Excerpts From The Economic Way of Looking at Life
Excerpts from “The Economic Way of Looking at Life”, Nobel Lecture, December 9, 1992 by GARY S. BECKER …
(Excerpt 1)
1. The Economic Approach
My research uses the economic approach to analyze social issues that range beyond those usually considered by economists. This lecture will describe the approach, and illustrate it with examples drawn from past and current work.
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The analysis assumes that individuals maximize welfare as they conceive it, whether they be selfish, altruistic, loyal, spiteful, or masochistic. Their behavior is forward-looking, and it is also consistent over time. In particular, they try as best they can to anticipate the uncertain consequences of their actions. Forward-looking behavior, however, may still be rooted in the past, for the past can exert a long shadow on attitudes and values.
Actions are constrained by income, time, imperfect memory and calculating capacities, and other limited resources, and also by the available opportunities in the economy and elsewhere. These opportunities are largely determined by the private and collective actions of other individuals and organizations.
Different constraints are decisive for different situations, but the most fundamental constraint is limited time. Economic and medical progress have greatly increased length of life, but not the physical flow of time itself, which always restricts every one to twenty-four hours per day. So while goods and services have expanded enormously in rich countries, the total time available to consume has not.
Thus, wants remain unsatisfied in rich countries as well as in poor ones. For while the growing abundance of goods may reduce the value of additional goods, time becomes more valuable as goods become more abundant. Utility maximization is of no relevance in a Utopia where everyone’s needs are fully satisfied, but the constant flow of time makes such a Utopia impossible. These are some of the issues analyzed in Becker [1965], and
(Excerpt 1)
1. The Economic Approach
My research uses the economic approach to analyze social issues that range beyond those usually considered by economists. This lecture will describe the approach, and illustrate it with examples drawn from past and current work.
.
.
.
The analysis assumes that individuals maximize welfare as they conceive it, whether they be selfish, altruistic, loyal, spiteful, or masochistic. Their behavior is forward-looking, and it is also consistent over time. In particular, they try as best they can to anticipate the uncertain consequences of their actions. Forward-looking behavior, however, may still be rooted in the past, for the past can exert a long shadow on attitudes and values.
Actions are constrained by income, time, imperfect memory and calculating capacities, and other limited resources, and also by the available opportunities in the economy and elsewhere. These opportunities are largely determined by the private and collective actions of other individuals and organizations.
Different constraints are decisive for different situations, but the most fundamental constraint is limited time. Economic and medical progress have greatly increased length of life, but not the physical flow of time itself, which always restricts every one to twenty-four hours per day. So while goods and services have expanded enormously in rich countries, the total time available to consume has not.
Thus, wants remain unsatisfied in rich countries as well as in poor ones. For while the growing abundance of goods may reduce the value of additional goods, time becomes more valuable as goods become more abundant. Utility maximization is of no relevance in a Utopia where everyone’s needs are fully satisfied, but the constant flow of time makes such a Utopia impossible. These are some of the issues analyzed in Becker [1965], and