Nobel Prize winner Gary Becker could never win an election in this town.
Raising the eligibility age for Social Security and Medicare to 70
Selling the right to immigrate (foreigners would need to pay $50,000 to legally reside and work here)
Eliminating the granddaddy of all tax deductions, the mortgage interest deduction
Imposing a (mostly) flat tax
Enacting a number of other not-gonna-happen-soon changes
Your typical free-market ideologue. Right? Not quite.
Becker won his Nobel in 1992 for applying economic principles to human choices that appeared to have nothing to do with money, such as discrimination, marriage and even illegal parking.
Some examples: When minorities make up a large percentage of the population, discrimination hurts the discriminating employer — and could eventually drive them out of business — as well as the minority employee, Becker found. That's widely accepted today. Not so in 1957 when Becker wrote his first book on it called "The Economics of Discrimination."
Another one: Most criminals are not deranged lunatics but rational people. They weigh the reward of a crime against the likelihood of getting caught and the severity of the punishment. Becker came to study this subject after he decided one day to illegally park in a convenient spot.
His more controversial theories concern marriage, divorce and the decision to bear children. Wealthier couples are less likely to divorce than poorer couples, he posits, because the wealthy have more to lose.
In short, Becker believes that economic considerations play a big role in every life decision, not simply purchases. And, therefore, just like rebates or a low interest rate or a mega-sale can entice someone to buy a car, incentives can be crafted to persuade people to do other things, such as have fewer children.
He suggested one idea Thursday that I hadn't considered.
Many of Chicago's top executives are obsessed with "reforming" the city's public education system. At a minimum, reformers advocate pay-for-performance for teachers, with better "performance" tied to better student test scores.
Becker supports a lot of the things these executives support: charter schools, vouchers, differential pay for good teachers and the easy firing of "bad" ones.
He also advocates for an additional kind of pay-for-performance that could help alleviate a root cause of underperforming students — unstable families.
"Mexico has a system … (that) gives the parents of kids enrolled in elementary school and some in high school a monthly voucher conditional on the fact that the kid has to attend school regularly and has to do pretty well," Becker said. "In addition, there are some health aspects. The evaluation of these programs that have been made, and there have been a lot, have shown that the parents that are in the program, their kids do better."
Harvard University economist and MacArthur "genius grant" winner Roland Fryer has carried out one well-designed study in this regard, experimenting with $6.3 million in incentives for about 38,000 kids in four U.S. cities.
Fryer's results, published in 2010, were mixed. Paying for higher test scores in New York failed. Paying for higher grades in Chicago resulted in improved grades and attendance but didn't improve standardized test scores. Rewarding better behavior, such as improved attendance and no fighting, in Washington, D.C., generated a modest improvement in test scores. And success was found in Dallas, where students were paid $2 for every book they could prove they read. Reading scores rose.
Becker, who teaches full time and co-authors a blog with federal appeals court Judge Richard Posner, advocates paying the parents, not the students.
"My own view is that people respond on incentives, and it doesn't matter whether they're poor or rich," Becker said in an interview Friday. "Different groups respond to different incentives. In the Mexico system, kids from poor families whose parents don't care that much now have parents with a vested interest. They'll benefit if their kids do better."