Gary Becker: The Father of Economics Imperialism

This was written by the University of Toronto's Aloysius Siow:

Gary Becker, an American economist, died on May 3 at the age of 83. His major contribution was the systematic application of economics to the analysis of social issues. Before his work, economists primarily studied how markets and market economies worked. He used economics to study discrimination, criminal behavior, human capital, marriage, fertility and other social issues.

He won the Nobel Prize in economics in 1992. He also won the John Bates Clark medal, awarded to the best American economist under 40, in 1967; and the Presidential Medal of Freedom, the highest honor award by the US president to a civilian, in 2007.

Becker's father, Louis William Becker, migrated from Montreal to the United States at age sixteen and moved several times before settling down in Pottstown, Pennsylvania. Becker's mother was Anna Siskind. He was born in Pottstown in 1930. At age five, Gary and his family moved to Brooklyn. He studied in Princeton University as an undergraduate. He did his PhD at the University of Chicago where he met Milton Friedman who would have an enormous influence on his intellectual development. After he obtained his PhD, Becker spent a few years as an assistant professor at the University of Chicago and then moved to Columbia University.

His path breaking 1955 dissertation was on the economics of discrimination. It was the first systematic study of a non-traditional economic topic using economics. In it, he argued that the difference in wages between a majority and a minority group can be used to measure the extent of discrimination in the labor market. When one points out today that it is unfair that women earn 80 percent of what men make, they are channeling Becker. His thesis analyzed how the South African system of apartheid benefited Whites at the expense of Blacks in South Africa. 
This analysis anticipated the Anti-apartheid Boycott Movement of the West which started in 1959.

The methodology and concern of his thesis previewed his research career. At the time of the publication of his thesis in 1957, economics was a conservative discipline, restricting itself to the study of the behavior of markets and market economies. Becker set for himself the task of systematically applying the tools of economics to the study of social issues. At the beginning, his work was generally ignored if not actually denigrated within the profession. Economists were supposed to study more important concerns.

After studying discrimination, he provided a modern economic theory of criminal behavior. Together with his study on discrimination, this work inspired the development of the law and economics movement.

At Columbia University, he began a systematic study of human capital, the study of the allocation of time and other topics in labor economics. Together with his colleague Jacob Mincer, they wrote many of the important papers in labor economics and also produced many successful graduate students. For example, their graduate student, Michael Grossman, wrote his thesis on health economics where he applied economics to the study of individual maintenance of health. Today, health economics is a major field of study and a central pillar of health policy. Due to the topics they worked on, they also attracted and successfully supervised many female PhD students. Claudia Goldin of Harvard University is perhaps his most illustrious female PhD student.

In 1970, Becker returned to the University of Chicago where he remained as a professor until his death. He continue to apply his economics to the study of the family, including the behavior of marriage markets, allocation of resources within the family and fertility behavior. The discussion of how economics can affect fertility anticipated government policies which seek to increase their native fertility rates. For example, Singapore has over 30 programs which seeks to increase her fertility rate.

Today, Becker's approach is known as the rational choice approach in the social sciences. As the economics profession grew to appreciate his contributions, other social sciences have mixed feelings about his influence. On the one hand, they appreciate how he led economists to study different social issues. On the other hand, other social scientists often feel threatened by the invasion of economists. 
Economists systematically use mathematical methods, statistical analysis and often large data sets. They prioritize cost benefit calculus over other factors which may also affect individual behavior. They had little patience with qualitative studies. Thus some social scientists felt that their contributions were unfairly ignored and so resisted the application of economics to their fields. For example, the Critical Legal Studies movement was developed in the 1970s in part in reaction to the success of the law and economics movement in law schools. In political science, rational choice theory is now a core field of study. Yet there are many political scientists who reject this approach.

Interestingly, motivated by the work of psychologists, economists have also begun to reject the purely rational calculus model of Becker as too narrow. Rather, these behavioral economics researchers argue that individuals have bounded rationality and are subject to systematic biases in their behavior. For example, Robert Shiller, a Nobel economist, has argued that bubbles occur in asset markets due to psychological biases. Thus the success of Becker has led to qualifications which is a hallmark of progress in science.

Contrary to many successful economists, Becker did not spend much time consulting for either the government or business. He was a conservative but unlike his mentor Milton Friedman, his direct influence on policy was minimal. Rather, the various economic fields which he instigated have had and continue to have significant influence on public policy. For example, every politician who wants to spend more resources on public education says that they are investing in the human capital of their society. Today, economists systematically contribute to policy discussions on maternity leaves, subsidies for child care and other social issues.

On a personal note, I was a graduate student at the University of Chicago in the late seventies where I met Gary Becker. I was interested in social issues. But because he was so intimidating as a scholar, I did not write my thesis under him nor was it on those concerns. Ten years after I obtained by PhD, and after I had moved to the University of Toronto, I wrote my first paper on the economics of the family motivated by a discussion in evolutionary psychology. Our interest on the economics of the family overlapped and we subsequently have had many professional interactions. I also began to realize that he did not know everything and that it is fine to work on topics which he had worked on. Later in his life, he would sometimes introduce me as a former Phd student. At first I would correct him. But later I did not because perhaps he was right.

Comments

[Nick Rowe]

Good post.

Outside of economics departments, and looking at other social science departments only, would it be correct to say that Becker (and economics imperialism) has had much more influence in the US than in Canada? This is what I hear anecdotally, but my sample is very small.

[LInda Welling]

Nice post, Aloysious; thanks. I like your comment about the rejection of some of Becker's work/results being scientific progress. It's difficult to know how to treat his work in the econ of the family class: there wouldn't be such a class if not for him, but some of his basic results...!

And interesting question, Nick - I'd never heard that before, but given segregation and US history, Becker's work on discrimination might have had a greater impact on policy than any of his work in Canada.

