The Gary Becker Method

The econ blogosphere is blowing up (rightfully so) with articles, tributes, and obituaries to the late Nobel Laureate Gary Becker. Prof. Becker passed away on Saturday at the age of 83.

While I don't have any anecdotes about Becker like Russ Roberts or Steven Levitt, I do want to highlight some thoughts on Gary Becker's method. After all, the blog's title comes from a Kirzner book on method. Over the past few days, a few posts, mostly from Austrians who love talking about this stuff, have discussed Becker's work with an emphasis on this.

What was the Becker method?

Most people have stressed Becker's application of economic reasoning to traditionally non-economic areas of inquiry. Becker saw economics as a method of inquiry about human decision-making. Economics was not just the study of markets. This was the focus of Becker's Nobel lecture "The Economic Way of Looking at Life"-

Unlike Marxian analysis, the economic approach I refer to does not assume that individuals are motivated solely by selfishness or gain. It is a method of analysis, not an assumption about particular motivations. Along with others, I have tried to pry economists away from narrow assumptions about self interest. Behavior is driven by a much richer set of values and preferences.

The analysis assumes that individuals maximize welfare as they conceive it, whether they be selfish, altruistic, loyal, spiteful, or masochistic. Their behavior is forward-looking, and it is also consistent over time. In particular, they try as best they can to anticipate the uncertain consequences of their actions. Forward-looking behavior, however, may still be rooted in the past, for the past can exert a long shadow on attitudes and values.

Actions are constrained by income, time, imperfect memory and calculating capacities, and other limited resources, and also by the available opportunities in the economy and elsewhere. These opportunities are largely determined by the private and collective actions of other individuals and organizations.

Different constraints are decisive for different situations, but the most fundamental constraint is limited time.

As an economist in 2014, it is hard to imagine a world where this is not the standard understanding of economics. We, economists, mostly believe that economics applies to all walks of life. It is a lens for looking at the entire world. That wasn't the standard thinking before Becker. Yes, Mises's book is call Human Action, but that was not normal.

Here, I want to highlight that a few other economists have shared their thoughts on Becker's method.

First, Becker's student, Walter Block, wrote an article following Becker's Nobel Prize. Block didn't see much differentiation between Becker and the rest of the profession. Block writes-

 This is because the Chicago (read Becker- BA) methodological approach is so close to (indeed, is indistinguishable from) that of the rest of the profession. This is in sharp contrast to Hayek, whose receipt of the prize has correctly been given credit for a large part of the Austrian revival. I know Gary Becker; Gary Becker is a friend of mine; and believe me, he's no Friedrich Hayek. Nor is he even a James Buchanan, who took a position on the subjectivism of costs compatible with that of the praxeological school.

Yet, Peter Boettke is much more favorable of the Becker method and believes that it takes on the Misesian project in one direction. Boettke writes-

How does Becker fit?  Well, in my way to read his contribution, I interpret him as a practitioner of praxeology IF one adopts a philosophy of science that Hayek dubbed "scientism".  In fact, I would argue that there are two ways to translate Mises's project into this "modern" philosophy of science to operationalize it: (1) the Becker way, and (2) the Vernon Smith way...

Understood in this light, we must acknowledge not only the towering achievment [sic] of Gary Becker's contributions to modernist social science, but the fundamental praxeological character of his project.  Imagine Mises writing Human Action if he was educated in the 1950s and competing as a young economist in the profession in the 1950s and 1960s trying to make their way as a leading scientist.  And in this thought experiment, remember the genius in question has adopted the prevailing philosophy of science and not choosing to buck against it (as Rothbard and Kirzner did).  My intuition says that the work would look a lot like the sort of univeral [sic] rational choice theorizing that was identified with Gary Becker, with James Buchanan and Gordon Tullock, with James Coleman, etc.  And there should be little doubt that in that crowd the most persistent and consistent application of the rational choice perspective was the great Gary Becker.

Mario Rizzo also sees a similarity between the Becker method and Austrian economics-

He loved economics and loved to apply it to a wide range of problems. He was no enemy of mathematical economics but thought that theory should be as simple as possible and developed with applications in mind. He was a true follower of Alfred Marshall on this: theory as the engine for the discovery of concrete truth. He was also no “positivist” in methodology. (Some people are quite careless about how they use that term.) He did not think that every statement in economic theory has to be falsifiable or testable. In response to what I believe to be the methodological disaster of behavioral economics, he argued that rationality per se is never testable. What is testable is the complex of assumptions and basic structure of a theory when it is applied to concrete problems. (I add, for those schooled in the philosophy of science, that he invoked the “Duhem-Quine Thesis.” )

He accepted Lionel Robbins’s view that economics is a science of choice generally, and not only a science of market exchange (what used to be called catallactics). In accepting that view he accepted the same perspective on this matter as Ludwig von Mises and the British economist Philip Wicksteed – from both of whom Robbins derived his own view. So there is immediately an undeniable Austrian connection.

While it is important to realize that the Becker method was specific and "mainstream", it was also full of insights. Any economist as good as Becker (there haven't been many) has some insight to economic method and we should be willing to listen.

He was a great economist and I wish I could have met him. RIP Dr. Becker