Becker's work has been influential not only in economics but also other disciplines including sociology and demography. His most famous work is
Human Capital, and he wrote on sociological topics as diverse as marriage, the family, criminal behavior, and racial discrimination.
Discrimination Becker recognized that people (employers, customers, and employees) sometimes do not want to work with minorities because they have bias against the disadvantaged groups. He went on to say that discrimination increases a firm's cost because in discriminating against certain workers, the employer would have to pay more to other workers so that work can proceed without the biased ones. If the employer employs the minority, low wages can be provided, but more people can be employed, and productivity can be increased.
Politics Becker's contributions to politics have come to be known as "Chicago political economy" of which he is considered one of the founding fathers. Becker's insight was to recognize that
deadweight losses put a brake on predation. He took the well-known insight that deadweight losses are proportional to the square of the tax, and used it to argue that a linear increase in takings by a predatory interest group will provoke a non-linear increase in the deadweight losses its victim suffers. These rapidly increasing losses will prod victims to invest equivalent sums in resisting attempts on their wealth. The advance of predators, fueled by linear incentives, slows before the stiffening resistance of prey outraged by non-linear damages.
Crime and punishment Jurist
Richard Posner has stressed the enormous influence of Becker's work which "has turned out to be a fount of economic writing on crime and its control", as well as the analytics of crime and punishment. While Becker acknowledged that many people operate under a high moral and ethical constraint, criminals rationally see that the benefits of their crime outweigh the cost which depends upon the probability of apprehension, conviction, and punishment, and their current set of opportunities. From a public policy perspective, since the cost of increasing a fine is trivial in comparison to the cost of increasing surveillance, one can conclude that the best policy is to maximize the fine and minimize surveillance.
Human capital In his 1964 book
Human Capital Theories Becker introduced the economic concept of
human capital. This book is now a classic in economic research and Becker went on to become a defining proponent of the
Chicago school of economics. The book was republished in 1975 and 1993. Becker considered labor economics to be part of capital theory. He mused that "economists and plan-makers have fully agreed with the concept of investing on human beings". Becker’s work on human capital changed how economists think about education and skills. He argued that people gain economic value when they invest in things like schooling, training, and health, similar to how companies invest in machines or technology. This idea helped explain why workers with more education often earn higher wages and why countries benefit when they support learning and skill development. Becker’s approach also shaped later research on how people choose to improve their skills and how governments can design programs that strengthen the workforce. His theory became important in discussions about income differences, showing that part of the wage gap comes from differences in investment in knowledge and abilities. While some scholars say human capital theory does not fully address social and structural barriers, Becker’s ideas remain highly influential and continue to guide research on education, labor markets, and economic growth.
Modern household economics Together, Becker and
Jacob Mincer founded Modern Household Economics, sometimes called the New Home Economics (NHE), in the 1960s at the labor workshop at Columbia University that they both directed.
Shoshana Grossbard, who was a student of Becker at the University of Chicago, first published a history of the NHE at Columbia and Chicago in 2001. After receiving feedback from the NHE founders she revised her account. Among the first publications in Modern Household Economics were Becker (1960) on fertility, Mincer (1962) on women's labor supply, and Becker (1965) on the allocation of time. Students and faculty who attended the Becker-Mincer workshop at Columbia in the 1960s and have published in the NHE tradition include Andrea Beller,
Barry Chiswick, Carmel Chiswick,
Victor Fuchs,
Michael Grossman, Robert Michael,
June E. O'Neill, Sol Polachek, and Robert Willis.
James Heckman was also influenced by the NHE tradition and attended the labor workshop at Columbia from 1969 until his move to the University of Chicago. The NHE may be seen as a subfield of
family economics. In 2013, responding to a lack of women in top positions in the United States, Becker told the
Wall Street Journal reporter
David Wessel, "A lot of barriers [to women and blacks] have been broken down. That's all for the good. It's much less clear what we see today is the result of such artificial barriers. Going home to take care of the kids when the man doesn't: Is that a waste of a woman's time? There's no evidence that it is." This view was criticized by
Charles Jones, stating that, "Productivity could be 9 percent to 15 percent higher, potentially, if all barriers were eliminated."
Home production In the mid-1960s, Becker and
Kelvin Lancaster developed the economic concept of a household production function. Both assumed that
consumers in a household receive utility from the goods they purchase. Such as for example, when consumers purchase raw food. If it is cooked, a utility arises from the meal. In 1981 Becker published
Treatise on the Family, where he stressed the importance of
division of labor and
gains from
specification.
Economics of the family During Becker's time at Chicago in the 1970s, he mostly focused on the family. He had previously done work on birth rates and family size, and he used this time to expand his understanding of how economics works within a family.
Rotten kid theorem At the core of Becker's economic theory on the
family, which he developed on the basis of figures for United States families in 1981, is the "rotten kid theorem". He applied the economics of an altruist to a family, wherein a person takes actions that improve the well-being of another person, despite more self-interested action being feasible. Becker pointed out that a parent forgoes higher income, by focusing on family work commitments in order to maximize a well-meaning objective. Becker also theorized that a child in a US family may be perfectly selfish because it maximizes its own utility. There have been attempts to test this economic thesis, in the course of which it was found that cross-generational families do not necessarily maximize their joint income.
Organ markets A 2007 article by Gary Becker and
Julio Jorge Elias entitled "Introducing Incentives in the market for live and cadaveric organ donations" posited that a free market could help solve the problem of a scarcity in organ transplants. Their economic modeling was able to estimate the price tag for human kidneys (about US$15,000) and human livers (about US$32,000). It is argued by critics that this particular market would exploit the underprivileged donors from the developing world. == Household Specialization model and feminist critiques ==