Economics of Life by Gary S Becker & Guity Nashat Becker

Economics of Life: From Baseball to Affirmative Action to Immigration, How Real-World Issues Affect Our Everyday Life (publ 1999)

"We do not identify with any political party in the United States since none takes a consistent position on whether individuals respond to incentives and know their own interests better than politicians and bureaucrats do," Gary S. Becker, Nobel Prize in Economics 1992

"Some intellectuals even expect politicians, voters, and readers to quickly accept cogent analysis that is stated clearly and forcefully. In our judgment, this claim is a very mistaken view of the impact of ideas on policies and beliefs. Political decisions are not mainly determined by a dispassionate evaluation of ideas and analysis, but by a pragmatic balancing of power among competing special and general purpose pressure groups. Ideas are often impotent when arrayed against powerful interests."

"The economic way of thinking, with its recognition that choices are sensitive to the costs and benefits of different actions, offers many insights into economic, social & political behavior. These insights are overlooked by persons who look at behavior from purely political, social, or psychological perspectives."

On: Do rich countries inherently have lower economic growth rates than developing countries?
"Rich countries that do not perform well should blame policies and behavior - not age and wealth. Their rate of growth will not slow if they avoid complacency and the perennial temptation to overregulate and control economic life."

"It is far easier to create bad public programs than to eliminate them once they have been around for a while. This old but frequently ignored law of political science has been called "the tyranny of the status quo," and it helps explain why even downright perverse government policies stubbornly survive and sometimes even expand."


k's notes:
(1) Highlights in bold and/or italic were added by me to capture and remember the essence.
(2) Author Gary Becker has not published another book since this one appeared in 1999. Unfortunately, it has major drawbacks:
- It is a collection of essays written for Business Week and, therefore, are too short to include actual data. References to others' research is documented and we are told why it is wrong. But the author's own research is not and so cannot be compared.
- The author likes to predict things like "the immense cost to business" of the Americans with Disabilities Act. Predictions are ridiculous when there is no follow-up work to refine the model based on actual data.
- Heavy slant toward companies, as expected in Business Week. While the authors rightfully claim no pressure to slant articles by Business Week, the authors were specifically chosen to write a Business Week column due to their slant toward business. Interestingly, the authors ignore this fact - that analyses are biased in both directions.
- Some interesting ideas in the book but, if you have read Freakonomics first, don't bother with this 1999 book. Although hailed as the first "freakonomic," Becker's work suffers greatly by the time periods he would select for studies, specific comparisons of regions of his own choosing, and assumptions of how people behave based on his lifetime (basically 1960-1990) experience.
- The only way to truly learn from this book is by doing or finding the follow-up data & research that tells us if his predictions came to pass - especially with the recent massive global trade increase and the current economic crisis. One simple example: Becker is positive that unemployment would go up 1-2% (from 5 to 7%) if the minimum wage was increased. Since his prediction, unemployment went down significantly due to economic growth even in the face of higher minimum wages, but unemployment is currently about 10% - well above anything Becker imagined. Rather obviously, increasing the minimum wage is only one small part of the health of companies. And, it's not worth raving about as a giant issue!