[Aloysius Siow]

Linda:

I sometimes disagree with him as a son disagrees with his father. But I also recognize what he has done for me intellectually. I also value his approval but when he does not give it, I write it off as him defending his legacy. I may not be as smart but my ego is as large. Haha.

Nick: I also have anecdotes but also no fact.

[Wonks Anonymous]

"Interestingly, motivated by the work of psychologists, economists have also begun to reject the purely rational calculus model of Becker as too narrow. Rather, these behavioral economics researchers argue that individuals have bounded rationality and are subject to systematic biases in their behavior."
I don't think that's an accurate description. I've heard others eulogize him as being one of the first "behavioral economists"!

[roger gathman]

I wouldn't be too quick to attribute to Becker the family and fertility policies of the developed countries, which go back at least to the thirties in Europe, particularly in Scandinavia. See here: http://www.oecdobserver.org/news/archivestory.php/aid/563/Can_governments_influence_population_growth_.html

"Alva and Gunnar Myrdal, argued in their 1934 book, Crisis in the Population Question, that Sweden must raise its birth rate; at the time the rate was below two children per woman, down from four at the turn of the century. The way to reverse this trend, they said, was by social reform that would support the family. Their proposals placed the responsibility for population targets in the hands of government and included maternal and child healthcare, free delivery, maternity and housing benefits, and general child allowances. Changes in social and welfare systems and marked reforms in the spheres of sexuality and reproduction saw the birth rate for most of the past half-century fluctuate at around two children per woman. It peaked at around 2.5 in the mid-1940s, when the general child allowance was introduced following the end of the Second World War, but never recovered its turn-of-the- century level."

[Aloysius Siow]

Absent China's One Child Policy which is draconian, its very difficult to affect national fertility rates via subsidies, maternity leaves, etc.. Many rich countries want to increase fertility but are not succeeding.

Due to substantial empirical work, I think its fair to say that Becker's quantity and quality model and its extensions cannot explain much of the fertility differences across women. I think some form of peer effects is needed. E.g. Fogli and Veldkemp 2011. The quantity and quality model is important because it gives us a behavioural model to estimate, and we are able to conclude that the factors which Becker and perhaps most economists would think of as a first pass are not enough to explain fertility behavior. So now others, such as Fogli and Veldkemp, add other hypotheses.

A more extreme modification will be to say that the quantity and quality model is basically wrong. I.e. that is not how adults think about children. One such model is that there are two factors affecting the demand for children. One factor, which is often applied historically and to developing countries, is that children are factors of production and or old age insurance for parents. Such a factor can generate high fertility. The second factor is that adults only want one child for own consumption, and have a second so that the first will not be lonely or for diversification. This second factor is not a quantity and quality rationale and is also against Darwinism. So there are reasons to be sceptical. In any case, for many historical and developing societies, the first factor dominated and so economic factors affected the demand for children. But as societies became richer and women's wages rose, the first factor became less important. And now the second factor is visible and operative. I have not decided whether I am crazy enough to work this out formally.

[Tom]

The most important issue is to find which gov't policies have been most successful in rich countries for increasing fertility among the above-average 50% richer folk. The paradox is that society wants more kids from the rich, but usually it's the poor who actually have more kids. Yet more kids from poor folks in a rich society are generally better than fewer kids.

This general conclusion is negatively modified when there racial / ethnic minorities who are poorer than average (NOT Asian-Americans), who need more social safety net public assistance, and who have more kids.

So -- what gov't policies work best, so far?

[Jacques René Giguère]

Rich men have more children but, in modern societies, they mate with educated women who have less ( and educate them more).
Some poor people have more children, but the number who have them is usually smaller as they are less marrieageable. poor men have no income or end up in prison (birth control american-style).
That's the old trope about the (any unfavorite category)swamping the ( whatever is deemed "superior" by the "superior".)

[Linda]

Aloysius, the "children as factors of production or old age insurance" doesn't contradict the quantity/quality, does it? In earlier stages of development, and/or low income levels, quality amounts to level of nutrition, not formal education. If nutrition is a binding constraint, as income levels rise we might see both quantity and quality increasing, at least over some range. Your second "factor" is akin to the "heir and a spare" argument. On the other hand, if loneliness is a factor in determining the quality of the desired single child...

[Aloysius Siow]

A problem with the quantity and quality model is that many women now have zero kids, including educated and wealthy women. Many of them are also unmarried. The above is the case now in several Asian societies such as Japan, HK, Singapore. Economists want to think of child services, some combination of quantity and quality, as generating positive utility. So why are so many rich women having no kids.

One interpretation is that this state is transitory. I.e. women in these societies have gotten educated and they dont want a traditional marriage. On the other hand, educated men want a traditional marriage. Many men marry down (and so get their traditional marriage) and many educated women do not marry because they cannot bring themselves to marrying down. This is related to work by recent work by Bertrand and Pan. The question is whether this is transitory. After one generation of no offspring, the next generation may adjust. This interpretation is a cultural norm story which is outside the quantity quality model.

[Jack 01]

It cannot be underemphasized how difficult it must have been in the beginning, when many economists indeed mocked Becker's choice of subjects to study using economics. For example, Princeton's Alan Blinder wrote a parody of Becker's work published in Chicago's own Journal of Political Economy (Becker must have been a good sport!):
http://theunbrokenwindow.com/wp-content/uploads/2008/04/the-economics-of-brushing-teeth.pdf

Of course, today Becker is seen as probably the leading economist of the second half of the 20th century, and economists would say, the leading *social scientist* of that 50-year period.

Heckman's tribute to Becker should not be missed:
https://bfi.uchicago.edu/sites/default/files/file_uploads/Heckman-tribute-text.1.20.14.pdf