Sunday, May 18, 2014

Gary Becker, in Memoriam

           Nobel Prize-winning conservative economist Gary S. Becker, who pioneered an interdisciplinary approach to economics with various other academic fields, and who recognized rational decision-making in economic and other matters, died earlier this month at age 83 in Chicago.

            Born in Pottsville, Pennsylvania in 1930, Gary Becker’s father was a small businessman who moved the family to New York City when his son was five, thereby exposing him further to business and stocks.  Becker earned a bachelor’s degree from Princeton in 1951 and a Doctorate in economics from the University of Chicago 1955.  He was a professor there for a few years, then at Columbia University for many years, before returning to the University of Chicago

There, free market defender and fellow Nobel laureate for economics Milton Friedman became Becker’s mentor.  Together, they formed part of the academic school of thought known as the Chicago School of Economics. 

            Becker wrote numerous books and articles over nearly six decades.  His most influential books and their dates of publication included the following: The Economics of Discrimination, 1957; Human Capital, 1964; and A Treatise on the Family, 1981.  Becker was also a conservative columnist for Business Week from 1985-2004 and then co-wrote a blog with Federal Judge Richard Posner for the last decade of his life.

            The work of Becker transformed not only academics, but has had a significant effect on economics and public policy.  He added the insight of sociology, demographics, psychology and criminology to economics.  Becker’s interdisciplinary approach is also credited with introducing economics to sociology.  He thereby changed the perspective of economics from treating people’s decision-making as irrational or emotional (e.g. based upon fear), to rational, and, therefore, predictable.  Becker targeted his intellectual curiosity and academic rigor to the subject of family decisions and crime, for example.  He concluded that criminals were not motivated only by mental illness or social oppression, as had been widely assumed, but by the perception that the benefits of the crime would outweigh the risks.

            Becker famously provided the academic research to back up the common-sense conservative argument against racial discrimination, or by analogy, against any other type of discrimination that is based upon arbitrary reasons.  He concluded that racial discrimination makes a business less competitive than those that hire based upon merit because a business that does not hire blacks at a relatively lower wage, must pay Caucasians at a relatively higher wage.  A related conclusion is that free market competition reduces discrimination.  

            Becker recognized altruism as a true motive, but also demonstrated how financial incentives can inspire altruism.  He was known for the famous theory of the “rotten kid,” whereby parental financial aid to a selfish sibling that is contingent on his well-treatment of his other siblings would induce him to treat them better then he otherwise would. 

            For his academic work, Becker received numerous awards and honors, including the Nobel prize for economics in 1992 and the Presidential Medal of Freedom from President George W. Bush in 2007.  In addition to awards in the fields of economics and statistics, he was made a member of the American Academy of Arts and Sciences in 1972, the Pontifical Academy of Sciences in 1997, and was the winner of the National Science Award in 2000. 

            Not confined to the halls of academe, Becker was a co-founder of a business and philanthropy consulting company.  He was also an advisor to Republican presidential nominee Robert Dole during the former Senator from Kansas in 1996 and served on an advisory body during the War on Terrorism.  Becker was hawkish against both budget deficits and terrorists. 

           Gary Becker’s significant contributions to economics and his model for interdisciplinary academic studies will continue to bear fruit toward a better understanding of mankind and to better economic decision-making, fiscal and other public policy.   

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