Becker's Economic Approach Essays

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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 …show more content…
As discussed in lecture (Benson Economics and Human Nature Lecture), people use heuristics, assumptions about their preferences and beliefs, to allow themselves to make quick decisions and short-cut cost-benefit analysis. People consider heuristics to be their preferences, even though if they actually went through a detailed analysis they may reject them. Becker’s “economic approach to human behavior” explains what many other economists might consider to be irrational decisions by allowing for changes in an individual’s inclination toward a particular set of payoffs. While the monetary or physical reward may be the same, the preferences toward that outcome are allowed to change. This can explain for many seemingly irrational decisions, like the example about choosing between saving four men and killing one or letting one die from being hit by a train as described by Steven Quartz and Colin Camerer in “Curious: Decisions, Decisions” (Curious: Decisions, Decisions 2008). They describe an example where people choose to pull a level to divert a train from killing four men, to only killing one, but they will not push a man onto a track to save four men. According to the economic approach, the reason why people choose not to push a man onto the track to save four men is that their preferences toward pushing a man onto a track versus pulling a switch are different. The outcome of each example is the same: either one man or four men die, but

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