Essential Coase: The Lighthouse in Economics

Throughout his career, Ronald Coase urged economists to avoid relying too heavily on theories and generalizations-what he called "blackboard economics"-to explain human behaviour and economic outcomes. Instead, Coase understood it was important to study history in order to understand the nuances and complexities of the real world. One of the best examples from Coase's own work is the lighthouse. Long viewed as a quintessential public good that needed to be built by government and financed by taxes, Coase's research revealed that, in fact, lighthouses had been built, maintained and financed privately in Britain for centuries, and that they were not, in fact, the public good that economists had previously thought. Watch this video to learn more, and visit www.EssentialCoase.org.