Gary Becker

1. Gary Becker

GARY BECKER
The man who merged sociology and economics, showing how
sociological factors influence economic behavior, while also laying
particular stress on human capital
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2. So who is gary becker?

SO WHO IS
GARY BECKER ?
W H AT H A S H E A C H I E V E D I N L I F E T O
BECAME THE MAN WHO PUT THE
H U M A N I N TO E C O N O M I C S ?

3. Gary Becker

> Born in Pottsville, Pennsylvania, U.S
to a Jewish family
> Studied at Princeton University and
at the University of Chicago – B.A.
and Ph.D.
> Was a professor of economics and
sociology at the University of Chicago
> Was credited with the “rotten kid
theorem”
> Described as “the most important
social scientist in the past 50 years”
by the New York Times
> He died on May 3 2014, when he
was 83 years old
G A RY
BECKER

4. A man of numerous ideas, Gary Becker

A MAN OF NUMEROUS IDEAS, GARY
BECKER
-
WO R K I N G C A R E E R A N D T E AC H I N G
-
D I S C R I M I N AT I O N
-
H U M A N C A P I TA L
-
CRIME AND PUNISHMENT
-
FA M I LY S T RU C T U R E
-
Q U OT E S
-
AWA R D S

5. Becker supervised many Ph.D. students, including two who became directors of the Congressional Budget Office, Republican June O'Neill and Democrat Robert

BECKER SUPERVISED MANY PH.D. STUDENTS, INCLUDING
TWO WHO BECAME DIRECTORS OF THE CONGRESSIONAL
BUDGET OFFICE, REPUBLICAN JUNE O'NEILL AND
DEMOCRAT ROBERT

6. Discrimination is the unjust or prejudicial treatment of different categories of people, especially on the grounds of race, age, or sex

D I S C R I M I N AT I O N I S T H E
UNJUST OR PREJUDICIAL
T R E AT M E N T O F
D I F F E R E N T C AT E G O R I E S
O F P E O P L E , E S P E C I A L LY
ON THE GROUNDS OF
RACE, AGE, OR SEX
Before Becker, the standard economic view was
that only those who were the victims of
discrimination were the losers. Becker, in a book
that was based on his University of Chicago PhD
dissertation, showed that discrimination also
reduces the incomes of the perpetrators because
they lose out on the purchase of goods and
services. People with a taste for discrimination,
either through prejudice or ignorance, will lose.
With free market entry, discriminating employers
will go out of business, or find that their profits
are reduced. Non-discriminating firms would be
able to benefit from arbitrage as workers' values
are determined by their marginal production. If
employers discriminated on the basis of gender,
race, religion, or sexual orientation, when doing so
had no effect on job performance, employers
would be effectively fining themselves for their
prejudices.

7. Human capital is the stock of knowledge, habits, social and personality attributes, including creativity, embodied in the ability to perform labor so as to produce economic value.

H U M A N C A P I TA L I S T H E
STO C K O F K NOW L ED GE,
HABITS, SOCIAL AND
PERSONALITY
AT T R I B U T E S , I N C L U D I N G
C R E AT I V I T Y, E M B O D I E D
IN T HE A B IL IT Y TO
PERFORM LABOR SO AS
TO P RO DUC E EC O NO MIC
VA L U E .
Before Becker, the concept of education as an investment in human
capital was practically unknown. Capital was a bank account, or
equity, or an assembly line. Education was regarded simply as
learning from school or college, not an investment that created a
stream of returns. The term "human capital" was controversial
because it equated people with machines. Becker's book, Human
Capital, was published in three editions, and examined the rates of
return on schooling for different groups, and incentives to invest in
different types of education.
To give but one example, women's investments in education were
caused by the cultural changes that enabled them to move into the
workforce in the 1980s. In 1994, Becker wrote, "The enormous
increase in the participation of married women is the most
important labor market change of the past twenty-five years. Many
women now take little time off from their jobs even to have
children. As a result, the value to women of market skills has
increased enormously, and they are shunning traditional ‘women's
fields' to enter accounting, law, medicine, engineering, and other
subjects that pay well."

