Interview with the most influential economist of our time

Lunch with the FT: It’s the humanity, stupid -- by Tim Harford

The Chicago shopping mall’s parking lot is packed. The white-haired grandfather pulls into a space with a 30-minute limit, not nearly long enough for the leisurely lunch we have planned. “We should be fine here. I don’t think they check that carefully,” he explains in gentle but distinctively Brooklyn tones. I look across at him and ask, “Was that a rational crime?” He doesn’t hesitate for a second. “Yes it was.”

The theory of rational crime is one of half a dozen explosive ideas that won Gary Becker the Nobel prize in economics. The theory struck Becker 40 years ago, when he was running late to examine a doctoral student. With no time to find a free space, he quickly weighed the cost of paying for parking against the risks of being fined for parking illegally. By the time he arrived at the examination, the then-unfashionable idea that criminals would respond to the risks and costs of punishment was taking shape in his mind. The unfortunate student was immediately asked to discuss. (He passed, and Becker did not get a ticket.)

Becker’s approach to problems does not seem to have changed, with costs and benefits never far from his mind. As we head towards La Petite Folie, a French restaurant concealed inside the mall, he devotes some time to explaining the rationale behind choosing this particular eating place. He had originally suggested the University of Chicago’s Quadrangle Club, where I would have been able to observe Becker’s academic colleagues in their natural environment. In the end, though, the quality of the food outweighed all other factors: “I thought we should at least have a decent meal,” the professor says.

Becker introduces me to the restaurant’s proprietor, Mary, gives me the choice of seats and politely offers advice on the menu. Dressed in jacket and tie, and the soul of unforced politeness, his gentlemanly behaviour could hardly be more at odds with the horror his ideas have often produced. He’s not worried by his reputation as bogeyman economist.

“My whole philosophy has been to be conventional in things such as dress and so on. But when it comes to ideas, I’ll be willing to stick my neck out: I can take criticism if I think I’m right.”

He does think he’s right, and the criticism has never been far away. Initially, it came from other economists. Frank Knight, a founder of the so-called Chicago school of economics, persuaded a journal editor not to publish Becker’s early paper on the incentives behind how democracies reach decisions. (The subject later became “public choice theory” and produced a Nobel prize for another economist, James Buchanan.) Becker’s PhD thesis was on discrimination - how to measure it and what effects it might have on the wealth of both the discriminators and their victims. It was thought to be no fit subject for an economist, and the Chicago faculty persuaded a sociologist with little interest in Becker to oversee his work. Becker later struggled to publish his book, The Economics of Discrimination.

The battles for acceptance went on for many years. Before he was 30, Becker presented to the American Economic Association his then-new idea of “human capital” (that people would invest in their own education as they might invest in shares, mindful of the rate of return). He recalls that the response was “absolutely outraged”. Now, he says, “it’s hard to believe human capital was once controversial. For politicians, if they don’t mention the term human capital they don’t win.”

We have already asked the waiter to give us more time as the conversation ranges from London’s congestion charge (”they’ve done what I’ve always said should be done”); nuclear energy (Becker is in favour) and the pros and cons of blogging. Becker is also curious to hear from me about London and journalism.

The waiter tries again after a decent interval. Becker chooses the scallops and recommends seafood, but I am tempted by the steak. I press him to have some wine. “I’ll have a glass. No more than a glass for me.” Then we discuss whether to have French or Italian mineral water. I vote Italian. He concurs: “I like Italy. I like the Italians. They’re easy.” It is perhaps the only time in our conversation that he chuckles.

Becker wants a clear head for tennis that afternoon. He is 75 and looks it, with fine white hair and translucent, heavily lined skin, but he moves like a younger man. When I arrived at his home to take him up on his offer of a lift to the restaurant, I could see his silhouette coming down the stairs at a fair clip. He drives confidently. In the summer, he moves his work to Cape Cod and often swims in the ocean. Becker has always loved sport, but that, and his family, seem to be his only distraction from work. “I don’t like small talk too much, so I don’t try to get involved in that.” It is clear from even a few minutes conversation that what really motivates Becker is the world of ideas.

