Extending the theoretical lenses of behavioral economics through the sociological prisms of Gary Becker

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Abstract

Becker stands out as a Godfather of conventional economics because of his reliance on prices, income, and rationality as a means of analysing and predicting choice behaviour. He also accepts, for modelling purposes, the assumption that individuals make decisions after considering the consequences of these decisions. Hence, there can’t be any regret. But Becker also maintains that traditional economics is flawed, often generating highly misleading analytical predictions. However, he rejects the heuristic and biases approach to behavioral economics which he equates to a psychological approach to economic issues, focusing on irrationality in decision-making. Instead, Becker introduces key sociological variables as core determinants of choice, taking us well beyond the traditional economic focus on price and income In this approach to modelling, choice behaviour is rational or sensible and smart. One need not revert to referring to behaviour that can’t easily be explained by prices and income as biased or irrational. Becker also recognizes the importance of individuals’ preferences changing through their interactions with their socio-economic environment. I argue that Becker’s approach to decisionmaking contributes to enriching a behavioralist approach to modelling choice behaviour. It is particularly well situated in the approach to behavioral economics taken by Simon, which was heavily interdisciplinary, going well beyond psychology and economics, who also challenged a narrow economic understanding of the determinants of choice behaviour. I argue for a modelling framework that integrates aspects of Becker’s research through a critical assessment of his contributions.
Original languageEnglish
Pages (from-to)45-51
Number of pages7
JournalJournal of Behavioral Economics for Policy
Volume2
Issue number1
Publication statusPublished - 2018

Keywords

  • Becker
  • personal and social capital
  • rationality
  • smart decision-making
  • identity economics

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