Abstract
I waited in an anteroom on an unseasonably hot October morning while Gary Becker’s secretary typed away. Like all the offices housing the Chicago economics department, the room is shabbily comfortable. Professor Becker walks in and is reminded of a staff seminar later that day. As the secretary recites the title of the scheduled paper, Gary Becker’s eyes involuntarily roll. I can easily relate to that. It is the “Life’s too short to listen to a yet another incredibly narrow paper on arcane techniques without any clear economic applications.” Many of us reach that age, only the timing varies from one individual to the next.
This is a preview of subscription content, log in via an institution.
Buying options
Tax calculation will be finalised at checkout
Purchases are for personal use only
Learn about institutional subscriptionsNotes
- 1.
The Cowles Commission was established in 1932 by Alfred Cowles, president of an investment counseling firm who also underwrote the founding of the journal Econometrica. Its initial home in Colorado Springs proved too removed from academic activities. The Commission moved to Chicago in 1939 and remained there until 1955. Strong ties developed between the Commission and the University of Chicago, Department of Economics. Jacob Marshak was not only the Director of the Commission (before giving way to Tjalling Koopmans) but was also a member of the Department. Chicago academics holding dual appointments in these early years included Joel Dean, H. Gregg Lewis, Jacob Mosak and Oscar Lange. They were later joined by others, such as Don Patinkin. However, relationships between the Cowles Commission and other members of the Department of Economics (like Milton Friedman) were not so cordial. George Stigler, writing to his friend Milton Friedman (December 1947), describes Colin Clark as being someone who “would be marvelous in infuriating the Cowles boys, although probably not your equal” (Hammond, J. Daniel and Claire H. Hammond (2006) Making Chicago Price Theory. London: Routledge, p.73). During this Chicago sojourn, Milton Friedman mounted opposition that nearly reached the level of a guerrilla campaign against the Commission. In 1955 the Cowles Commission relocated to Yale University. For those interested in its sojourn in Chicago details are available in Hildreth, Clifford (1986) The Cowles Commission in Chicago: 1939–1955. New York: Springer Verlag.
- 2.
Gary Becker arrived as a graduate student at Chicago in the fall of 1951. After three years of graduate school he was appointed assistant professor in the Department. He accepted a position at Columbia in 1957.
- 3.
In some ways, Otto Eckstein (1927–1984) was the antithesis of his friend Gary Becker, being the very model of those post-war economists who moved so easily between academia, government and the corporate sector. Among a number of government posts, he served as a member of the Council of Economic Advisors (1964) alongside Walter Heller and Gardiner Ackely. In the late 1960s he co-founded Data Resources Inc. to provide econometric forecasting services to corporate clients. When he sold to McGraw-Hill in 1979 his shares were worth $20 million. From 1975 he served as Paul M. Warburg Professor at Harvard University. He was a registered Democrat and moved in those circles. Gary Becker, during his lifetime or even after, would never be mistaken for a registered Democrat nor was he ever inclined to move in such realms.
- 4.
The paper appeared in 1951 as “The Division of Labor Is Limited by the Extent of the Market”, Journal of Political Economy 59(2): 185–93.
- 5.
The Theory of Competitive Price (1942) New York: Macmillan extended Stigler’s exploration of economics only through perfect competition. He later expanded this base to include other market possibilities in The Theory of Price (1946) New York: Macmillan. This version went through four editions with the fourth (1987) perhaps encouraged by the afterglow of Stigler’s Nobel Prize. Becker would have been a freshman at Princeton in 1948. Why he read The Theory of Competitive Price instead of The Theory of Price must remain a mystery, though of only trivial import.
- 6.
Becker completed his dissertation under Milton Friedman with a pioneering study focused on the economics of discrimination. It was soon afterwards published by the University of Chicago Press. Gary S. Becker (1957, 1971, 2nd ed.) The Economics of Discrimination. Chicago, University of Chicago Press.
- 7.
Stigler was the first to hold the Charles R. Walgreen Professorship of American Institutions. In 1958 it had an attached salary of $25,000, unheard of in those days. The chair also came equipped with ample research funds which enabled Stigler to provide inducements for rising young lights in the profession to come to Chicago.
- 8.
The paper referred to is “De Gustibus Non Est Disputandum”, American Economic Review. 67(1): 76–90. The original referee report of what would become a seminal paper was mixed.