If Becker has a single guiding principle, it is that the economic way of looking at behaviour applies more broadly than originally thought, and people make rational choices about crime, marriage, parenthood, education, even drug addiction. Economists have been suspicious of his call for a much broader set of values to be taken into account, while non-economists accuse him of reducing emotional decisions to monetary ones. I suggest to him that this is a straightforward misunderstanding and most people have not realised that economics is not the study of money.

“You’re absolutely right. People have completely misunderstood, probably never read anything I wrote. Obviously money is important, but what I mostly study is non-monetary - discrimination, marriage. Nowhere in anything I’ve ever written does it say that people get married mainly or solely for money.”

All the same, Becker’s ideas can seem cold, even to other economists. He gives the impression of being an extremely cerebral man. “I have some novelist friends who will notice every individual characteristic. I’m very poor at that. But I think I’m a pretty good observer - in my mind - of social and economic behaviour. I think I get a lot of my stuff from that talent.”

And so we discuss the rationality of giving money to beggars despite trying to avoid them. Then he outlines a new model of suicide that he’s working on with his friend and fellow blogger, Judge Richard Posner, the economist and legal scholar. The two are trying to distinguish between a failed suicide and a successful cry for help. He shows no inclination to soften his analysis with the slightest hint of political correctness. When we discuss my “Dear Economist” column - in which his work appears frequently - he ignores my suggestion that the column is half in jest. “Some people might say it’s far-fetched. But I like the applications I’ve seen.”

After initial fierce resistance within the profession, and equally fierce support from Chicago school greats such as Milton Friedman, Becker is now regarded as one of the most influential economists of the 20th century - arguably, the most influential of all. Becker’s colleague at Chicago, Steven Levitt, recently studied which economists were inspiring empirical research in the leading journals. Becker was ahead by a landslide in the raw number of citations, and unlike rivals who tended to produce just one or two famous ideas, he has published influential papers every decade for 50 years.

“There was a sea change. I began to notice it in the 1970s and 1980s. A lot of the younger people coming out of Harvard, MIT and Stanford were very interested in what I was doing, even though their faculty were mainly - not entirely - opposed to the sort of stuff I was doing.”

Becker doesn’t show any sign of slowing down. Along with the paper on suicide, he has been working on the individual response to the fear of terrorism, the macroeconomic impacts of larger populations, and why evolution might produce people who always compare their wealth to that of others. He teaches more classes at Chicago than he’s ever done, and although he recently stopped writing his monthly column for Business Week after nearly 20 years, he now writes an essay every week on a blog with Posner. Posner was once a possibility for the US Supreme Court (”I don’t think there’s anyone, including [Chief Justice] Roberts, on the Supreme Court who’s anywhere near the equal of Posner”) but Becker now tips him for a Nobel prize in economics.

It is 14 years since Becker himself was roused from a flu-induced slumber by the call from Sweden. The prize - long-predicted by then - provoked two concerns. One was that his work would stop making people feel uneasy. “I’m a little bothered by that. It’s fine to have it accepted and I’m gratified by that. But I also think you’ve got to try to keep doing work that’s controversial, that’s not accepted.”

The second worry was that, like most Nobel laureates, Becker would stop doing serious work. The possibility seems remote. “I still like what I’m doing. That’s what keeps me going. Whether I’m as good at it as I used to be is open to question, but I still think I have ideas, I can make contributions, I think some of them are interesting and I enjoy doing it. I like having a busy schedule, I’ve been blessed with a fair bit of energy, I can manage all these things, and it’s my main interest in life, my work - so it can continue.”

Becker has eaten slowly, more interested in the conversation than the food. We skip dessert and coffee, although we’ve been sitting together for nearly two hours. As we get up to leave, a young fan approaches Becker to profess his admiration for his columns in Business Week. Becker responds graciously before holding the door open for me to leave the restaurant.

Then, despite my protestations, he waits on the sidewalk with me until my taxi arrives. He shakes my hand, walks away, but turns back immediately to help me as someone else tries to take the cab. Order restored, with a smile, he strolls off into the sunny Chicago afternoon.

La Petite Folie, Chicago
1 x steak with gratin potatoes
1 x scallops with capellini
2 x glasses wine
1 x bottle San Pellegrino water
Total: $61.03