ECONOMISTS CHANGING THEIR MINDS. Sometimes economists change their minds. This obituary for Ronald Coase at a University of Chicago site provides a vivid example of economists changing their minds.The Coase Theorem came about in this way: Coase had written an article about The Federal Communications Commission. Economists at the University of Chicago thought Coase was wrong, and he was invited to Chicago to present his view. George Stigler, also to become a Nobel Prize winner, wrote: “We strongly objected to this heresy. Milton Friedman [1976 Nobel laureate] did most of the talking, as usual. He also did much of the thinking, as usual. In the course of two hours of argument, the vote went from 21 against and one for Coase to 21 for Coase.”
Coase was asked as a result of the meeting to write an article for a University of Chicago publication. The article— “The Problem of Social Cost”—stated the Coase Theorem. Coase wrote: “Had it not been for the fact that these economists at the University of Chicago thought that I had made an error in my article on The Federal Communications Commission, it is probable that ‘The Problem of Social Cost’ would never have been written.â€