In this book, Gary Becker and Kevin Murphy provide such a framework by including the social environment along with standard goods and services in their utility functions. These extended utility functions provide a way of analyzing how changes in the social environment affect people's choices and behaviors. More important, they also provide a way of analyzing how the social environment itself is determined by the interactions of individuals.
Using this approach, the authors are able to explain many puzzling phenomena, including patterns of drug use, how love affects marriage patterns, neighborhood segregation, the prices of fine art and other collectibles, the social side of trademarks, the rise and fall of fads and fashions, and the distribution of income and status.
About the Author
Table of Contents
Part I The Effect of Social Capital on Market Behavior
1. The Importance of Social Interactions
2. Social Forces, Preferences, and Complementarity
3. Are Choices "Rational" When Social Capital Is Important?
Part II The Formation of Social Capital
4. Sorting by Marriage
5. Segregation and Integration in Neighborhoods
6. The Social Market for the Great Masters and Other Collectibles
with William Landes
7. Social Markets and the Escalation of Quality: The World of Veblen Revisited
with Edward Glaeser
8. Status and Inequality
with Iván Werning
Part III Fads, Fashions, and Norms
9. Fads and Fashion
10. The Formation of Norms and Values