Gary Becker
Based on Wikipedia: Gary Becker
What would you pay for a kidney? Gary Becker thought he knew: about fifteen thousand dollars. For a liver, roughly thirty-two thousand. These weren't guesses—they were the outputs of economic models he built to solve the organ transplant shortage. The idea scandalized critics who saw it as exploitation of the poor. But Becker had spent his entire career asking questions that made people uncomfortable, and then answering them with mathematics.
He once calculated the optimal punishment for crime. He analyzed why people get married, and why they get divorced. He put a dollar value on racial discrimination. And in doing so, he transformed economics from a discipline about money and markets into something far more ambitious: a unified theory of human behavior.
The Economist Who Wouldn't Stay in His Lane
Gary Becker was born in 1930 in Pottsville, Pennsylvania, to a Jewish family. He studied at Princeton, then moved to the University of Chicago for his doctorate—a decision that would shape not just his career but the entire trajectory of modern social science.
At Chicago, he fell under the influence of Milton Friedman, whom Becker would later call "by far the greatest living teacher I have ever had." Friedman's course on microeconomics rekindled Becker's passion for the field. But where Friedman focused on monetary policy and markets, Becker would venture into territory economists had never touched.
His doctoral thesis was titled "The Economics of Discrimination." It was 1955, and the Civil Rights Movement was just beginning to build momentum. Most economists at the time considered racial discrimination a sociological problem, outside their domain. Becker disagreed.
He approached discrimination the way an economist approaches any other phenomenon: by asking what it costs. His insight was elegant and unsettling. When employers discriminate against minority workers, they're essentially paying a premium for their prejudice. They either hire fewer workers than they need, or pay more to the workers they're willing to hire. Discrimination, in other words, is economically inefficient. It's a tax that bigots impose on themselves.
Crime as a Career Choice
If Becker's work on discrimination was provocative, his analysis of crime was downright explosive.
The traditional view held that criminals were either morally deficient or psychologically disturbed. Society's response should therefore focus on rehabilitation or punishment as retribution. Becker rejected this framework entirely. What if criminals, he asked, are simply rational people responding to incentives?
Think about it from the criminal's perspective. Committing a crime offers certain benefits—money, status, thrills. It also carries costs: the probability of getting caught, the severity of punishment if convicted, and the opportunity cost of whatever else the criminal could be doing with their time. A rational person weighs these factors and decides whether crime pays.
This might sound obvious now, but in the 1960s it was revolutionary. And it led to a striking policy conclusion.
Consider two ways to deter crime: you can increase surveillance, making criminals more likely to get caught, or you can increase punishments, making the consequences of getting caught more severe. Both approaches reduce the expected payoff from crime. But they don't cost the same. Hiring more police officers, installing more cameras, building more prisons—all of this is enormously expensive. Raising the fine for a conviction? Nearly free.
Becker's analysis suggested that the most efficient policy is to minimize surveillance while maximizing punishment. Make getting caught unlikely, but make the consequences devastating. This reasoning underlies much of modern criminal justice economics, though its real-world applications remain controversial.
Human Capital: You Are an Investment
Perhaps Becker's most influential idea was also his simplest: people are capital.
When economists talk about capital, they usually mean physical things—factories, machines, tools. These assets produce value over time. A company invests in equipment expecting future returns.
Becker argued that education and training work the same way. When you go to college, you're not just consuming a service. You're investing in yourself. You're building skills that will generate income for decades. The tuition you pay is like the purchase price of a machine. The higher wages you'll earn are like the machine's output.
This framework, which Becker developed in his 1964 book "Human Capital," transformed how economists think about education. It explained why workers with more schooling tend to earn more—they've invested more in their productive capacity. It explained why companies sometimes pay for employee training—they're investing in assets that will generate returns. And it provided a new lens for thinking about economic development: countries prosper when they invest in their people.
The concept proved enormously influential. It shapes everything from how governments evaluate education spending to how individuals think about career decisions. Should you get a master's degree? Think of it as an investment. Calculate the cost, estimate the returns, and see if the numbers work.
Critics have pushed back, arguing that human capital theory ignores structural barriers and treats people too much like machines. But even its critics acknowledge its impact. The idea that education is investment rather than consumption has become so embedded in our thinking that we barely notice it anymore.
The Economics of Everything
Becker didn't stop at discrimination, crime, and education. He wanted to understand all of human behavior through economic logic.