The referee and I have read your paper, “De Gustibus Non Est Disputandum”, subtitled “There’s no arguing over differences in the household production functions.” The referee and I like the paper, but its unfulfilled claims and self-congratulatory tone offend his sense of modesty and its size offends my sense of economy. The most interesting and original part of the paper is the section on advertising. The other sections are weaker either because they do not appear to generate any conceptually refutable hypotheses (addiction, habits, and fads) or as in the case of time preference and search theory, they are so far removed from the original premise (behaviour which had been rationalized by changes in taste). (Letter from the AER editor to Gary S. Becker and George J. Stigler, April 26, 1976.) (Letter located in George Stigler Papers, Special Collections, University of Chicago Library, Box 20/De Gustibus)
- 9.
Gary Becker refers to his 1965 paper, “A Theory of the Allocation of Time”, The Economic Journal 75 (299): 493–517.
- 10.
This appears in the 1963 collection of essays, The Intellectual and the Marketplace, and Other Essays. New York: Free Press of Glencoe.
- 11.
Among other work, Gary Becker may be referring to such seminal works as his 1974 paper, “A theory of social interactions”, Journal of Political Economy 82(5): 1064–93 as well as such later works as a 1986 publication with Robert J. Barro, “Altruism and the Economic Theory of Fertility”, Population and Development Review 12 (Supplement): 69–76, or a later article in 1988, “Altruism in the Family and Selfishness in the Market Place”, The Journal of Political Economy 96(4): 675–700.
- 12.
Jacob Viner (1892–1970) along with Frank Knight were both key figures in the first Chicago School of economics which flourished during the interwar period. He remained at Chicago from 1919 to 1946 before leaving for a position at Princeton. He was most noted for his approach to trade theory though also possessing an almost encyclopaedic knowledge of the History of Economic Thought. Through his graduate course on price theory he ultimately influenced the thinking of such distinguished economists as George Stigler, Milton Friedman, James Buchanan, Don Patinkin and many others.
- 13.
The article appeared as “The Theory of Economic Regulation”, Bell Journal of Economics and Management Science 291): 3–21.
- 14.
Daniel Kahneman and Amos Tversky (now deceased) are two psychologists who are largely credited with helping to formulate behavioral economics as a legitimate alternative to the sort of rational decision maker at the center of standard economics. A seminal collaboration of the two appeared in a 1979 article, “Prospect theory: An analysis of decisions under risk”, Econometrica 47(2): 313–327. Kahneman was awarded a Nobel Prize in 2002. He highly influenced the work of Richard Thaler who later went on to become one of the leading lights of behavioral economics.
- 15.
However his 1970 book with James Kindahl, The Behavior of Industrial Prices (New York: Columbia University Press) is based on survey work of that type.
- 16.
The article referred to appeared in 1991 as Gary Becker accurately notes as “A Note on Restaurant Pricing and Other Examples of Social Influences on Price”, The Journal of Political Economy 99(5): 1109–1116. In miniature, this is a gem that perfectly demonstrates the Chicago approach. It also provides a quick guide to how Becker analyses a given problem. It’s an article well worth tracking down.
- 17.
We are discussing their first collaboration which appeared in 1974 as “Law Enforcement, Malfeasance, and Compensation of Enforcers”, Journal of Legal Studies 3(1): 1–18. In the discussion it may sound as though I am trying to flatter. My admiration for the paper is quite sincere. It is a very interesting article whether or not you are ultimately convinced by it. Of their two collaborations, I would be willing to argue that this is the superior one.
- 18.
See the article that came out two years later in 1976 as “The Sizes of Legislatures”, The Journal of Legal Studies 5(1): 17–34.
- 19.
Edward Lazear is often considered to have pioneered the study of personnel economics. He was the founding editor of the Journal of Labour Economics. Lazear served at Chicago as Professor of Urban and Labor Economics between 1985 and 1992, before moving to the Graduate School of Business at Stanford University. In 2006 he was appointed to The Council of Economic Advisors. One of his most widely cited papers written with fellow Chicago habitué Sherwin Rosen appeared in 1981 as “Rank Order Tournaments as Optimum Labor Contracts”, Journal of Political Economy 89 (5): 841–64. Gary Becker refers to his paper on mandatory retirement which appeared several years after the Stigler/Becker collaboration (Lazear, Edward (1979) “Why Is There Mandatory Retirement?” Journal of Political Economy 87(6): 1261–1284).
- 20.
This article appeared only after his death in 1992 as “Law or Economics?” Journal of Law and Economics 35 (October): 455–68.
- 21.
