Mr Markets: Remembering Gary Becker

May 5, 2014

Economist Gary Becker, the Nobel Laureate who embodied and helped define what it means to be a Chicago school economist, died on Sunday at age 83. He “was the most important social scientist in the past 50 years”, writes Justin Wolfers. No economist since Marx, Wolfers says, has been as influential in changing the way we think about the social sciences. Becker “had the audacity to suggest that virtually every aspect of human behavior was amenable to economic analysis”.

In his 1992 Nobel acceptance speech, Becker said he “tried to pry economists away from narrow assumptions about self interest. Behavior is driven by a much richer set of values and preferences”. Becker’s early work tackled the economics of discrimination during the civil rights movement, proving that discrimination can economically hurt both those discriminated against and those doing the discriminating. He later dug into the economics of family life, restaurant pricing, education, immigration, and organ donation. In other words, Becker was doing freakonomics before Steven Levitt was out of high school.

Tim Carmody said that “people sometimes talk about ‘neoliberalism’ as a kind of intellectual bogeyman. Gary Becker was the actual guy”. What that means, says Crooked Timber’s Keiran Healy, is that economics is not just a topic, “but rather an ‘approach to human behavior’”. Healy says the significance of that leap was recognized by none other than French theorist Michel Foucault. Becker changed economics from the study of exchange, Foucault said, into the study of the individual as an “entrepreneur of himself”. Healy says Foucault viewed Becker as following in the footsteps of Emile Durkheim, the founder of modern sociology. Becker’s work was something of a “general science of society”, according to fellow Chicago economist George Stigler.

In a 2010 interview reposted by John Cassidy, Becker says “what I have always learned to be the Chicago view, and taught to be the Chicago view, is that free markets do a good job. They are not perfect, but governments do a worse job. Again, in some cases we need government. It is not an anarchistic position. But in general governments do a worse job”. As ideas go, that is just about as influential as they come. — Shane Ferro and Ben Walsh

On to today’s links:

The latest innovation in peer-to-peer lending: financial institutions loaning people money – NYT

Actually Good Questions
“What is Alibaba?” – WSJ

Defining down what it means to be a nerd – The Baffler

Student debt through the recession – Atif Mian and Amir Sufi

Banks can’t own CLOs, so they’re financing them: “plausibly an intended result of the Volcker Rule” – Matt Levine

Remembrance of Things Past
The surprising policy legacy of Ladies Home Journal – WaPo

Says Science
“Cancer killing nanorobots” – Re/code

The origin story of chicken tikka masala is “pure drunken invention” – Mark Hay

Study Says
“The slow pace of wage growth is the best indicator of an incomplete economic recovery” – Binyamin Appelbaum
“Short- and long-term unemployment exert equal downward pressure on price inflation” – The Fed

Data Points
A record number of Americans have health insurance – Danny Vinik

Stuff We Are Not Linking To
A Tinder-like dating app that uses LinkedIn to encourage assortative mating

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