Saturday, June 17, 2006

Gary Becker at Lunch with the FT

This weekend's FT magazine features Nobel laureate economist Gary Becker in its "Lunch with the FT" section. Tim Harford, probably one of the best non-economist columnists (or the one and only?) understanding economics well, is a host.

There are several interesting episodes in this article.

... 40 years ago, when [Gary Becker] was running late to examine a doctoral student[,] [w]ith no time to find a free space, he quickly weighed the cost of paying for parking against the risks of being fined for parking illegally. By the time he arrived at the examination, the then-unfashionable idea that criminals would respond to the risks and costs of punishment was taking shape in his mind. The unfortunate student was immediately asked to discuss.

Frank Knight, a founder of the so-called Chicago school of economics, persuaded a journal editor not to publish Becker's early paper on the incentives behind how democracies reach decisions.

Becker's PhD thesis was on discrimination - how to measure it and what effects it might have on the wealth of both the discriminators and their victims. It was thought to be no fit subject for an economist, and the Chicago faculty persuaded a sociologist with little interest in Becker to oversee his work. Becker later struggled to publish his book, The Economics of Discrimination.

Before he was 30, Becker presented to the American Economic Association his then- new idea of "human capital" (that people would invest in their own education as they might invest in shares, mindful of the rate of return). He recalls that the response was "absolutely outraged".

"There was a sea change. I began to notice it in the 1970s and 1980s. A lot of the younger people coming out of Harvard, MIT and Stanford were very interested in what I was doing, even though their faculty were mainly - not entirely - opposed to the sort of stuff I was doing."

Finally, this is probably why I like Tim Harford:
... non-economists accuse him of reducing emotional decisions to monetary ones. I suggest to him that this is a straightforward misunderstanding and most people have not realised that economics is not the study of money. "You're absolutely right[," says Becker.]


Sean said...

Masa, I really liked this article. Thanks for pointing it out. I will respond to your email soon.


Masayuki said...

Thanks for your comment, Sean.

I found Gregory Mankiw at Harvard also recommends this article.