… is from pages 16-17 of Ronald Coase‘s 1994 collection, Essays on Economics and Economists; specifically, it’s from Coase’s 1981 G. Warren Nutter Lecture in Political Economy, entitled “How Should Economists Choose?”:
But a theory is not like an airline or bus timetable. We are not interested simply in the accuracy of its predictions. A theory also serves as a base for thinking. It helps us to understand what is going on by enabling us to organize our thoughts. Faced with a choice between a theory which predicts well but gives us little insight into how the system works and one which gives us this insight but predicts badly, I would choose the latter, and I am inclined to think that most economists would do the same.
I offer this bonus quotation now because today Ronald Coase celebrates his birthday number 102. Still active and insightful – he just published a new book, and recently did this podcast with Russ – Coase is one of the great treasures that my profession has given to the world. Although celebrated, Coase’s work nevertheless remains underappreciated – not so much because the numerator of the appreciation that scholars have for his work isn’t very high (after all, he did appropriately win the Nobel Prize in 1991), but because the denominator that is the insight and wisdom and scholarship that he brought, and still brings, to economics and the social sciences is so massive.