The Right Coast

March 02, 2004
Book Recommendation: Social Economics
By Mike Rappaport

Although I believe that social forces are important, I have usually been frustrated by the sociology that I have read. These works often suffer from various sins, including either lack of rigor or clarity, or political bias. (One exception is Peter Berger’s book, The Capitalist Revolution: Fifty Propositions about Prosperity, Equality, & Liberty, a great book that attempts to provide a sympathetic understanding of capitalism from an empirical perspective – although it is a little out of date.)

Recently, I found Gary Becker and Kevin Murphy’s Social Economics: Market Behavior in a Social Environment. The book attempts to understand certain social forces with an economic type rational choice - equilibrium model. As a law professor with a long term interest in economics, I found the analysis extremely helpful, since it took a very clear and familiar model and used it to analyze social forces.

The key idea, underlying all of the book’s models, is that people care about goods, based not only on the the goods themselves, but also on how many other people in a social group desire them or buy them. So teenagers may desire to smoke based on how many of their peers do so, and people may purchase certain fashions because many other people do.

The models have many implications. For example, it may turn out that as a couple makes less money, they may not have fewer kids if there is strong social pressure to have a particular number.

The book also seeks to explain the sense in which social forces seem to leave people without choices. When the interdependences are strong, people derive so much more from taking the actions that other people do that they seem forced to make the same choices as others. This can be true even if the underlying activity is relatively undesirable. So one might play basketball because one’s friends do, even though one does not really like it.

In the end, I did not find the predictions in the book all that surprising. The book generally predicts “sociological facts” that we all know. What was significant was that it generated these predictions with an economic-type model that made clear to what extent a desire to be like others was doing the work.