8. Crime and punishment

CRIME AND
PUNISHMENT
Before Becker, discussions of crime centered on
possible mental illness and sociological behavior of
criminals. Few considered that criminals might be
rational. In a series of papers published from the late
1960s to 1990s, Becker showed that the amount of
crime is determined by a number of factors
influencing the costs and benefits of breaking the law.
Criminals look at the likelihood of getting caught, the
return from the crime, and the cost of law-abiding
alternatives, such as getting a paying job.
Social policy can change these variables. It sounds
obvious now that making it more likely that criminals
will be caught, or making it easier for criminals to find
legal jobs, can reduce crime, but no one had analyzed
the variables in an economic framework before. This
helped Harvard University professor James Q. Wilson
to develop his "broken windows" theory, which
suggested that aggressive policing would reduce
crime.

9. Family structure

FA M I LY
STRUCTURE
In his lecture on receiving the Nobel Prize, Becker said that his
six years spent writing A Treatise on the Family were the most
difficult effort he had ever undertaken. The book, published in
1981, looked at the costs and benefits of love and marriage and
the decision to have children. This cost-benefit analysis produced
results that were often controversial and counter-intuitive, yet
appear to be born out in people's behavior.
Important for modern demographics, Becker showed that the
richer a society, the lower would be its birth rate. As the value
of time rises, people have fewer children, because it becomes
more expensive to care for them. The need for investing in skills
in a richer society is another factor driving up costs of
childbearing.
Sure enough, increasing income of different countries is one of
the greatest predictors of fertility. As countries get richer, the
birthrate declines. For example, Poland had a fertility rate of 3
births per woman in 1960, back when its GDP per capita was
only $1,700 in 2012 dollars. Now the country has a GDP per
capita of $12,700, and a fertility rate of 1.3 births per woman.
Similarly, South Africa's GDP per capita has increased nearly
1,800 percent since 1960, and its fertility rate has fallen over 60
percent during that same time period.

10. “Gary Becker, who led the movement to apply economic ideas to areas of life such as marriage, discrimination and crime . . . was one of the most influential and most cited economists of the 20th century.” Financial Times, May 6

“ GA RY BECK ER, WH O L ED TH E M OVEM ENT TO A P P LY ECONOM IC IDEA S
T O A R EA S OF L IFE SUCH A S M A R R I AGE, DI SCR I M I NAT IO N A ND CR I M E . . . WA S O NE O F
T H E M OST INFL UENT I A L A ND M O ST CI T ED ECO NO M I ST S O F T H E 2 0 T H CENT U R Y. ”
FI NA NCIA L T IM ES, M AY 6

11.

AWARDS:
> 1992 Nobel Memorial Prize
in Economic Sciences
> 1967 John Bates Clark
Medal
> 2000 National
Medal of Science
> 1997 Pontifical
Academy of Sciences
> 2004 John Von
Neumann Award
> 2007 Presidential Medal
of Freedom

12.

Many famous
economists, even
some Nobel Prize
winners, have
made their career
based on one
innovative idea.
Gary Becker, the
Nobel Prizewinning
economist who
died on 3 May
2014, aged 83, had
not one
innovative idea,
but dozens.
In a profession that is often
condemned for dwelling on
the abstract and irrelevant
problems, Becker focused
on the major social issues
of the day and found both
surprising and compelling
insights. Invariably he found
that individuals were
rational, a startling
conclusion in a world all
too willing to believe the
opposite. Becker pioneered
the frontiers of economics
and inspired a generation of
economists who have
followed in his footsteps.
HE WILL BE MISSED

13. Thank you for attention!

THANK YOU FOR
ATTENTION!
I F YO U H AV E A D D I T I O N A L
QUESTIONS, PLEASE FEEL FREE
TO A S K

14.

Presentation Credits
- 20 Most Influential Living Economists - http://superscholar.org/features/20-mostinfluential-living-economists/
- Gary Becker from Wikipedia - https://en.wikipedia.org/wiki/Gary_Becker
- A Man of Numerous Ideas, Gary Becker, Will Be Missed http://www.realclearmarkets.com/articles/2014/05/06/a_man_of_numerous
_ideas_gary_becker_will_be_missed_101040.html
- Gary Becker, US economist, 1930-2014 https://www.ft.com/content/bba18500-d3d7-11e3-b0be-00144feabdc0
If you want to see more information about Gary Becker, here is the link
to the YouTube video where is his tribute:
https://www.youtube.com/watch?v=a0r1Ia2Z774