970’s. Adding capital to households (such as washers) reduces the value of time spent doing housework, and should lead to more people leaving homemaking for work outside the home. You think that’s common sense, but it wasn’t before Becker.
  • With one of my professors, Isaac Ehrlich, Becker started a field on the economics of crime. Becker gave economic teeth to the seat-of-the-pants argument that criminals are deterred by the probability of getting caught, and the probability of doing time. Again, that might seem like common sense, but it still is not to people who focus on “root causes” explanations of crime (like poverty and discrimination).

Any of those is probably worth a Nobel Prize. Becker did all four, and the Nobel committee’s announcement gave him credit for all of them.

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