Becker’s project was to universalise economics. He claimed that the same logic explaining why a firm hires workers could explain why a parent invests in a child’s education.
Time became “human capital.”
Love became a form of “investment.”
Crime became an outcome of a “cost-benefit analysis.”
By treating every decision as rational optimisation, Becker eliminated the distinction between economic and social behaviour. Everything became a market. Everyone became an entrepreneur of the self.
It was, in its way, a brilliant intellectual move, for which he won the Nobel Prize, but it was also a profoundly corrosive one.
The Becker Problem is that he was right but I don’t like the answer.
Well, there’s a thing, eh?
Everything is economics.
If you define it as the allocation of scarce resources that have alternative uses, the most scarce and valuable of all, with the most alternatives, is your own time and energy. Thus however you decide to use it, the opportunity costs in terms of all the other possible ways you could have used it but didn’t are vast. You’d better make sure you’re using it in the most valuable way (to you) that you can.
So go on, be Chief Rabbi. You may be as intelligent as Einstein but you won’t discover the principle of General Relativity because you’ll have spent your time and energy studying the Torah instead. Your choice, and you paid the opportunity costs of doing so.
ISTM the standard mistake is to assume all choices are rational. Obviously they’re not, but they are what appear to bring the most benefit to the decision-maker at the time. If people think getting completely pissed is better than spending that time and money on something else it’s because they prefer getting completely pissed at that time and place than doing anything else. They perceive they’ll be better off doing that, and sometimes they’ll be right.
And so parents, simultaneously rationally, instinctively and intuitively, educate and socialise their children and teach them how to study because clocks don’t go backwards, that time won’t come again, and not using that time and energy in this way has much higher opportunity costs, although they’re mostly in the future.
If you look, you’ll see that humans are not the only species that behave in this way. All living creatures do. But somehow this insight seems to be beyond most people.
“Everything is economics.”
It is more accurate to say ‘everything can be seen as economics’. Different levels or types of explanation can be applied to the same phenomenon without necessarily being mutually exclusive. So there can be economic, psychological, biological, etc explanations of why Fred did X.
Indeed, Theo, although that’s also saying not all of economics is monetary, or even transactional, which doesn’t invalidate my opening sentence. Time only goes one way, and however you choose to spend yours it ain’t coming back again.
“God is dead.” — Fred
“Fred is dead.” — God
You’re seeing economics as something separate. Economics is human interaction at a conscious level. It includes psychological.
He won the counterfeit Nobel Prize.
Mind you, Obama’s winning a Nobel Prize reminds that two of the real ones are shonky as hell.
Both Lit and Peace could be OK but they are at the whim of the buggers in Sweden & Norway. I guess the guys who choose for the Physics prize don’t get to influence Lit & Peace, more’s the pity.
This is a childish perspective on things, and there is almost certainly more ruin from it than accepting reality. People have a perspective on “evil” that comes from dinner parties and movies.
“Crime became an outcome of a “cost-benefit analysis.”
Which it is. Various measures introduced into banks cut bank robbery because the haul fell. The breathalyser cut drinking and driving. Football hooliganism was ended by the government allowing CCTV footage to be used in evidence.
As Norman observes, it’s not simple, purely rational. If you’re a retard, you might not do the sums on bank robbery.
There’s a certain amount of rationality to the holocaust. Wartime caused a fall in available food, as did a couple of poor harvests. You have too many mouths to feed, what do you do? Well, you could have lots of people starving on average, or you get rid of one group. And what do you do with that group? Kill them all? Well, no. You kill the “useless eaters”. You kill small children and the elderly and disabled on arrival. The fit and capable Jews are used as slave labour, until they’re no longer productive and then you kill them. It’s why sending kids off to Auschwitz or talking about racism or hatred is pointless. If there had been enough food around, the Nazis wouldn’t have bothered. It’s barbaric, sure, but desperation gets you to barbarity. It’s why I loathe the “organic food” people, because that’s where organic food leads you. Not to some hippy wonderland but food shortages. And when people can’t easily get food, they will commit barbarous acts to get it.
As Norman observes, it’s not simple, purely rational. If you’re a retard, you might not do the sums on bank robbery.
There was a case discussed on here some years ago that perfectly illustrates the point. Some thieves spent a weekend tunneling to a cash machine that didn’t have much money in it. Tim did the calculation and what they got was less than the minimum wage and for that they got prison sentences.
Ah see, I know a little about this having worked in retail banking.
Weekends were a bit of a squeeze with cash machines. The machine gets filled by a bloke from a security company turning up with locked metal trays full of cash that he pushes into the back. Simple operation, branch manager opens up the back of the machine he pushes it in, action is logged.
The problem is that after 12pm on a Saturday there’s no way to top it up. Branch is closed, no-one to open the back. Saturday afternoon and evening is a big dent. The cash dwindles, you fill up Monday. But you could get big shopping days or some other reason and machines empty by Sunday afternoon.
There was a Tales Of The Unexpected with half the cast of Last of the Summer Wine which had nearly exactly this exact plot. Long weekend, tunnel in from next door, find all the cash gone for a big bank holiday shopping rush.
I recall advice (Sun Tzu? Confucius??) to the Chinese Emperor on how to deal with a famine affecting two provinces. Pick the one that has been most loyal (and if you can’t decide just flip a coin) and send troops to the other to collect all their food supplies and give it to the loyal province. The people of the former province will bless your memory for generations, and the people in the latter don’t matter, because they’re all dead.
We are mammals, not roaches.
Ants, rather… Cockroaches are solo artists and relatively smart… They have to be…
The problem with Becker is that he applies economic theory on Sociology™ , of *his* age no less…
He never let go of the mechanistic approach to Humanity™ which was all the Vogue up to the ’80’s-ish, and I , as a biology student, got …inflicted… with his theories as part of my Ethology ( nothing to do with “ethics” , but behaviour ) lectures.
Holes you could drive a russian tank platoon through in his basic premises as seen from the viewpoint of a biologist.
The biggest problem with his theories is that he (still) extrapolates from the concept of Rational Man™, when even in the 90’s it was already becoming very clear that Man is anything *but* Rational in many cases.
Most notably when it comes to offspring, and choices you make around them.
Women are hardwired to get them, and males are hardwired to try and sire them. Regardless of personal cost. That’s what Teen/Adolescent hornyness is *for*.
If we weren’t hardwired that way, and were clasically Rational, we’d never even entertain the notion of saddling ourselves with a literal parasite sucking up all our time and resources for some 2 decades. or at least 10 years in the age you could actually put them to work..
Becker *may* work on companies, but his mojo doesn’t work on people. Because people aren’t Rational™.
Gamecock thinks everyone is rational to themselves. It’s the others who have a problem.
Now that is one opinion I fully agree with….
That’s very true. I hadn’t thought of biology that way in connection with economics. The responses that are wired in on a genetic level. Although I’ve always included it in “People will seek to maximise what they perceive as their personal advantage” Because the wired in stuff will be personal advantage. What can trip that response can be very wide
Personal advantage to a young man is a hot bird. To the hot bird, a breadwinner for the kids. This is why sex is pleasurable: it’s an excellent incentive to do it.
To the pair of them, instinctively, personal advantage then becomes bunch of kids (including spares for child mortality) able to keep the family going and provide for it. As you say, not only does none of this require rationality, it positively gets in the way.
I’ve no doubt it’s rational. But rationality is particular to a person & for that person a time. Most decisions look rational when you make them. To you. Irrational decisions? When you’re taking someone else’s advice. And even that decision is rational. Or you don’t.