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If you like Gary Becker's story, you might also like:
Milton Friedman,
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John Hennessy,
Leon Lederman,
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Gary Becker
Gary Becker
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Gary Becker Interview (page: 3 / 9)

Nobel Prize in Economics

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  Gary Becker

We've had some increases in the minimum wage, but in a big city -- Los Angeles for instance -- because of the cost of housing, it's almost impossible to support a family, even in a small apartment, on a minimum wage. Even with the "welfare to work" programs, a living wage is out of reach for many people. In your view, how can we deal with that issue?

Gary Becker: Well there's the short run and the long run.

Long run, I think, the goal -- and I think it's a feasible goal -- would be to increase the skills of people at the lower end enough so they're not just at the minimum wage. Minimum wage is a low wage, six dollars an hour or so. You multiply that times 2000 hours a year, you're getting $12,000. That's a low wage for Los Angeles or any other expensive part of the United States. So the challenge is to increase their capabilities and skills so that they can earn a lot more than that. That's why the human capital focus puts a lot of emphasis on education, reforming education, improving education, increasing the access of education to people from modest backgrounds. Most kids who come from middle classes or rich families, they'll go to college, that's almost automatically expected with a few exceptions. But it's the kids from the lower end that we have to worry about, and who worry that they have good schooling, K to 12, and then those who are interested and capable will go on to some form of higher education. And if they do that, they'll get well above the minimum wage. Minimum wage now, it's a few percent only of the U.S. population. It's partly teenagers who are not yet finished with their career, partly people that don't have the skills. And the teenagers, well they'll eventually evolve into people above the minimum wage. They're not so much the problem. It's the people who will not get the education that gives them the capabilities to be earning a lot more than the minimum. That is where social policy, economic policy should be focused. And we can certainly achieve that goal. It's a question of concentrating the resources in the right way to do it. And if we do it, we'll have very few families, as opposed to teenagers who are at those low wage levels. That's what we advocate, what I advocate, and it comes directly out of my research in this area.

Gary Becker Interview Photo
You later turned your attention professionally to the issues of family. How did you think of applying economic theory to issues of divorce and family?

Gary Becker: My work on human capital got into issues of why different children have different opportunities. Some go on to college, some don't. Some drop out very early, some continue on, some are successful, some aren't. It seemed pretty clear to everybody who's thought about the problem, that it's something in the family that makes a difference. So I began to think about it more. I've taken it as given that these children are making these decisions, but I really want to trace it back some steps deeper, into what family they're in, and family choices.

I began to think more sporadically about family: Who marries whom, what matches you see, how many children people had -- an area I had touched on in a paper I did much earlier, but came back to that. How much they invest in their child, that is, effort and time, money, encouragement they put into the child. That directly looks at the educational issue. But then divorce was beginning to increase. Do families stay together? I had to talk about the divorce issue. Eventually I published this book that covered almost every aspect, in terms of broad issues, that the family deals with, from having children, from marrying before having children, to investing in your children, to divorcing, to care of elderly parents. All these issues I tried to bring together within a common framework. And it was the hardest thing I ever did, I mean mentally. It took enormous concentration. For a number of years I'd wake up at night, start working on it. I was very tired when the book was over. It took a year or two before I could really get much intellectual zest back to work on things. It took a lot out of me doing that book, and I felt it was an imperfect book. Family is such a huge subject that I certainly didn't feel I "solved" the family. But at the same time, I felt I had made progress in showing that one could use these tools to help illuminate some issues of the family, and was very satisfied about that, even though, again, when the book came out, the economists, the non-economists were skeptical. Even the Nobel Prize Committee, when they awarded me the Nobel Prize, they mentioned my work on discrimination very positively, my work on crime, which we haven't talked about. My work on human capital, those were all positive. But even they had to say that the family is still very controversial, this work on the family.

[ Key to Success ] Perseverance

What was so controversial about it?

Gary Becker: Let me make that clear, 'cause this is important.

I didn't mean that families only worried -- when people married -- how much money they could get out of the marriage. I mean, if I did that, then sure, money is important, but there are a lot of other things in marriage: affection, love, what have you. And so I tried to take account of all those type of variables, but do it in a way where I used economic tools of analysis. And by the tools of analysis, I meant that people were looking out for their interests, however broadly we define these interests. It could include, of course, altruism and concern for others and charity. But they were looking out for their interest, and they made decisions that made sort of comparisons between the benefits and the costs of their interests, however defined, and they choose the ones that maximize their well-being. That was the approach. Now, when suitably sort of qualified, the way I did it now, it doesn't seem like such an extreme approach, but for many people, that seemed antithetical to how they wanted to look at families, as sort of driven by emotion, driven by love, non-calculating. That's what I was going against, that type of consideration, and that's where the controversy came from. Are these important in marital decisions or divorce decisions or family-size decisions? That defined the controversy. I claimed they were. I tried to claim it not only theoretically, but by doing empirical statistical analysis, quantitative analysis, that demonstrated it was. Others felt I was just... some of them were angry, others just thought I was doing a -- more calmly -- I was off on the wrong direction, that this wasn't going to help with the family. That was the source of the controversy.

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This page last revised on Mar 31, 2011 18:30 EST
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