Professor Gary Becker died yesterday
at the age of 83. At the time of his death, he was arguably the most highly
respected living economics scholar.
The blogosphere will soon be
flooded with obituaries, appreciations
and evaluations of his work by people better placed than I to offer
them. Given, however, that I was privileged to have been able to study with him
for a short period of time as a graduate student at the University of Chicago,
and that he acted as the chairman of my Ph.D. dissertation committee, I would
like on the occasion of his passing to
offer a few words of personal appreciation.
Becker will be remembered mostly
for his work on human capital and the economics of the family. It is hard to
overstate the influence of his contributions to these fields. Indeed, he pretty
much created them – though one must not minimize the contributions of others
early scholars like T. W. Shultz, Simon Polacheck, and especially the independent and
complementary work of Jacob Mincer.
By his own account, Becker came
to these subjects through the influence of his mentor Milton Friedman whose
approach led him to see economics as the study of people “in the ordinary
business of life” (as Alfred Marshall would have it). But his first foray
beyond the traditional borders of the subject was not in those subjects (human
capital or the economics of the family) but rather in the economics of discrimination,
a very volatile subject at the time. He literally wrote the book on The Economics of Discrimination (see
also here). It seemed to
him at the time that the conversation on civil rights and segregation was
hopelessly confused by the lack of an understanding of the social processes at
work, an understanding that was accessible using the eternal principles of
economics to investigate how people act on their preferences, whatever they are
and whatever we may think of them. So he quite controversially investigated the
likely results of economic processes in which people had given (race or gender)
preferences and showed quite simply that, as long as people were free to act in
open markets as employers, workers, or consumers, the act of discrimination
would carry a price. For example, discriminator-employers who indulged their
preferences would be outcompeted by those who hired the most qualified person
for the job, and, in this way, open competition would tend to erode
discriminatory outcomes (if not discriminatory attitudes).
When I came to the University of
Chicago I knew nothing of any of this. My exposure to Chicago was confined to
Friedman’s monetary work. I did not even know what a great price theorist
Friedman was. But I soon became aware of Becker, the young prince of the
department, and I took as many courses from him as I could – two in price
theory and at least one on topics in family economics as I recall. And I became
aware also of his work on discrimination. I read the book with great
excitement, but also some disappointment. I left South Africa for Chicago in
September 1972. This was, in retrospect, the peak in the power of the Apartheid
regime. South Africa epitomized racial discrimination and it was very ugly. I
had seen it first-hand every day. And here was a book on the underlying
principles of discrimination. So I thought it would provide answers for me
about South Africa – what was Apartheid really about, what was its future?
While I found the book
fascinating, I did not find the answers to the questions I started with. Of
course, this was an absolute blessing for me. It became the opportunity for my
dissertation on the economics of Apartheid. The reason the answers were not
there was that Becker had excluded the case of state-enforced discrimination by
assumption. But his work did provide the answers by implication. If state power
is used to prevent the competitive process from eroding the effects of
discrimination then discrimination may endure and even flourish. (I subsequently
found the analysis I was looking for in the works of Anne Krueger and William
Hutt). Becker’s models provide the necessary window into what would happen once
the apparatus of state discrimination were abolished. It was vitally relevant
at the time, and it remains so to this day as we consider the current
regulatory environment of affirmative action and racial preferences.
I
used Becker’s theories again in my work on capital. I came to Chicago after
studying capital theory with Ludwig Lachmann. The two scholars were different
in every way. It was as if they spoke different languages, not even the common
language of economics. It left me quite confused. But when I started to study
Becker on human capital I made my own “translations” and began to see very
interesting things. Crazy to imagine combining a radical Austrian with a Chicago
equilibrium-empiricist. But that is what I ultimately did, and I think it
worked. Becker adopted the language of scientism, the denigration of any work
that did not feature confronting the data with some very abstract model to
yield satisfactory t-statistics. But I did not find this persuasive or helpful.
Rather it was Becker’s penchant for imaginative theoretical insights, using what
Chicago thought of as “the equilibrium-method,” that fascinated me. The equilibrium method consists in
understanding equilibrium to mean individual constrained-maximization, which
really means purposeful action. The economic models take basic economic situations
and manipulate logical (mathematical) symbols, representing aspects of those
situations, like attitudes, costs, benefits, etc., to wring-out hard-to come by,
but important, economic intuitions that often explain observed phenomena in new
and insightful ways. That was the genius of this productive period in the
history of the Chicago School that is Becker’s legacy. One has to look past the
method, which is both a way of thinking and a way of gaining “scientific”
respectability, to see the richness of the insights. This richness is a result
of the “Chicago-method” of applying basic Marshallian price theory in a
flexible and innovative way. For example, the economics of the family, the
economics of discrimination, crime and
punishment, human capital, public choice, religion and, most recently, the
economics of addiction and similar subjects.
Clearly
Gary Becker’s contributions transformed economics. His work spurned massive
changes in approach and widened the scope of its endeavors. When he wrote his
book on Human Capital he faced substantial
opposition to the very use of the term. His daring to apply economic tools to
an analysis of choice to have children provoked the vehement condemnation of
the sociologists. But Becker was always unfazed by these obstacles. He harbored
no grudges and he affected no airs. As a teacher he was tough but incredibly
open-minded and accepting of the thoughts of others. He encouraged critical
thinking and the expression of ideas. I never saw him angry with students or
colleagues. He was a true gentleman.
He
was busy, always busy, and I had a hard time getting to talk to him. And I was
always awed by him. I wish I had been able to have had more of him, but I am
honored to have been able to have known him in the way I did.
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