Nobel Prize-winning (1992) economist Gary Becker, who died on May 3, extended economic theory into areas such as racism, crime and family formation, in which it hadn't been thought relevant. Critics, whether of religious or other persuasions, complained that Becker's analysis dehumanized us by leaving out many other factors that were of equal or greater importance.
Yet that's not just true in his areas; economic analysis even of purely economic buy/sell decisions leaves out non-economic
factors and can lead us to false results. In reality, the science gives us very useful insights, but its conclusions should always be examined in a "big picture" context, to eliminate those that are not merely counter-intuitive but foolish.
Perhaps the extreme example of Becker's approach to economics was his 2012 claim on the "Becker-Posner blog" that suicide was a rational act by people who believed the net present value to them of their future existence was negative. One doesn't need to be the soppiest of humanists to see this as an oversimplification.
Why it may indeed be true in some cases (mostly the terminally ill) that a person committing suicide has summed the utility of his future existence and found it negative, the reality is that most who kill themselves are deeply disturbed, either temporarily or permanently, and unable to make such a rational evaluation of their future potential outcomes. This is surely therefore a case where Becker's economic analysis adds only modestly to our understanding. Non-economic factors in most such cases are far more important than economic reasoning.
Nevertheless, suicide is an extreme case, in which Becker's economic analysis is least useful. Another of his highly controversial applications of the technique, concerning family formation, is much more difficult to criticize. It is unquestionably the case that the full entry of women into the professional workforce has increased the costs of child rearing.
To an extent, it also has reduced its benefits, at least for the dual-career professional couple. If the child is left with minders for much of its existence, the parents' joy in interacting with it must of necessity be reduced. It's also obviously the case that the increasing costs of college and the apparent necessity of getting a college degree in today's economy, further increase the cost of child rearing. Becker thus drew the conclusion that these increased costs would drive down the fertility rate. While there are many other factors beyond the economic in choosing whether to start a family, the decline in traditional marriage and childbearing are surely evidence that, on a big picture basis, Becker was right.More ...
Martin Hutchinson is the author of Great Conservatives (Academica Press, 2005) - details can be found on the website www.greatconservatives.com - and co-author with Professor Kevin Dowd of Alchemists of Loss (Wiley, 2010). Both are now available on Amazon.com, Great Conservatives only in a Kindle edition, Alchemists of Loss in both Kindle and print editions.
(Republished with permission from PrudentBear.com. Copyright 2005-14 David W Tice & Associates.)