Monday, 5 May 2014

Nobel Laureate economist Gary Becker has passed away -

Gary Becker was one of the greatest economists of the past half century. The 82-year old Becker was a pioneer in using the tools of economics to analyse things that are frequently thought to be outside the realm of economics. He made important contributions to the family economics branch of economics. Neoclassical analysis of family within the family economics is also called new home economics.

This idea of using economics to analyse non-market things seems normal these days. But when Gary Becker started doing this it was very new. And he truly taught people to see the world in new ways.

Becker’s Nobel Prize lecture is titled The Economic Way Of Looking At Life and in it, Becker briefly goes over how he used economics to analyse such topics as crime (why people commit it), discrimination against minorities, and family life.

Criminology first rose his interest when he was short for time one day. He had to weigh the cost and benefits of legally parking in an inconvenient garage versus in an illegal but convenient spot. After roughly calculating the probability of getting caught and potential punishment, Becker rationally opted for the crime. Becker surmised that other criminals make such rational decisions. However, such a premise went against conventional thought that crime was a result of mental illness and social oppression.

In his powerful intro, he makes two important points. One is that economists who presume that everyone is selfish (maximizing their own utility) take too narrow a view of human motivation. People are motivated to act for all kinds of reasons (jealousy, spite, etc.). His other point is that while productivity has provided abundance in many areas, the one resource that we’ll never have more of his time. Time will always run out, and there will always only be 24 hours in a day. For this reason, we’ll never have Utopia, because that scarcity will always be there.

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