Becker's Economic Approach

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In “The Economic Approach to Human Behavior,” Gary Becker describes his explanation of “the economic approach” as being how individuals choose the price they are willing to pay for a good as a rational choice determined by the payoff of the good, based on their preferences for that good. Becker believes that prices, preferences, payoffs, and costs may include intangibles or unknowns. Thus Becker’s “economic approach to human behavior” is the belief that any human decision can be explained by a cost-benefit analysis by the decision-maker with the available information, where he/she decides the utility gained by making that choice is greater than the cost. The amount of information collected to make a decision is also determined by the preferences toward the amount of information necessary to make a decision and cost of acquiring that information. He believes that just because the preferences behind an individual’s decision are not understood, does not mean that individual did not make a rational decision. Using this approach, all human behavior and decisions can be rationalized because the approach explains how individuals make their decisions, not necessarily the specifics of why. The “economic approach to human behavior” is capable of explaining all human actions and behavior because it accounts for unknowns that are not necessarily explicitly explained in the approach. Any factor leading to a decision that is unexplained is still considered a change in preferences; Becker cites aging as an example. People’s preferences change as they get older, leading to different decisions. The changing of the biology in the brain can lead to preferences that change over time, such as the need for less sleep as one gets older. The e... ... middle of paper ... ...er approaches to economics may be more specific in defining outcomes with given information, the economic approach as explained by Becker is more adaptable to all situations. Becker’s economic approach is limited when compared to other methods of explaining human behavior in that it can only provide context for the procedure of decision-making. Even though his approach is limited, it does explain what others may consider “irrational” behavior as still being part of rational decision-making, leading to Becker’s economic approach being applicable to “all human motivation and behavior.” Works Cited Becker, Gary. 1986. "Chapter 4: The Economic Approach to Human Behavior." In: Rational Choice. New York: New York University Press. ThirteenWNET. Curious: Decisions, Decisions. Steven Quartz and Colin Camerer. 27 Aug. 2008. .
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