Gary Becker knew why we like our favorite restaurants. Photographer: Jamie Rector/Bloomberg

Gary Becker Explains Your Dinner Check

By Cass R. Sunstein

Saturday marked the death of Gary Becker, perhaps the greatest social scientist of the last 50 years. More than anyone else, Becker is responsible for the rigorous pursuit of the idea that human beings are rational and responsive to incentives. That’s a simple idea, but Becker used it to produce path-breaking insights into countless areas, including crime, discrimination, addiction, politics and the structure of the family.
Becker was a colleague and a friend of mine, and he was a quintessentially rational man. On the tennis court, where he competed with people decades younger than he was, he always hit the right shot. Because he couldn’t hit the ball hard, he relied on placement, and he always hit the ball exactly where it should go. In an academic workshop, he didn’t grandstand or try to show people up; he sought the truth. “What’s the evidence for that?” he liked to ask.
In his late 50s and after, Becker produced a series of essays, the implication of which we have only started to understand. One of his favorites, and mine, asked this question: Why don’t popular restaurants increase their prices? That’s a big puzzle, because some restaurants have long lines, and surely -- you might think -- they could make a lot more money, and cut those lines, with higher prices.


Behavioral economists like to emphasize fairness. People tend to think that it’s unfair to raise prices, and maybe popular restaurants don’t want to make their customers angry. But Becker didn’t have a lot of enthusiasm for behavioral economics, so he went in a different direction.
His key point was that people’s demand for some goods depends on the demand from other people. For some goods, the pleasure is greater when many people want to consume it -- "perhaps because a person does not wish to be out of step with what is popular, or because confidence in the quality of the food, writing, or performance is greater when a restaurant, book, or theater is more popular.”
Becker’s argument helps to explain why some books, movies, restaurants, magazines, political campaigns, technologies and ideas turn out to be spectacularly successful, while very similar ones fail. If at some point people begin to think that your product is popular, you can get a huge boost.
We can account for otherwise inexplicable inequality in this way. Success or failure, Becker wrote, “often depends on fortuitous factors that help sales snowball when they catch on and sink when they flop.” His explanation also helps to explain why success can be unpredictable. Producers often can’t know, in advance, whether those fortuitous factors will work out in their favor.
It is remarkable, and entirely characteristic, that social science’s greatest exponent of human rationality could explain why rational people keep prices low when they could make a lot of money by raising them -- and why economic success or failure can be impossible to foresee in advance.