CHICAGO'S BECKER WINS NOBEL PRIZE
Author: By David Warsh, Globe Staff
Date: Wednesday, October 14, 1992
Page: 59
Section: BUSINESS
CHICAGO -- University of Chicago professor Gary Becker was awarded the
Nobel Economics Prize yesterday for his role in demystifying the Cole Porter
world.
A pioneer in the economics of marriage and fertility, crime and punishment,
education and training, discrimination and the formation of habits, he was
cited by the Swedish Academy for extending "the sphere of economic analysis to
new areas of human behavior and relations."
"I enjoyed being unpopular," he told reporters at a news conference here.
''I must confess that I get a little bit uncomfortable" when identified with
conventional wisdom.
To some in present-day economics, Becker is an archvillain, the man who
more than any other trivialized the field by taking it where it wasn't
supposed to go. They have resisted not out of obtuseness, but from the
conviction that civic and personal truth lay elsewhere. As the Swedish Academy
noted in its citation, his early work was "met with skepticism and even
distrust" -- nowhere more so than in Cambridge, where his disciples are still
few and far between.
Sherwin Rosen, chairman of the University of Chicago's economics
department, spoke to the point yesterday when he said "at the time, people
couldn't believe that anyone would have the chutzpah" to talk about
discrimination as an economic rather than strictly emotional phenomenon,
because it was thought to be outside the turf of what economics could do. In
general, Rosen said, it was Becker's older colleagues who objected, while
younger students ate it up. Harvard economist Robert Barro, perhaps Becker's
chief apostle in Cambridge, said, "I think it's a great choice."
Becker scarcely found it necessary to defend his approach to treat the more
intimate decisions that human beings make as being essentially rational. He
made the point and passed on: "To marry or not, how many children to have, how
much to spend on children: these are economic questions because they involve
incentives."
It is the same with crime, he said: "If you make it easy to commit crimes,
you're going to have more crimes."
At 61, Becker is a man of widespread influence and generally conservative,
or at least market-oriented, views. A former president of the American
Economic Association, he reads far more widely in history, geography and other
social sciences than most economists.
He writes a monthly column for Business Week magazine, alternating with
liberal Princeton University economist Alan Blinder.
He spends every summer on Cape Cod, a vestige of his days as a young
professor at Columbia University in the 1960s.
Yet it is with the University of Chicago that Becker is identified, more
than any other economic scholar except Milton Friedman. It was there Becker
did his PhD on discrimination in 1955, defining it as an act in which an
economic actor is prepared to incur a cost to avoid entering into a contract
with someone not of his sex or race. He argued that such behavior would
eventually cause economic harm not only to the victim but to the perpetrator
of the deed.
Since then, his march has been largely irresistible.
At the heart of Becker's approach has been the idea of human capital, a
metaphor that was more or less invented and refined at Chicago by Becker's
teachers, Theodore Schultz, Greg Lewis and George Stigler.
In a 1989 lecture, Becker described it this way: "To most of you, capital
means a bank account, one hundred shares of IBM, assembly lines or steel
plants . . . These are all forms of capital in the sense that they yield
income and other useful outputs over a long period of time.
"But I am going to talk about a different sort of capital. Schooling, a
computer training course, expenditures on medical care and lectures on the
virtues of punctuality and honesty are capital too in the sense that they
improve health, raise earnings or add to a persons's appreciation of
literature over much of his or her lifetime. Consequently, it is fully in
keeping with the capital concept as traditionally defined to say that
expenditures on education, training, medical care, etc. are investments in
capital.
"However, these produce human, not physical or financial, capital because
you cannot separate a person from his or her knowlege, skills, health or
values the way it is possible to move financial and physical assets while the
owner stays put."
It was the third consecutive year that University of Chicago professors won
or shared in the economic award -- last year it was Ronald Coase for
developing the concept of transaction costs, and the year before, Merton
Miller, Harry Markowitz and William Sharpe, for the beginnings of modern
portfolio theory.
All told, more that two-thirds of the prizes given since the award was
established in 1969 have gone to people who were either trained or did their
vital work at the Hyde Park campus. Yesterday Becker ascribed the record to
the University's high tolerance for heterodoxy.
SIDEBAR
NOBEL ECONOMISTS
WINNERS OF THE NOBEL MEMORIAL PRIZE IN ECONOMIC SCIENCE SINCE 1969.
1992 -- Gary S. Becker, US
1991 -- Ronald Coase, US (British-born)
1990 -- Harry M. Markowitz, William F. Sharpe, Merton Miller, all US
1989 -- Trygve Haavelmo, Norway
1988 -- Maurice Allais, France
1987 -- Robert M. Solow, US
1986 -- James M. Buchanan Jr., US
1985 -- Franco Modigliani, US
1984 -- Richard Stone, Britain
1983 -- Gerard Debreu, US
1982 -- George J. Stigler, US
1981 -- James Tobin, US
1980 -- Lawrence R. Klein, US
1979 -- Arthur Lewis, Britain; Theodore W. Schultz, US
1978 -- Herbert A. Simon, US
1977 -- Bertil Ohlin, Sweden; James Meade, Britain
1976 -- Milton Friedman, US
1975 -- Leonid Vitalievich Kantorovich, USSR; Tjalling Koopmans, US
1974 -- Gunnar Myrdal, Sweden; Friedrich August von Hayek, Britain
1973 -- Wassily Leontief, US
1972 -- John R. Hicks, Britain; Kenneth J. Arrow, US
1971 -- Simon Kuznets, US
1970 -- Paul A. Samuelson, US
1969 -- Ragnar Frish, Norway; Jan Tinbergen, Netherlands
SOURCE: Associated Press
Globe staff chart
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