Becker: The Economic Approach to Human Behavior

Becker, G., 1976. The Economic Approach to Human Behavior, University of Chicago Press.

Ch. 1: The Economic Approach to Human Behavior

“The following essays use an ‘economic’ approach in seeking to understand human behavior in a variety of contexts and situations. Although few persons would dispute the distinctiveness of an economic approach, it is not easy to states exactly what distinguished the economic approach from the sociological, psychological, anthropological, political or even genetical approaches” (3).

“Economics is said to be the study of (1) the allocation of material goods to satisfy material wants, (2) the market sector, and (3) the allocation of scarce means to satisfy competing ends” (3).

The first definition, according to Becker, is wrong because the logic of economics can be applied much more broadly than simply material goods. The third definition is the most broad, and does more to identify the nature of a problem to be solved and little to identify what it is that economists do. “All of these definitions of economics simply define the scope, and none tells us one iota about what the ‘economic’ approach is” (4). Becker argues that the economic approach, or method, is what makes this study unique, and not the subject-matter in question.

“Everyone recognizes that the economic approach assumes maximizing behavior more explicitly and extensively than other approaches…Moreover, the economic approach assumes the existence of markets that with varying degrees of efficiency coordinate the actions of different participants…Prices and other market instruments allocate the scarce resources within a society and thereby constrain the desires of participants and coordinate their actions. In the economic approach, these market instruments perform most, if not all, of the functions assigned to ‘structure’ in sociological theories…The preferences that are assumed to be stable do not refer to market goods and services, but to underlying objects of choice that are produced by each household using market goods and services…The combined assumptions of maximizing behavior, market equilibrium, and stable preferences, used relentlessly and unflinchingly, form the heart of the economic approach as I see it” (5).

He then goes on to explain why these core assumptions of the economic approach are appropriate. Becker also explains how the economic approach can be applied to really any problem facing the social sciences. That being said, however, he ends this chapter by claiming that the economic approach provides a certain kind of knowledge about the world and that other approaches are quite useful in explaining different kinds of human behavior. In the end, there is a role for approaches that theorize actors to be rational maximizers with stable preferences operating in equilibrium seeking markets.