Behavioral Economics

One of the most influential contributors to behavioral economics, maybe even in all of economics, is Gary S. Becker. Becker's economic interests were solidified during his time at Princeton because he "wanted to do something for society". However, it was at the University of Chicago where Becker's work with the economic theory to tackle important contemporary problems led him to believe that economics had the power to unlocking important "mysteries" that other practices couldn't. This provided him the opportunity to write his controversial dissertation on discrimination, which was denounced by economists. However, Becker was different than most economists in that he believed that the definition of economics was less about the subject matter and more about the methodology of analysis, the economic approach, and he thought it was applicable to human behavior. Throughout his works The Economics of Life and The Economic Approach to Human Behavior Becker goes on to explain the economic approach.

Throughout the first chapter of The Economic Approach to Human Behavior, Becker begins by stating that most definitions of economics are insufficient. He believes that in order to fully understand economics, you must understand the economic approach. At the heart of the economic approach, maximizing behavior, market equilibrium, and stable preferences are the core characteristics. In terms of maximizing behavior, Becker assumes that most human beings are rational, profit maximizing participants of society. The economic approach also assumes that the existence of markets coordinates actions of different participants with varying efficiency to make them mutually consistent. Lastly, the assumption of stable preferences provides a foundation for generating predictions about responses to various changes and allows the analyst to prevent tedious explanations. One aspect that is not included in the economic approach is the assumption that information is imperfect, because it is expensive to acquire, to explain "irrational and volatile behavior". Becker determines that the economic approach does not consider irrationality, contentment with wealth already acquired, or convenient ad hoc shifts in values as something the it takes into account. Rather it calculates the costs, monetary or psychic, of pursuing an opportunity that reduces profitability.

As Gary Becker continued his illustrious career, he was approached by Business Week to write weekly columns for their magazine. Although an already established economist, Becker's biggest fear was of failure. After consulting his three friends Milton Freidman, Ted Schultz, and George Stigler, and his wife, Guity, he accepted and his collection of columns have been compiled in The Economics of Life. Throughout the first block of columns, Becker seems to emphasize that too much or primitive regulation on religion, fishing, telecommunications, disabilities, oil,