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Monday, May 12, 2014

Micro Loses a Legend

A note on the passing and legacy of Gary S. Becker (1930–2014)

The past year has been marked by the passing of a number of postwar pioneers of modern microeconomics. Now Gary Becker has expired at the age of 83. Becker had been in poor health recently, yet he remained active in his research.

Becker was born in 1930 and studied economics as a student of Milton Friedman at the University of Chicago. His dissertation was a pioneering work on the economics of discrimination. Becker was a socialist in his youth, but his education as an economist quickly changed him into a classical liberal. He excelled as a Chicago school economist. In fact, Friedman would later remark that Becker was his best student.

Becker initially taught at Columbia University, where his students included Walter Block, but he ultimately moved to the University of Chicago.

Hardly any other modern economist influenced his peers more than Becker, and this was no small feat. He entered the economics profession at a time when nearly all economists favored heavy government involvement in markets. Furthermore, most economists emphasized macroeconomics over microeconomics. Becker did more than almost anyone to reassert the primacy of microeconomics; he also expanded its scope.

Microeconomic analysis was, for the most part, confined to analysis of conventional markets where goods are bought for money. Austrian economists (e.g., Ludwig von Mises, Carl Menger, and Lionel Robbins) had already pointed out that economic reasoning applies to all circumstances where people respond to scarcity.  However, Becker followed up on the work of Robbins by applying Chicago price theory to unconventional markets.

No economist besides Gordon Tullock embraced controversial issues more enthusiastically. Thanks to Becker, Chicago microeconomics became known for groundbreaking research on the economics of crime, the economics of the family and marriage, the rotten-kid theorem, organ markets, and “rational addiction.” Becker student Laurence Iannacconne founded the study of the economics of religion.

The core of Becker’s economics is his theory of the allocation of time. According to Becker, since time is scarce, we allocate it between work for pay, family, sports, religion, and—perhaps among many other things—criminal activities.

Becker’s approach brought badly needed economic analysis to areas of human life that only sociologists were analyzing. Perhaps the single most important result of applying economic reasoning to sociological issues was to show how individual rationality often applies to situations where many people quickly assume irrationality. Thanks to Becker, many economists are more skeptical of the War on Drugs and of restrictions on the sale of human organs. Becker was also a steadfast critic of minimum wage laws and of the fair trade movement. Becker’s criticisms of government intervention were not limited to academic writings. He authored many op-eds in Business Week and cofounded the Becker-Posner Blog.

Becker achieved recognition with the 1967 John Bates Clark Medal, the 1992 Nobel Prize in economics, and the 2004 Presidential Medal of Freedom.

Becker was in many ways a pragmatist. He thought that political competition could limit government waste and might make the public sector somewhat efficient. Becker also considered replacing the War on Drugs with taxes. In one of his final works, he suggested that taxing legal drugs might discourage the use of drugs more so than criminalizing drugs had done.

Gary Becker was a prolific and audacious economist. He had as much influence on modern microeconomics as his mentor and friend Milton Friedman had on modern macroeconomics. He will be sorely missed.

  • The Freeman is the flagship publication of the Foundation for Economic Education and one of the oldest and most respected journals of liberty in America. For more than 50 years it has uncompromisingly defended the ideals of the free society.