Friday, December 6, 2013
The Associated Press
CHICAGO — Nobel Prize winner Ronald Coase, a pioneer in applying economic theory to the law, has died at age 102. The former University of Chicago professor was the oldest living Nobel laureate before his death Monday at a Chicago hospital.
Coase died after a short illness, said University of Chicago Law School Dean Michael Schill who spoke to Coase's caregiver who was with him when he died.
The British-born economist won the Nobel in 1991 for expanding economic theory to include simple but neglected concepts such as property rights and overhead costs. His work generated a new way of thinking about government regulation, without condemning all regulation as bad, Schill said.
"It's impossible to overstate the influence of Ronald on the law," Schill said. "Ronald was one of the founding fathers of (the field of) law and economics."
Coase was born in suburban London in 1910. He wore leg braces as a child and was sent to a school for "physical defectives," he recalled in a biographical essay he wrote for the Nobel Prize organization. He hadn't taken Latin, so a degree in history — his first choice — was impossible.
That became "one of those accidental factors which seem to have shaped my life," he wrote, and eventually led him to the study of economics.
Coase's ideas grew from roots in the real world. In the 1930s, while a student at the London School of Economics, he toured U.S. factories. What he learned from talking to business owners shaped his first significant paper, "The Nature of the Firm," published in 1937 when he was in his mid-20s.
His second influential paper, published in 1960 and titled "The Problem of Social Cost," made the case that parties in a dispute — such as a railroad and a farmer — can negotiate ideal agreements without government intervention as long as property rights are clear. The idea, called the Coase Theorem, still helps policymakers think about when taxes are appropriate to resolve problems such as industrial pollution.
In a 1997 interview published in the journal Reason, Coase talked about studying the effects of government regulation using real-world cases.
"Economics has been becoming more and more abstract, less and less related to what goes on in the real world," Coase told the magazine. "In fact, economists have devoted themselves to studying imaginary systems, and they don't distinguish between the imaginary system and the real world. ... All the prestige goes to people who produce the most abstract results about an economic system that doesn't exist."
His most recent book, co-authored with former student Nina Wang, looked at China's market transformation. "How China Became Capitalist" was published last year when Coase was 101.