Marriage? It's a household production arrangement where two people specialize in different tasks to maximize joint output. Divorce? It happens when the expected gains from marriage fall below the expected gains from being single. Having children? It's an investment decision, trading off quantity against quality—you can have many children with modest resources devoted to each, or fewer children with more investment in each one.
Even addiction, traditionally viewed as the antithesis of rational behavior, succumbed to Becker's analysis. In his theory of "rational addiction," people become addicted because the future costs of addiction are discounted against immediate pleasures. The addict isn't irrational; they're just applying a very high discount rate to future consequences.
This approach—applying economic reasoning to domains previously reserved for sociologists, psychologists, and philosophers—came to be known as "economic imperialism." Some meant it as a compliment. Others didn't.
The Rotten Kid Theorem
One of Becker's most creative insights concerned family dynamics. He called it the "rotten kid theorem," and it reveals something profound about how incentives work within families.
Imagine a family with two siblings. One is selfish—the rotten kid—caring only about their own welfare. The other is altruistic. Both are supported by a benevolent parent who cares about the welfare of the whole family.
You might expect the selfish sibling to take advantage of the situation, grabbing as much as possible while the altruistic sibling makes sacrifices. But Becker showed something counterintuitive: even the rotten kid will behave cooperatively.
Why? Because the rotten kid knows that if they harm their sibling, the benevolent parent will redistribute resources to compensate. Any gain from selfish behavior will be undone by the parent's intervention. The only way for the rotten kid to actually improve their position is to take actions that increase total family welfare—actions that benefit everyone.
The theorem illustrates how the right incentive structure can channel selfish behavior toward socially beneficial outcomes. It's a microcosm of Adam Smith's invisible hand, playing out around the dinner table.
Chicago Political Economy
Becker's influence extended beyond pure economics into political analysis. His work on what economists call "rent-seeking"—the pursuit of government favors rather than productive activity—helped found a field now known as "Chicago political economy."
His key insight involved something called deadweight loss. When the government imposes a tax or regulation, it doesn't just transfer resources from one group to another. It also destroys value. Some economic activity that would have happened doesn't happen. This destruction is the deadweight loss.
Here's the crucial point: deadweight losses grow disproportionately as the size of the intervention increases. Double the tax rate, and you more than double the deadweight loss. This mathematical relationship has profound implications for politics.
When a special interest group tries to extract resources through government intervention, it initially faces weak opposition. The victims suffer small losses and have little incentive to fight back. But as the extraction grows, the deadweight losses accelerate. The victims suffer increasingly severe damage and become increasingly motivated to resist.
This dynamic creates a natural brake on predatory behavior. Interest groups can't simply extract unlimited resources because their victims will eventually mobilize against them. The mathematics of deadweight loss ensures that resistance grows faster than aggression.
The Man Behind the Models
Despite his dry mathematical approach to human behavior, Becker's own life contained its share of drama and devotion.
He married his first wife, Doria Slote, in 1954. They had two daughters together. When Doria died in 1970, Becker was devastated. He remained single for a decade before marrying Guity Nashat, an Iranian historian whose research interests overlapped with his own work on family economics. The marriage brought together two scholars who shared intellectual passions.
Becker spent most of his career at the University of Chicago, though he taught at Columbia University for several years. At Chicago, he held a joint appointment in economics and sociology—fitting for a scholar who had blurred the boundaries between disciplines.
He was politically conservative and wrote a monthly column for Business Week for nearly two decades, alternating with the liberal economist Alan Blinder from Princeton. The arrangement perfectly captured the era's belief in balanced discourse: one column from the right, one from the left, readers could make up their own minds.
In his later years, Becker started a blog with Richard Posner, the influential federal judge and legal scholar. The Becker-Posner Blog featured the two intellectual giants debating issues of the day, applying rigorous analysis to current events. It ran for over a decade, ending only with Becker's death in 2014.
Recognition and Controversy
The honors accumulated. Becker won the John Bates Clark Medal in 1967, awarded to the most promising American economist under forty. He was elected to the National Academy of Sciences, the American Academy of Arts and Sciences, and the American Philosophical Society. He received the Presidential Medal of Freedom. And in 1992, he won the Nobel Prize in Economics.
The Nobel citation praised Becker "for having extended the domain of microeconomic analysis to a wide range of human behavior and interaction, including nonmarket behavior." It was a diplomatic way of acknowledging that Becker had spent his career annoying other social scientists by trespassing on their territory.
A 2011 survey of economics professors named Becker their favorite living economist over sixty, ahead of Kenneth Arrow and Robert Solow—both Nobel laureates themselves. Justin Wolfers, a prominent younger economist, called him "the most important social scientist in the past fifty years."
