Customer Reviews

Economics of Discrimination (Economics research studies of the Economics Research Center of the University of Chicago)

5 star:		(5)
4 star:		(1)
3 star:		(0)
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1 star:		(1)

 

 

Gary Becker turned his thesis paper into one of the classic works on discrimination. Becker demonstrated conclusively why irrational discrimination (or the overt act derived from the intent of racism, sexism, etc.) is difficult to maintain in a truly competitive economy. Competitors, seeking advantage, will hire victims of discrimination. Their labor costs will be lower. All else being equal, financial captial will flow to companies with lower labor costs, providing them with further competitive advantage. Eventually the price of labor for victims of discrimination will be "bid up" to the point where the marginal revenues from labor will equal the marginal cost of labor, at which point their average wages will reflect little, if any, loss of income from discrimination.

Milton Friedman has always insisted that there is no such thing as a free lunch. If Becker proves anything with this book, it is that he was a good student of Friedman's. The basic lesson of this book is that every choice we make has a cost. The employer who decides to discriminate against prospective employees who are more productive, but the `wrong race' end up paying higher real wages and earn less profits. The merchant who turns business away because of race loses revenue and profits.

The analysis of this book is far more complicated than what I have indicated, but the complexity of this book is not its strength. Becker is possible the worst of those economists who think that they make a positive contribution by "formalizing" common sense into a complex math model. You really do not need to know calculus to understand the basic logic behind substitution and income effects. For that matter, you do not need to know much about substitution and income effects to understand the common sense of opportunity cost thinking.

While the presentation of this book is overkill, Becker still deserves credit for taking on a controversial subject. The idea that markets tend to discourage racism is not very popular among academics now, and it was probably even less popular among us in 1971. The Economics of Discrimination deserves three stars for content, but five stars for intellectual courage.

The Economics of Discrimination is the single most important book written about the topic of discrimination. Dr. Becker, a scholar of the Chicago school, won the Nobel Prize for his pioneering work in topics such as discrimination. In this book, the founding father of economic "imperialism" (the application of rational choice models to the topics usually reserved for other disciplines), presents an interesting hypothesis: free markets, through the profit maximizing incentive, are the best way to combat racism and bigotry.

The logic is simple: bigotry, if practiced by employers, has a cost. The best, most greed-driven profit maximizers will have no demand for this sort of strange, cost-imposing behavior. In a competitive market, we can expect that this behavior would lead directly to bankruptcy, and rightly so. Free markets provide the profit incentive for a color-blind society. Where would you expect to see the most discrimination, then? Government, of course, because it lacks profit incentives. Not-for-profit organizations are also easy victims. In other venues, discrimination is just too costly to be viable. Restrictions on the ability to choose, though, do nothing to stop bigotry, only to encourage it.

This book delves in to this argument in great detail with total academic honesty, and it is thoroughly researched, well documented, and succinctly presented. Dr. Becker is a first rate scientist and an excellent writer, and even though this was written early in his academic career it still carries his signature style. This book is a complete, definitive, authoritative work on the subject, but also suitable as an introduction. It could be readable by anyone with elementary economic knowledge, and even by the intelligent lay person. Anyone who wants to know what discrimination is really about and what we can do about it would do well to read and understand this book. No argument about discrimination is complete without understanding the logic and models Dr. Becker presents.

As a contribution to an impressive trend of applying the economic way of thinking to the most important issues we face, this book is absolutely invaluable. If this book interests you as much as it did me, you may want to read other books by Dr. Becker. For more about discrimation, though, try The State Against Blacks by Walter Williams.

nearly 50 years after Becker wrote it, this book still serves as a cornerstone for the economics of discrimination. it is still as insightful and controversial as it was when it was published. Becker's ability to apply economics in areas where it is not traditionally used makes this work a must read for anyone interested in discrimination.

I disagree, but the previous reviewer has a right to be wrong.

I disagree, but the previous reviewer has a right to be wrong.

I was forced to read this piece of garbage in the early 1980s and am surprised that my co-reviewer offered five stars. While Prof. Becker's theories may be stimulating to the Nobel Academy and his Chicago disciples, I found his conclusions vapid and unfulfilling.