Ronald Coase was a British economist and author. In 1991, he won the Nobel Prize in Economics for discovering and explaining the importance of transaction costs and property rights for the way the economy is set up and works. He was a well-known and very smart scholar who was known for his brilliant mind and knowledge of even the smallest details of the subject. Coase was the Clifton R. Musser Professor Emeritus of Economics at the University of Chicago Law School for most of his life. People often call him the “father” of reform in how the electromagnetic spectrum is used. This is because of his 1959 article “The Federal Communications Commission,” in which he criticized spectrum licensing and suggested that property rights would be a better way to give spectrum to users. Coase became well-known for his 1937 article, “The Nature of the Firm.” In it, he introduced the idea of “transaction costs” to explain what firms are and what they can’t do. In his 1960 article, “The Problem of Social Cost,” he said that problems caused by externalities could be solved with clear property rights.
Early years and childhood
Ronald Harry Coase was born in Willesden, a suburb of London, on December 29, 1910. His parents were Henry Joseph Coase and Rosalie Elizabeth Coase. His father worked at the post office as a telegrapher. His mother also worked at the same job before she got married.
Interestingly, young Coase wasn’t as interested in sports as his parents were. His father played football, cricket, tennis, and lawn bowls, and his mother played tennis. He liked to read.
In his childhood, Coase’s legs were weak, so he had to wear leg irons. Coase went to a school for kids with physical problems because he was born with a birth defect.
At age 12, Coase won a scholarship that paid for him to go to Kilburn Grammar School. In 1927, he did well on the test for high school graduation in history and chemistry.
Coase wanted to go to college to study either history or chemistry, but he couldn’t because he didn’t know Latin or math, which were required for those subjects. Instead, he chose to study business.
Coase moved to the University of London after his first year of B.Comm. He got a Sir Ernest Cassel Travelling Scholarship, which let him go to the United States and study why American industries were set up differently.
Through this research, he came up with a new way to look at economics called “transaction costs,” as well as an explanation of why businesses exist.
Coase went to the London School of Economics and got his Bachelor of Commerce degree from there in 1932.
Ronald Coase’s Career
After getting his degree from the London School of Economics, Coase went to work as an assistant lecturer at the University of Dundee’s Dundee School of Economics and Commerce. From 1932 to 1934, he was in charge of this job.
In 1934, Coase started working at the University of Liverpool as an assistant lecturer in commerce. After a year at the job, he moved to his alma mater, the London School of Economics, where he taught until 1951. He was in charge of the class on the economics of public utilities in Britain.
Coase’s first important article, “The Nature of Firm,” was written in 1937 while he was working at LSE. It was mostly based on research he did as an undergraduate in the United States. Through the article, he talked about why businesses exist.
He said that firms were like centrally planned economies, except that they were made up of people who chose to do so on their own. The main reason firms started up was because of the cost of marketing. Coase worked for the government during the Second World War.
He worked for the Forestry Commission, the Central Statistical Office, and the Offices of War Cabinet. After the war, in 1946, Coase went back to the London School of Economics, where he taught “The Principles of Economics,” the main economics course. At the same time, he kept looking into public utilities, especially the post office and broadcasting.
He wrote a book called “British Broadcasting: A Study in Monopoly” in 1950. It was based on his research into the American broadcasting industry, which he did while on a Rockefeller Fellowship in 1948. Coase moved to the United States in 1951. From 1951 to 1958, he worked at Buffalo State College in New York. After that, he went to school at the Center for Advanced Study in Behavioural Sciences for a year.
In 1959, he moved to Charlottesville, Virginia, and started working in the economics department at the University of Virginia. Two years later, he wrote “The Problem of Social Cost,” which became his second most important piece of writing. He showed how transaction costs and property rights affect business and society as a whole. The article was a big hit right away, and it is now the most-cited article in modern economics.
The article “The Problem of Social Cost” led to the development of the Coase theorem, which says that when information and transaction costs are low, the market will find an efficient solution to the problem of nuisances, no matter where the law puts the liability for the nuisance.
In 1964, he moved to the University of Chicago, where he taught economics until 1981 as the Clifton R. Musser Professor Emeritus. He was also put in charge of the Journal of Law and Economics. He stayed in this position until 1982. During his time as an editor, he filled in as a trustee of the Philadelphia Society for a short time. In 2012, when he was over 100 years old, he published a book called “How China Became Capitalist.”
Works of note
The articles that Coase wrote in 1937, 1959, and 1960 are his most important contribution to the field of economics. In his first article, “The Nature of Firm,” he explained the nature and limits of firms by introducing the idea of transaction costs.
In ‘The Federal Communication Commission,’ a book he wrote in 1959, he said that property rights were the best way to give spectrum to users. In his 1960 book, “The Problem of Social Cost,” he said that the problems caused by externalities could be solved by clear property rights.
Awards & Achievements
Ronald Coase won the 1991 Nobel Prize in Economics for figuring out and explaining how important transaction costs and property rights are to the way the economy is set up and how it works.
In 2012, the University of Buffalo gave him an honorary doctorate degree.
Personal History and Legacies
On August 7, 1937, in Willesden, England, Ronald Coase married Marion Ruth Hartung of Chicago, Illinois.
He died on September 2, 2013, in Chicago. He was 102 years old.
Estimated Net worth