George Stigler celebrated Gary Becker as theoclassical economics’ schwerpunkt that led their blitzkrieg assault on other social sciences. Stigler proudly called economics the “Imperial” discipline. The idea that imperialism was a desirable trait is a typical example of Stigler’s blindness to history and human suffering. Stigler famously proclaimed that economics alone was actually a social “science” because only it had a theory of human motivation (maximizing self-interest). The Sveriges Riksbank Prize announcement in 1992 cited Becker’s imperialistic forays into the family, human “capital,” discrimination, and crime as the basis of their award.
“Gary Becker’s research contribution consists primarily of having extended the domain of economic theory to aspects of human behavior which had previously been dealt with – if at all – by other social science disciplines such as sociology, demography and criminology. In so doing, he has stimulated economists to tackle new problems.
Gary Becker’s research program is founded on the idea that the behavior of an individual adheres to the same fundamental principles in a number of different areas. The same explanatory model should thus, according to Becker, be applicable in analyzing highly diverse aspects of human behavior. The explanatory model which Becker has chosen to work with is based on what he calls an economic approach, which he has applied to one area after another. This approach is characterized by the fact that individual agents – regardless of whether they are households, firms or other organizations – are assumed to behave rationally, i.e., purposefully, and that their behavior can be described as if they maximized a specific objective function, such as utility or wealth. Gary Becker has applied the principle of rational, optimizing behavior to areas where researchers formerly assumed that behavior is habitual and often downright irrational. Becker has borrowed an aphorism from Bernard Shaw to describe his methodological philosophy: “Economy is the art of making the most of life”.
Becker’s applications of his basic model to different types of human behavior can be accounted for by distinguishing among four research areas: (i) investments in human capital; (ii) behavior of the family (or household), including distribution of work and allocation of time in the family; (iii) crime and punishment; and (iv) discrimination on the markets for labor and goods.”
In this five part series I discuss these four areas and Becker’s role with regard to financial crises. Stigler was incorrect about other social sciences lacking a theory of human motivation or ignoring rationality and incentives. The series will become part of the book that I am co-authoring with Wesley Marshall on economists and economics that studies the manifold failures of recipients of the Sveriges Riksbank Prize. Theoclassical economics’ reductionist dogma of human motivation is one of its great weaknesses of these Prize winners. One of the ironies that I will develop in this series of articles about Becker’s embarrassing forays into other disciplines is that he abandons the dogma that all behavior is self-interested in his work on the family, uses the dogma in the fields of crime and addiction where it makes particularly poor sense and produces a series of errors, and inadvertently demonstrates the circularity of the dogma in his work on discrimination and on “rational addiction.”
Becker, one of the great promoters of the dogma of rationality and a self-proclaimed expert on discrimination, demonstrated his irrationality and personal blindness to his prejudices about women in his work on the family. Becker’s adoption of Shaw’s aphorism is telling, for Becker’s blindness to his errors proved that theoclassical “economy” is definitely not the “art of making the most of life.” Becker’s dogmas about the family would have seriously reduced economic growth and made it far harder for women to make the most of life. Fortunately, parents and women ignored Becker’s policy advice about the family and about investment in women’s abilities and opportunities. Theoclassical economics is the art of fixing the rules to make the most for plutocrats at the expense of the vast bulk of society. Theoclassical economics can simultaneously shrink the “pie” and in the infamous words of Citicorp’s ode to “plutonomy”:
“In a plutonomy there … are rich consumers, few in number, but disproportionate in the gigantic slice of income and consumption they take. There are the rest, the ‘non-rich’, the multitudinous many, but only accounting for surprisingly small bites of the national pie.”
Becker never evinced the slightest understanding of how discrimination systematically denies its victims the ability to make “the most of life.” An economist who celebrates economics as the means of making the most of life yet encourages discrimination is a failure as an economist and fails even the most basic requirements of logic.
I recently wrote a long article that discusses three of Becker’s weaknesses, but it was addressed to a specialized context. I will draw heavily on that article for the first two installments in this series on the family and investment in women.
My broader debt in this area is to my spouse, June Carbone, who made many of these points about Becker in 2000 in From Partners to Parents: The Second Revolution in Family Law.
Becker’s Failure to Understand the Family, its History, and its Changes
Becker purported to have done exhaustive research on the history of the family in preparation for his 1981 book: A Treatise on the Family (revised and enlarged, 1991).
“Writing A Treatise on the Family is the most difficult sustained intellectual effort I have undertaken.
Trying to cover this broad subject required a degree of mental commitment over more than six years, during many nighttime as well as daytime hours, that left me intellectually and emotionally exhausted.”
Becker, however, was wrong about the essence of “family,” ancient history and modern developments. Worse, he is wrong in ways that were designed to make it appear that the facts support his thesis. The essence of family includes children, and Becker makes troubling claims about children.
“Of course, most societies forbid the purchase and sale of children, but it is easy to forbid what would be uncommon” (1991: 45).
The purchase and sale of children is a major problem today and at various times and places it was a common decision that poor families faced. Becker’s inability to understand the terrible choices poverty has often forced on people illustrates a common theoclassical failure.
Becker’s Mythical Specialization through Non-Specialization
Becker decried the entry of women into the paid workforce as reducing “specialization” and resultant “efficiency.” He married (pun intended) the (also deeply flawed) concept of “comparative advantages” from international trade with Smith’s parable of the pins (Smith’s ode to the efficiency of specialization) to claim that the classic “generalist” “job” (the “traditional stay-at-home mom”) represented the epitome of “specialization.” (Yes, he was blind to the irony.)