George Stigler was awarded a Nobel Prize in 1982 partially in recognition of his essential work on the economics of information. Two key papers are the one that he produced in 1961, “The Economics of Information”, Journal of Political Economy 69(2): 213–25, followed by another in 1962, “Information in the Labor Market”, Journal of Political Economy 70(5, pt.2): 94–105. The former paper is by far the more influential of the two.
- 22.
Becker refers here to a very critical review article on the Handbook of Industrial Organisation which appeared in February 1991 as “The Handbook of Industrial Organization”, The Journal of Political Economy 99(1): 201–217. George Stigler could have easily read a submitted copy in 1990.
- 23.
The reference here is to Oliver Williamson (1932–) who advanced a particular use of the idea of transaction costs in his work in Industrial Organization. He was awarded a Nobel Prize for these advancements in 2009. Williamson championed the importance of a type of behavior he labelled opportunism, or self-interest with guile. Asymmetric information allowed the individual with information to use that advantage to his or her self-interest. Stigler wasn’t impressed. In a letter (March 17, 1981) to Douglas North commenting on his work, Theory of Institutional Change George Stigler noted: “There is evidence of a similar if lesser flirtation with opportunism, an even more faddish notion.”
- 24.
Edward Mason (1899–1992) spent his career at Harvard, being awarded a PhD in 1925 under the guidance of Frank Taussig and teaching there for 46 years until his retirement in 1969. Along with Joe Bain in the 1930s and 1940s he developed the Structure, Conduct, Performance approach to Industrial Organization which rested heavily on the case-study method. This form of analysis became the standard for research in this field only to be supplanted by the Stigler-inspired approach that transformed Industrial Organization into a form of applied price theory. Mason’s approach was the very antithesis of what for George Stigler was the essence of economic theory. Stigler’s response was to largely dismiss such efforts. In his 1988 autobiography (Memoirs of an Unregulated Economist, New York: Basic Books), Stigler essentially skewers Mason’s method.
Edward Mason’s group at Harvard was the leading producer of Ph.D.’s in industrial organization. Each new Ph.D. gravely decided in some mysterious fashion whether the industry chosen for his doctoral dissertation was or was not acting in a socially desirable way (162).
- 25.
Gary Becker refers to an article that appeared in two parts over the year 1973–1974, “A Theory of Marriage: Part 1”, Journal of Political Economy 81(4): 813–46 and “A Theory of Marriage: Part 2”, 82(2): S11–S26.
- 26.
Nigel Tomes wrote a 1978 dissertation, “A model of child endowments, and the quality and quantity of children.” He co-authored such papers with Gary Becker as “Child Endowments and the Quantity and Quality of Children”, The Journal of Political Economy 84 (4, Part 2: Essays in Labor Economics in Honor of H. Gregg Lewis (Aug. 1976)): S143–S162 as well as “Human Capital and the Rise and Fall of Families”, Journal of Labor Economics 4 (3, Part 2: The Family and the Distribution of Economic Rewards (Jul., 1986)): S1–S39.
- 27.
The article is of course the much-cited work, “The problem of social cost”, Journal of Law and Economics 3 (October): 1–44. It is the article from which George Stigler discovered (or invented) The Coase Theorem.
- 28.
The article, “The Nature of the Firm”, by Ronald Coase appeared in Boulding, Kenneth E. and George J. Stigler (eds) (1953) Readings in Price Theory. London: George Allen and Unwin Ltd., pp. 331–351. Including the work by Coase was actually Stigler’s direct decision according to Ronald Coase (conversation, Oct. 1997).
- 29.
The most likely piece referred to is a magazine article which has since its initial publication been reproduced a number of times. It shows that at this time, George Stigler was still clearly under the influence of Henry Simons. Stigler, George J. (1952). “The Case against Big Business”, Fortune 45 (May): 123 ff.
- 30.
A good example of this would be his 1946 book, Domestic Servants in the United States, 1900–1940. New York: NBER.
Author information
Authors and Affiliations
Copyright information
© 2016 The Author(s)
About this chapter
Cite this chapter
Freedman, C. (2016). De Gustibus Non Est Disputandum: George Stigler through Gary Becker’s Eyes. In: In Search of the Two-Handed Economist. Palgrave Studies in the History of Economic Thought Series. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-137-58974-3_6
Download citation
DOI: https://doi.org/10.1057/978-1-137-58974-3_6
Published:
Publisher Name: Palgrave Macmillan, London
Print ISBN: 978-1-137-58973-6
Online ISBN: 978-1-137-58974-3
eBook Packages: Economics and FinanceEconomics and Finance (R0)