Gary S. Becker - Accounting for Tastes - ISBN:0674543572

Gary S. Becker - Accounting for Tastes

Date: 21 November 2010, 07:17

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Gary S. Becker - Accounting for Tastes
Publisher: Harvard University Press | 1998-03-30 | ISBN: 0674543572 | PDF | 292 pages | 11.93 MB

Economists generally accept as given the old adage that there's no accounting for tastes. Gary Becker disagrees, and in this collection he confronts the problem of preferences and values: how they are formed and how they affect our behaviour. In the process he explores puzzles of social life as well as some of society's problems. He observes, for example, that adjacent restaurants, which have roughly the same quality of food and similar prices, may differ greatly in the number of customers they are able to attract. Why is one invariably full, while the other has seats to spare? And why is it that the profits of tobacco companies may rise when consumption falls? The answers to these and many other questions about people's consumption patterns, Becker argues, have to do with the way preferences and values are shaped. Although these are central topics of social behaviour, they have never been addressed in a systematic and analytical way. Becker applies the tools of modern economic analysis to just this topic, one that economists have traditionally left out of their models of rational choice. But, as Becker observes, once people's basic needs for food, shelter and rest are met, their consumption depends very much on how their tastes are formed - on childhood experiences and social and cultural influences. For many kinds of behaviour, there is a strong positive effect of past behaviour on current behaviour, and there are strong peer effects. Thus, whether a person currently smokes or uses drugs depends significantly on whether he has smoked or used drugs in the past. And his choice of CDs, movies and books depends to a large extent on what his friends and associates have to say about them. Becker argues that, for a large class of behaviour, decisions on what to consume are not independent of one another but are interdependent. He incorporates past experiences and social influences into preferences or tastes through two basic capital stocks, which he calls personal capital and social capital. At any given moment, what a person wants depends not only on the menu of goods he can choose from and their prices but also on his current stock of personal and social capital. Behaviours that raise or lower these stocks (trying out the popular new drug, joining an upscale health club) will change his future desires and choices. Becker applies this method of analysis to assessing the effects of advertising, the power of peer pressure, the nature of addiction, and the function of habits.

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