By Russ Roberts
I really enjoyed speaking with my old teacher, Eddie Lazear, about Gary Becker.Becker was a huge part of my economics education. In recent years I’ve moved away from my Chicago roots and more toward a Smithian/Hayekian approach. What does that mean? It means less emphasis on presuming rationality and a lot less confidence in empirical analysis using multivariate regression analysis and other sophisticated statistical analyses.
When I was on the job market, one of my favorite moments was at Virginia Tech. George Stigler told me that the people there liked you to stand up to them and challenge them back when they challenged you. Gordon Tullock was at Virginia Tech at the time. At my presentation, he said that my thesis didn’t seem very “Chicago.” I said it was: simple assumptions, testable implications and then empirical testing of the implications. Ah, said Gordon, but how do you know if your assumptions are simple. Easy, I said. If you can understand them Professor Tullock, they must be. The crowd roared, especially the younger professors, happy to see Gordon get a taste of his own medicine. Gordon smiled. Looking back on the incident, I’m a bit horrified at my cheekiness, but Virginia Tech did give me an offer.
I tell the story because my response to Gordon really captured the methodology I was trained in, the methodology of Friedman and Sherwin Rosen and Sam Peltzman, and Stigler and the Chicago School of that time. But maybe more than anyone it was the methodology of Gary Becker. Theory, implications, empirical test. And not particularly fancy theory. And certainly not theory for theory’s sake.
Working at George Mason, I slowly moved away from that approach because I came to believe that the empirical part is not so reliable. I’m much closer to Hayek’s “Pretence of Knowledge” Nobel Lecture than I am to my early training at Chicago.
Talking to Eddie Lazear reminds me of how much Becker I still have in me–his incredible respect for the power of the economic way of thinking. So while I’ve lost faith in the empirical part, the first part is still bred in my bones. I still think of the world as something to understand through the relentless application of market forces and some rationality.
Commenter JW was surprised that Coase did not make my list of the five most influential economists of the 20th century. You could easily make the case that Coase was as influential as Samuelson. And Coase would certainly be one of my three favorite economists of the 20th century with Friedman and Hayek.
Finally, commenter Steven wonders why losing your job isn’t a sufficient incentive to get sports refs to be honest and avoid bribes from gamblers. Becker’s point is that the more the job pays, the more there is to lose. So the incentive is larger and presumably more effective.