Gary S. Becker received the Nobel Prize in Economic Sciences in the year 1992: “For having extended the domain of microeconomic analysis to a wide range of human behavior and interaction, including nonmarket behavior.” With his new perspective, he widened the scope of economic sciences and at the same time added numerous insights to the human behavior research and the field of anthropology.
Becker considers economics not as a science that deals with a specific subject matter. For him, economics is a specific method that can be applied to all areas of human life. The basic assumptions of his approach are based on the rational choice model: maximizing behavior of human beings, stable preferences in regard to the central aspects of life, and the existence of markets where the allocation of scarce resources is coordinated and a market equilibrium is reached. At the same time, Becker acknowledges the wide range of human interests as basis for maximizing behavior and does not focus just on selfishness or gain like other economic research in the past.
On the basis of these assumptions, Becker reached well-accepted models about human behavior, within the family or in regard to crime, as well as further explanations for several human characteristics such as altruism.
Gary S. Becker was born in 1930 in Pottsville, Pennsylvania. He studied at Princeton with a focus on mathematics and economics. Later in his studies, he nearly lost interest in economics, since it did not seem to deal with crucial social questions.
For his graduate work, he decided to go to the University of Chicago. The encounter with Milton Friedman and his approach to economics as a “tool to analyze the real world” renewed Becker’s fascination for economics.
Becker’s first larger publication, The Economics of Discrimination, was based on his PhD thesis (1955) and came out in 1957. Within this work, Becker applied the economic view to analyze the effects of prejudices concerning minorities on their earnings, employment, and occupations. Becker concluded that discrimination leads to economic disadvantages for the person discriminated against as well as for the person practicing discrimination.
After he finished his third year of graduate study, Becker received an assignment as assistant professor at Chicago. To become more independent, he left Chicago 3 years later and accepted a position at Columbia University and the National Bureau of Economic Research. In the following 12 years, he taught at Columbia and did research at the bureau, especially on the subject of human capital. Based on existing research, Becker developed a general theory on human capital. The theory answers the question of how investments in human competence, as in the case of education, can be explained, and what consequences these investments imply. As a result of these activities, he published his book Human Capital in 1964. Today, his theory has a wide application. It helps to explain human behavior in regard to education, migration, as well as investments and earnings in the health sector. Empirical data have shown the huge impact of human capital on real-world phenomena.
Other research projects of Becker in this period resulted in frequently cited articles, for example, on the allocation of time, irrational behavior, or crime and punishment. Becker’s view on crime as a possible rational behavior helped to find new concepts to explain and to prevent crime.
In 1970, Becker returned to Chicago. Besides the increased interest in the economics of politics as a result of his encounter with George Stigler, Becker concentrated on the research of human behavior within household and family. He applied his approach to different interactions of family members and questions of fertility, marriage, children, or employment. Within Becker’s theory, families are described as an interaction of different people with distinct and interdependent calculations of their utility functions. The theory allows predicting and explaining the results of this interaction and offers new insights into human behavior. In Becker’s conception, a household can be considered a small factory, which produces the basic goods the members of the family need, such as meals, a residence, or entertainment. The production presupposes the input of time and ordinary market goods.
As part of his theory of family, Becker has worked on the important anthropological question concerning the existence of altruism as a human trait. Becker suggests a combination of economic and sociobiological methods to solve this question. Through the application of his economic theory, he argues that the survival of altruism can be explained by the results of the utility-maximizing behavior of altruists and egoists. The main reason for this effect is that altruistic behavior results in interdependent utility calculations between the person acting altruistically and the person in whose favor the action was. The people who receive a benefit from altruistic behavior have a motive for acting altruistically toward the person being altruistic to them, because they realize that an increase in the well-being of the giver enhances their own well-being. This dynamic leads to an economic advantage for human beings showing altruistic behavior. The altruists may not intent to benefit from their altruistic actions, but it is the case that the likelihood of their survival increases and with it the survival of the altruistic trait. Because Becker’s model is based on interaction and not on shared genes, it is able to explain altruism outside the family, for example, between neighbors.
The approach of Becker is especially interesting considering Nietzsche’s critique of morality. It shows that even within a society based on egoism and individual interests, altruism as a human trait could survive.
Because of Becker’s unusual way of using the economic approach, his work was often not accepted as real economics. But his way of analyzing human behavior proved to be very effective, and as a result, he received the Nobel Prize in Economic Sciences in 1992.
- Becker, G. S. (1990). The economic approach to human behavior. Chicago: University of Chicago Press.
- Becker, G. S. (1992, December 9). The economic way of looking at life (Nobel lecture). Chicago: Department of Economics, University of Chicago.