capitalism

Becker, Gary S. (1930– ) 29
of Chicago. He was an assistant professor at Chicago from
1954 to 1957, before moving to Columbia University and the
National Bureau of Economic Research. “I felt that I would
become intellectually more independent if I left the nest and
had to make it on my own,” Becker has written. “I have
always believed this was the correct decision, for I developed
greater independence and self-confidence than seems likely if
I remained at Chicago.” Becker spent 12 fruitful years at
Columbia, but ultimately returned to Chicago in 1969, where
he has taught ever since.
As the Nobel Prize committee stated, if there is a defining
characteristic of Becker’s work, it is method. He has
applied rational choice theory rigorously and ingeniously to
topics that were once thought beyond the purview of economics.
At the heart of Becker’s approach is the idea that
people, in all areas of their lives, maximize their utility subject
to the constraints with which they are faced. In short,
they act purposefully—rationally—not only in choosing a
job, but also in choosing a mate. These actions are not
always “selfish.” Instead, Becker models behavior in a way
that allows individuals to “maximize welfare as they conceive
it, whether they be selfish, altruistic, loyal, spiteful, or
masochistic.” At first, his work was often viewed with
skepticism by economists, who considered his choice of
subjects odd and far afield from more well-trodden territory
as, say, money and banking, and by sociologists, political
scientists, and anthropologists, who viewed him as an interloper
or, worse, an “imperialist” aiming to apply methods
wholly unsuitable to their disciplines. Over time, however,
his work has become widely accepted by economists, and,
increasingly, social scientists across related fields have
come to appreciate it as well.
Becker’s work has spanned a wide variety of topics, but
his influence arguably has been the greatest in four broad
areas: racial discrimination, crime, human capital, and the
family. When Becker first examined the economics of discrimination
in the 1950s, much of American society was still
segregated. Becker suggested that this fact implied that the
employer who refused to hire African-American workers
had a taste for discrimination. However, that taste, as Becker
demonstrated, is not necessarily costless. In a competitive
market, employers who systematically discriminate against
specific racial or ethnic groups may suffer because the more
productive workers from those groups will likely be hired
by competing firms looking to gain an advantage. The more
competitive the market, the more intense is the bidding for
skilled workers regardless of their race or ethnicity.
Becker followed this analysis with discussions of individual
skill-building or human capital. His conclusions were
straightforward: that skills are, in fact, augmentable, and
individuals face an economic choice about whether and how
to build them. The fundamental issue is opportunity cost.
Suppose one goes to college for 4 years to learn new skills
and ultimately obtain a degree. There are often obvious
costs involved, most significantly tuition. But there are less
obvious costs, such as the time spent pursuing education—
time that could have been spent in the labor market instead,
thus earning wages. Individuals must assess whether the
building of such skills will help them enough over their lifetimes—through
improved earnings as well as cultural and
other nonmonetary gains—to more than offset the time and
effort spent acquiring them. This idea is now one of the most
standard in labor economics—indeed, all of economics—
which was quite novel at the time Becker began his work.
Subsequent empirical studies have shown that the building
of skills has become increasingly important in modern
economies, both at the individual and macro level. Highskilled
workers tend to receive a wage premium, and the
economies of countries with relatively well-educated workforces
tend to grow more quickly than those with relatively
poorly educated workforces. As a result, human capital—
specifically, how to most efficiently encourage investment
in the building of skills—has become an important public
policy issue.
Becker’s work on crime overturned some long-held
beliefs. As he put it: “In the 1950s and 1960s, intellectual
discussions of crime were dominated by the opinion that
criminal behavior was caused by mental illness and social
oppression, and that criminals were helpless ‘victims.’”
Becker was critical of these assumptions. Most criminals,
he argued, were rational, just like noncriminals. He
acknowledged that, in general, people are constrained by
moral and ethical considerations and would not commit
crimes even when those crimes could be quite lucrative and
the chances of being caught are quite low. But for those
who do become criminals, many carefully assess their alternatives.
Given the likelihood of being caught, is crime more
profitable than pursuing work that is legal? If so, they may
choose crime. It is important here to note the linkage with
human capital. Those who have spent time improving their
skills are less likely to pursue crime because their legal
workplace alternatives tend to be better. In addition, they
have more to lose, in both future earnings and social status.
Of all of Becker’s research projects, his work on the
family is perhaps the most controversial. It also has been the
most mentally taxing. “Writing A Treatise on the Family is
the most difficult sustained intellectual effort I have undertaken,”
Becker wrote. Despite its complexity, there are some
key themes that run throughout his work. First is the idea
that the household can be modeled as a small factory, where
decisions about the distribution of work and the allocation
of time are determined by largely economic factors. For
instance, as family members’ real wages increase, there is
less incentive for home production and greater incentive to
work outside the household. This fact explains, in part, the
increase in female labor-force participation. Also, more
women entering the workforce may have contributed to
higher rates of divorce, as they become increasingly able to