Gary Becker

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Gary Becker : biography

December 2, 1930 –

Nobel Memorial Prize

According to the Prize in Economic Sciences 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 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 an analysis based on a set of assumptions and individual preferences. Agents are maximizing welfare, which 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.

Organ markets

An article by Gary Becker and Julio Elias on "Introducing Incentives in the market for Live and Cadaveric Organ Donations" said that a free market could help solve the problem of a scarcity in organ transplants. Their economic modeling was able to estimate the price tag for human kidneys ($15,000) and human livers ($32,000). It is argued by criticshttp://www.nature.com/ncpneph/journal/v2/n9/full/ncpneph0268.html that this particular market would exploit the underprivileged donors from the developing world. This view was endorsed by the National Kidney Foundation in a testimony to the US Congress where Dr Francis Delmonico argued that "a US congressional endorsement for payment would propel other countries to sanction unethical and unjust standards…." Another concern is that if a market for organ donations were introduced, then organs would often go to the patients most able to afford them rather than patients who may have more need for them medically.

Quotations

  • "My teachers taught me that economics was not a game played by clever academics, but a serious subject that helped us understand the real world we lived in. You can do economics and do it in a rigorous way and nevertheless talk about important problems."
  • "So I had this little idea. I saw a way of taking the prejudices of workers and employers and customers and all groups, even governments, and sort of putting that through an economic analysis with competition and the goals of employers, opportunities for black and white employees to choose among different firms. So it becomes a complicated problem, using all the tools of economics."

Politics

Becker is also famous for his economic analysis of democracy. He asked what determines the extent to which an interest group can exploit another. The basis of his analysis was the concept of deadweight loss.

Becker’s insight was to recognize that deadweight losses put an exponential break on predation. He took the well-known insight that deadweight losses are proportional to the square of the tax, and used it to argue that a linear increase in takings by a predatory interest group will provoke a non-linear increase in the deadweight losses its victim suffers. These rapidly increasing losses will prod victims to invest equivalent sums in resisting attempts on their wealth. The advance of predators, fueled by linear incentives slows before the stiffening resistance of prey outraged by non-linear damages. Classical conditioning psychologists see a substantial foundational fallacy in this theory in the assumption that the "prey" does not object to the predation per se and only objects when the degree of non-linear damages gets large. Classical conditioning understanding illustrates that prey’s lack of earlier visible objection is not likely innate but conditioned fear response to suppress.

He is also noted for his advocacy of immigration tariffs, and for his staunch defense of the consequences of neoliberalism in Latin America.