The Review of Austrian Economics

, Volume 31, Issue 4, pp 403–417 | Cite as

The nature and limits of Gary Becker’s theory of racial discrimination

  • Sanford IkedaEmail author


To what extent does Gary Becker’s model of discrimination capture “the essence of prejudice and discrimination”? After providing a general outline of Becker’s original model and summarizing some subsequent developments, this paper takes a critical perspective on the model to suggest that the absence of imperfect information in his approach unhelpfully limits its explanatory power. Instead, an approach that allows for the possibility of genuine error and draws on Adam Smith’s analysis of the impact of markets on one’s moral sense offers a deeper, more realistic understanding of what it means for people to express their prejudice (or not) through their choices.


Gary Becker Discrimination Prejudice Imperfect knowledge Choice Adam smith Prudence 

JEL classification

B31 B41 D89 J71 



I wish to thank the Liberty Fund for providing me the occasion to write this paper and the comments provided by participant of the Colloquium on Market Institutions and Economics Process at New York University, the 3rd Cosmos + Taxis Conference in Milan, Italy, and the Liberty Fund Colloquium on “Revisiting the Intellectual Contributions of Gary Becker.” The usual caveat applies.


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Copyright information

© Springer Science+Business Media, LLC, part of Springer Nature 2018

Authors and Affiliations

  1. 1.Purchase CollegeSUNYPurchaseUSA

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