Gary Becker, the Nobel Prize winner economist died yesterday. His book was not an easy one to read specially for a narrow-minded finance PhD student :) Here is a very interesting interview with him REGION: I understand that you found the initial inspiration for your work on the economics of crime while searching for a parking spot. BECKER: True story. REGION: Would you tell us that story? BECKER: I was coming down for an oral exam at Columbia University when I was teaching there. In those days instead of written exams for Ph.D. students, we gave them orals. And my task was to ask a half-hour of questions on price theory. I was living in the suburbs, I drove down to Columbia and I was a little late. And its New York City, so its not easy to find a parking place. Columbia had no parking for its faculty in those days, so either you parked illegally or you went into a parking lot. Those were your choices. So as I got there I had to make that decision. I remember making that calculation of what are my chances if I park it in an illegal spot. Or, there was a parking lot a couple of blocks away and I would have a longer walk and, of course, it cost a little money. I started thinking about my chances of getting caught. As I walked over to the exam—it took me about 10 minutes—Im realizing that if Im thinking about my chances, the police, if theyre being rational, must also be thinking about that. Whats the likelihood, the chance of catching somebody? They dont want to spend every minute looking, so they do some kind of a probability analysis. And so theyre kind of in a war against the offenders. So I thought through some of this, and when I got to the exam the first question I asked the student was, How do you work out that problem? I did not think he would get the answer easily. I just wanted to see how he went about thinking about the answer. I dont remember the details of that. My impression is he did not do well. The question was a little tough. But after I finished the exam, I said, Gee, this is an interesting topic. I started working on it seriously at that point. Thats exactly how that went.
Posted on: Mon, 05 May 2014 00:17:22 +0000
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