But not everyone was impressed. Becker's economic approach to human behavior attracted persistent criticism. Sociologists argued that he reduced complex social phenomena to simplistic calculations. Feminists challenged his analysis of the family, which seemed to justify traditional gender roles as efficient outcomes. In a 2013 interview, Becker suggested that women's absence from top positions might reflect choices rather than discrimination, drawing sharp rebukes from economists who argued he was ignoring structural barriers.
His organ market proposal sparked perhaps the most intense controversy. Becker and his coauthor Julio Elias argued that allowing people to sell kidneys and livers would increase supply and save lives. Critics countered that such a market would inevitably exploit the poor, who would be pressured to sell their organs to the wealthy. The debate continues today.
The Chicago Legacy
Becker belonged to what historians call the third generation of the Chicago school of economics. The first generation, in the 1930s, included Frank Knight and Jacob Viner. The second generation, in the postwar period, was dominated by Milton Friedman and George Stigler. Becker, along with economists like Robert Lucas and Eugene Fama, represented the third wave.
Each generation built on the previous one, but also pushed in new directions. Friedman focused on monetary policy and the limitations of government intervention. Becker took the Chicago commitment to rational choice and applied it everywhere—to crime, to family, to addiction, to any domain where human beings make decisions.
The result was a kind of methodological imperialism. Economics had traditionally studied markets. Becker made it the study of choice itself. Any situation where people weigh costs against benefits became fair game for economic analysis.
This expansion was controversial, but it was also enormously generative. Becker's students went on to transform multiple fields. James Heckman, who attended Becker's labor economics workshop, won his own Nobel Prize for developing methods to correct selection bias in statistical analysis. The "New Home Economics" that Becker pioneered with Jacob Mincer spawned generations of research on how households allocate time and resources.
What Becker Got Right
Decades after his major contributions, what has held up?
The human capital framework remains fundamental. Economists, policymakers, and ordinary people all think about education as investment. This framing shapes how we evaluate everything from student loan policy to corporate training programs.
The economic approach to crime has been partially vindicated. Criminal justice reformers increasingly focus on incentives—making crime less attractive rather than simply punishing criminals more harshly after the fact. Becker's insight that punishment severity and detection probability are substitutes influences how police departments allocate resources.
His work on discrimination proved prescient in some ways. The argument that discrimination is costly to employers suggested that competitive markets would tend to reduce discrimination over time—and in many cases, they have. But the argument also proved too optimistic. Discrimination has persisted in ways that simple economic models struggle to explain.
What Remains Contested
The economic approach to the family generates ongoing debate. Becker's models captured something real about how households function, but critics argue they miss crucial dimensions of family life that can't be reduced to utility maximization. Love, obligation, tradition, power—these forces shape families in ways that economic models struggle to capture.
Rational addiction theory remains controversial. Does it illuminate the addict's predicament, or does it define away the very irrationality that makes addiction a problem? The framework's clinical coldness strikes many observers as missing something essential about human vulnerability.
And the broader project of "economic imperialism"—using economic tools to analyze everything—continues to divide scholars. Supporters see it as bringing rigor to sloppy thinking. Critics see it as intellectual colonialism, imposing one discipline's assumptions on phenomena that require different approaches.
The Enduring Question
Gary Becker died in 2014 at age eighty-three, from complications following surgery. The University of Chicago honored him with a three-day conference that same year.
His legacy raises a question that goes beyond any particular finding. Can human behavior be understood through the lens of rational choice? Are we all, in the end, maximizing utility subject to constraints?
Becker thought so. He believed that the tools of economics—prices, incentives, optimization—could illuminate almost any human activity. Marriage, crime, prejudice, addiction, even organ donation: all could be analyzed as the outcomes of rational agents weighing costs and benefits.
This vision has proven enormously fruitful. It has generated insights, predictions, and policy recommendations across dozens of fields. It has unified social science in ways that would have seemed impossible a century ago.
But it has also faced persistent resistance. Many scholars, and many ordinary people, find something troubling about reducing human experience to calculation. Love isn't just gains from trade. Crime isn't just a career choice. Family isn't just a production function.
The tension between these views—between the power of economic reasoning and its apparent limitations—remains unresolved. It may be unresolvable. But the debate itself, and the insights it has generated on all sides, represents Gary Becker's most enduring contribution. He didn't just provide answers. He forced everyone to think harder about the questions.