- Person
- Gary Becker
- Lived
- 1930–2014
- Field
- Economics
- From
- American
The story
Gary Becker was born in 1930 in Pottsville, Pennsylvania, to a Jewish family and grew up in Brooklyn, where his parents, neither of whom had gone beyond the eighth grade, ran small businesses. After Princeton and a PhD at the University of Chicago, where Milton Friedman taught him that economic theory was a tool for understanding the real world, he joined Columbia University and the National Bureau of Economic Research in 1957.
His first project for the Bureau became the book Human Capital (1964). Economists had long spoken loosely of human capital, but Becker gave it rigorous foundations. He treated spending on schooling, on-the-job training and health as an investment: it costs money and time now, including the wages a student gives up, and it raises the person’s productivity and earnings later. That made it possible to calculate the return to a year of schooling or a training programme, and to explain differences in wages between workers and how earnings change over a working life.
The approach opened large fields of research. With his colleague Jacob Mincer, a fellow pioneer of the field, Becker trained a generation of labour economists at Columbia. Others applied the framework to economic growth, migration, health and the differences in skills between countries. When Becker received the 1992 Nobel Memorial Prize in Economic Sciences, the Royal Swedish Academy of Sciences called human capital perhaps his most noteworthy contribution and said it was hardly an overstatement to call it one of the most empirically applied theories in economics.
The idea also changed public language and policy. Governments and international organisations now describe spending on education, skills and health as investment in human capital, and they use the methods Becker formalised to estimate the payoff of schooling, vocational training and early childhood programmes. Critics argue that the theory underplays social barriers that limit who can invest, but its core insight, that people’s knowledge and health are a form of wealth, is now common sense.
Why it matters
Becker’s human capital theory gives governments and families a way to measure the payoff from education, training and health, and underlies much of today’s education and workforce policy.
About Gary Becker
Economist who applied economic reasoning to discrimination, education, crime and family life; his theory of human capital shapes how the world thinks about schooling and training. Nobel 1992.
Sources
- Press release: The Prize in Economics 1992 NobelPrize.org
- Gary S. Becker, Biographical NobelPrize.org
- Gary Becker Wikipedia
Another act of tikkun olam. This is part of tikkun olam, the Jewish idea of repairing the world, and every one of us can add to it.