Becker Calls Children “Commodities”
I need to emphasize that I am not making any of this up. Becker also expressly called “children” “commodities” (1991: 24). Indeed, children were only part of the list of “commodities” that Becker claimed families “maximized.”
“[T]ime and goods are inputs into the production of ‘commodities’ which directly provide utility. These commodities cannot be purchased in the marketplace but are produced as well as consumed by households using market purchases, own time, and various environmental inputs. These commodities include children, prestige and esteem, health, altruism, envy, and pleasures of the senses.
***
I have assumed that a household assigns its members to investments and activities that maximize the household’s output of commodities without regard to incentives” (1991: 24, 48).
All of this is incoherent and bizarre. First, none of the things in Becker’s list are “commodities.” Second, his attempted commodification of children is obscene. Third, most of the things on his list can be “purchased in the marketplace.” Fourth, the economic logic, if Becker was held to principles of logical consistency would be to “optimize” rather than “maximize” these faux “commodities.” For example, few parents believe that the optimal number of children is achieved by “maximiz[ing]” pregnancies. I’m not sure what Becker had in mind by calling “envy” a “commodity,” but he cannot have believed that families sought to maximize the “envy” felt by members of the family. Fifth, consider the phrase “a household assigns its members to investments and activities….” This claim flows from Becker’s related claim that the members of the household choose who will serve as the head of the household to make such “assign[ments].” Becker’s study of history could not have led him to believe that there was such an egalitarian norm historically or in the era he was writing. The “head” of a married household has been, and remains, overwhelmingly male. He traditionally assigned, on a gendered basis, “investments” (education of the children and the spouses) and “activities” (the female members of the household do nearly all the household work). Such discriminatory practices continued for millennia though they did not “maximize” the household’s income, the quantity or quality of the faux commodities, the welfare of the faux commodities, or “altruism.”
Becker Ignored the Harms of Discrimination against Women
Discriminatory practices typically minimized household income and the circumscribed the lives of half of the household members (females). There are enormous positive externalities to education – particularly the education of women living in poor household (such as improved health for children) – so investing in the education of only males was a spectacularly poor economic and social decision. Becker, however, asserted that because discrimination against women in employment was the norm through history it must be economically efficient. Because it was efficient, it did not represent discrimination, but rather a mutual specialization of functions by the spouses.
Becker Claimed Discrimination Increased Efficiency
Becker claimed that women (who he implicitly assumed were essentially a homogenous “input” to a household “production function”) had a “comparative advantage” in the household over men because they can lactate. He refers to this as a “biological” comparative advantage that is “intrinsic.” He emphasized that even the most minor comparative advantage should lead to strict gender “specialization” in which women would overwhelmingly be stay-at-home moms while all men should work in the paid sector.
Of course, the reality is that some women (and some men) specialize in a host of “household” specialties, e.g., childcare and house cleaning), but they are paid for doing so. Other women specialize in being chemists, lawyers, and everything else in the paid sector. The result is that as women increasingly achieved higher education and increasingly worked in the paid sectors they dramatically increased our economy’s “specialization.” What Becker calls “specialization” was, in the case of women working in the household, the absence of specialization.
Here is a thought exercise for males: do you tell potential employers that your “specialty” is “working in the paid sector?” If you have developed a substantive expertise through your employment and education you say that you are a specialist in that field. If males trained for twenty years to become “specialists” in “working in the paid sector” (i.e., extreme generalists) the result would be a dearth of specialization – not the epitome of specialization. In sum, Becker’s central thesis was not simply incorrect – it was 180 degrees from the truth. Had the West been foolish enough to follow Becker’s advice about keeping women uneducated and ultra-generalists the results would have a substantial loss of efficiency and fairness and the loss of many positive externalities such as improved health for children.
The fact that as more women entered the paid labor force specialization was increasing rapidly was already apparent at the time Becker began researching his infamous Treatise. Becker’s Nobel address stresses his exhaustive research on the Treatise (published in 1981). As I will develop in the next two installments of this series of articles on Becker, he was particularly crude in his dismissal of the desirability of providing high quality education to girls who desired to work in the paid sector. Becker called such girls “deviants.” By 1982, 26.8% of medical school graduates and one-third of law school graduates were women. That’s a lot of “deviants” in “traditionally male” jobs.
By the time the Swedish Central Bank awarded its Prize to Becker his positions about the efficiency of discrimination against women in education and employment were even more farcical. Economics is the only discipline in which one can achieve top honors for being proven disastrously wrong and having relied on obvious logical and theoretical flaws and abundant evidence. Today, roughly half of med and law school grads are women.
The obvious question is why Becker was so blind to the reality of women’s lives and aspirations that he could spend years researching the question, and revise his book after a decade, yet never figure out that if he was right about the benefits of increased specialization he should be cheering the surging increase in specialization among women. The depth, and length, of Becker’s inability to understand such a simple concept about women demonstrates his radical lack of understanding of and empathy for women.
Becker’s Support for Discrimination against Women
Even more disturbingly, Becker emphasized that wives should be consigned to unpaid household work even if they had no intrinsic comparative advantage for such work and the division of labor arose solely because of educational and employment discrimination by men against women and the domination of husbands over wives (1991: 63). If employers discriminated against women, Becker’s reasoning was that it was even more wasteful to educate girls for a job in the paid sector. One form of discrimination against women (job discrimination) made another form of discrimination against girls and women (education) even more “desirable” on “efficiency” grounds. Becker was not troubled by moral qualms against either form of discrimination. In my next two installments I’ll explore in more detail Becker’s positions on the desirability of discriminating against women and disfavored minorities in education and employment in order to enhance efficiency.
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