Economic Imperialism

R&L: You are sometimes called an “economic imperialist.” What is meant by this?

Becker: That refers to my belief that economic analysis can be applied to many problems in social life, not just those conventionally called “economic.” The theme of my Nobel lecture, based on my life’s work, is that the horizons of economics need to be expanded. Economists can talk not only about the demand for cars, but also about matters such as the family, discrimination, and religion, and about prejudice, guilt, and love. Yet these areas have traditionally received little attention in economics. In that sense, it’s true: I am an economic imperialist. I believe good techniques have a wide application. Adam Smith and many others believed that as well.

On the other hand, my economic imperialism doesn’t have anything to do with crude materialism or the view that material status is the sum total of a person’s value. That view has much more in common with Marxist analysis.

R&L: Non-economists tend to deride economics for considering only economic motivation.

Becker: That’s true, but economic motivation can mean many things. I believe man is economically motivated in the sense that he is forward-looking–he tries to anticipate the consequences of his actions, and takes those consequences into account in deciding what to do. Such consequences influence the way he orders all aspects of life, including who he marries, whether he divorces, how many children he has, and so forth. It is, however, incorrect to think man is entirely motivated by selfishness and material gain. That is a notion I most emphatically reject.

R&L: How does your work complement traditional religious concerns?

Becker: Well, recently I’ve been doing research on how people’s values and preferences are formed, which has also been a concern of religious scholarship throughout history. Childhood experiences, and especially religious faith, have much to do with this. My long-running interest in the family would also be complementary, as would the topics of discrimination and prejudice in the marketplace.

Yet religion might also concern itself with even mundane areas of political economy. Research on the role of pressure groups and special interests, for example, should be of interest to anyone who cares about the process of political decision making, including those doing religious scholarship.

R&L: Is there an economics of religion?

Becker: Certainly, and I am trying to encourage people to work in this area more. There are many aspects to study. We need to know how people’s motivations are influenced by religion. We need to understand what motivates people to identify with one religion or another, how long they stay as members, and so forth. Even within the field called industrial organization, there is work to do. For example, is competition among different religious institutions good for religion and good for the public as a whole? All this can be studied with the techniques economists have developed.

R&L: What effect does prosperity have on religious sensibilities?

Becker: That’s an important question, but I don’t think I have much of an answer. In rich societies, the materialistic aspects of life, ironically, can play less of a role. Yet these same societies have access to lots of other opportunities, both with regard to religion and to religion’s substitutes, than poorer societies. It is another area that needs more study.

R&L: Your book, Economics of the Family, is the seminal work on the subject. What is the family’s role in the transmission of knowledge and values in society?

Becker: Even in modern societies, it plays the most important role in transmitting values and knowledge. Parents have access to their children from birth, and profoundly influence them in the crucial first fifteen years of life. You can see it in how children repeat the patterns of their parents–what political party they support, whether they smoke, whether they engage in crime. Some of these behaviors are genetic, certainly, and some environmental. But the influence cannot be denied. In addition, religious bodies and schools have significant influences.

R&L: American families changed when women entered the work force in such high numbers in the 1970s and 1980s. Was this caused by economics or by feminist consciousness?

Becker: The fundamental cause was economic, broadly understood. Higher wages for women, increased divorce, planned fertility, growth in service sector jobs that readily employ women, greater financial independence–all these led to increased participation. That, in turn, stimulated interest in the feminist movement. In short, feminist consciousness played a part but it was reinforced by economic concerns.

These days, the pressure on women, particularly educated women, to work is enormous. If an educated woman stays home to care for children, American culture makes her feel that she is doing the wrong thing. That is the pressure of feminism coming to bear. But working women and feminism don’t necessarily go together. In Japan and Hong Kong, for example, where women are increasingly working outside the home, feminist pressure has been rather weak.

R&L: This has undoubtedly affected family life.

Becker: Indeed. The most obvious consequence of women working outside the home is that they don’t have as much time for children. Families reduce the number of children they choose to have. In countries like Germany and Japan, the number of children is way below the number necessary to maintain the population. In the United States it is only slightly below.

In addition, parents spend much less time with the children they do have. Instead of traditional parenting, they substitute child-care facilities and other institutional arrangements. What are the consequences for children’s motivation, learning, and values? It’s still an open question how far that cuts. My belief is that the consequences are significant.

R&L: In another famous book, The Economics of Discrimination, you argue that discrimination carries certain costs. What do you mean?

Becker: Say a businessman has discriminatory preferences–that he doesn’t like hiring women or blacks or some other group. In a competitive marketplace, he must bear the costs of discrimination. For example, if he hires a high-wage white worker instead of an equally productive but lower-wage black worker, he forgoes profits that could accrue to the firm. The businessman may still decide to discriminate, but the stronger his prejudices, the higher the cost he must bear. Some economic systems and situations can hide these costs. And even a competitive market won’t eliminate discrimination. But the market will tend to reduce discrimination because companies that discriminate bear the cost.

R&L: Does civil rights legislation discourage discrimination?

Becker: If implemented correctly, such laws can impose an additional cost. That is, the discriminating employer not only has to bear the financial costs of passing up lower-wage workers, but he must also face the possibility of legal punishment. The real question, as with every piece of legislation, is: “How well have these laws worked in practice? Have they done what people hoped they would do?” Those are legitimate questions to raise.

R&L: What is your view of Richard Epstein’s controversial book, Forbidden Grounds?

Becker: It is a very thoughtful book, which also raises good questions. He stresses the difficulties of implementing civil rights legislation, highlighting the gaps between the promise and the practice. That doesn’t mean, however, that I therefore go along with his conclusion that there should be no civil rights legislation.

R&L: In your work on crime, you say crime is not an irrational act. What do you mean?

Becker: What’s bad for society is not always bad for certain individuals. Crime is not irrational to the criminal, because he thinks crime is beneficial to him. Even criminals try to be forward-looking. They consider: “How much will I gain compared with the likelihood I will be apprehended and punished?” Whatever the crime, money isn’t the only gain. That gain can also be vengeance or something sexual in nature. And there are also liabilities. From a public-policy point of view, crime can be reduced by increasing deterrents to crime, through punishments, through better policing, and through better jobs.

R&L: You have been variously described as a conservative, a liberal, a libertarian, and so forth. How would you describe yourself?

Becker: In my attitudes toward economic, political and social life, I don’t consider myself a conservative. I consider myself a European liberal in the older sense of the term. By that I mean someone who believes in individual freedom and individual choice, small-scale government, and in political power that is limited and decentralized. In short, I identify with the tradition of Lord Acton.