How Well Does the Becker Discrimination Model Hold Up?
By David Henderson
In the vast majority of my blog posts, I’m pretty sure of what I think about whatever issue I’m posting on.
This time, I’m less sure.
The basic Gary Becker model of the economics of discrimination, which he laid out in his 1957 book titled The Economics of Discrimination (which was based on his Ph.D. dissertation at the University of Chicago), is that those firms and employers that discriminate on grounds that have nothing to do with productivity will bear a cost of discriminating. That doesn’t mean that they won’t discriminate; it does mean that they pay a cost for doing so and that the cost might be large. This market incentive not to discriminate limits the amount of discrimination.
Linda Gorman did an excellent job of explaining the Becker model in “Discrimination,” in David R. Henderson, ed., The Concise Encyclopedia of Economics.
I became quite familiar with the Becker model when I used his book as one of the two texts in a half-semester Labor Market Institutions course that I taught at the University of Rochester’s Graduate School of Management (now the Simon School) in 1977.
Becker uses black and white as the major categories in his model. This is quite understandable given the issues of discrimination in the 1950s.
But the model is more general. It shows that anyone who discriminates on any grounds other than productivity will bear a cost of discriminating. Robert P. Murphy, in “The Economics of Discrimination,” Econlib, August 2, 2010, lays out the issue nicely, with examples that have nothing to do with race. (He also handles the issue of what happens when an employer, say a restaurant owner, discriminates in response to customers’ demands for discrimination.)
Here’s what I’m wondering: How well does the Becker model hold up currently in professional sports?
In many sports, especially NBA basketball, the owners are allowing and possibly encouraging players to push political views that a large percent of customers are likely not to appreciate. I’ve watched a few NBA games lately even though my Warriors are not in play, so to speak. The players have slogans on the backs of their uniforms. They get to choose from a wide variety of slogans including my favorites, “Peace” and “Freedom.” So far I haven’t seen anyone with those slogans on their backs, although I’ve watched only segments of 3 or 4 games. The most common seem to be “Black Lives Matter,” “Equality,” “I Can’t Breathe,” and “Vote.” One kind of creepy slogan, which, fortunately, I haven’t seen anyone wear is “Group Economics.”
One obviously can interpret these slogans in various ways. “Black Lives Matter,” for example, could simply mean “black lives matter.” But it could also refer to the organization Black Lives Matter that has a strong social and political agenda. “Equality” could mean equality before the law but it also could mean “let’s take wealthy people’s money and give it to the new politically empowered.” And you can bet that “Vote” doesn’t mean “vote for Donald Trump.”
My guess is that many NBA fans will be turned off by such slogans. Let’s say that 30% of fans are turned off. How will they react? If it’s by turning off the TV (going to games is irrelevant since we can’t do that anyway), the NBA will pay a cost.
How will the NBA react? Will the cost be big enough to cause it to change its behavior?
I don’t know.
Addendum: For my take on how beautifully the market worked to limit discrimination by a white racist owner against black basketball players, see “Donald Sterling and the Economics of Discrimination.”
I see that Jason Whitlock has addressed this. He also provides his answer to my question, an answer that I find unpersuasive:
BLM is immune to market forces. The global economy combined with Big Tech to create a concentration of wealth that has curtailed capitalism’s ability to punish bad business practices. The billionaire backers of BLM can offset the financial losses of the institutions hurt by the movement. The NBA is not much different from the Washington Post, the legacy media platform funded by the richest man in the world, Jeff Bezos. The Post does not need to adhere to long-established industry best practices. The Post is a spoke in the wheel of a much larger machine.
So is the NBA and the NFL.
My view is that billionaires don’t like losing money, which is one of the main reasons they’re billionaires.