Theodore W. Schultz’ speech at the Nobel Banquet, December 10, 1979

Your Majesties, Your Royal Highnesses, Ladies and Gentlemen,

Your Royal Academy of Sciences expressed a deep concern about the economic problems and the welfare of poor people throughout the world in awarding the Nobel Prize in Economics this year. It is a noble concern worthy of the best talent not only in economics but also in other branches of knowledge.

Permit me, however, to be less serious about economists for a moment.

I have been asked: What do economists do? My reply is: When economists face disagreements, they appeal to a long-established, basic Law of Talk, which is, “The more intelligent people are, the more certain they are to disagree on matters of social principle and policy, and the more acute will be the disagreement.” Herein lies the proof that economists are intelligent!

Economists, however, do not do what needs to be done to make friends, they neglect history to the consternation of historians. They give too little attention to the cultural and social values to please the humanities. Their mathematics does not impress the mathematicians. Scientists do not take kindly to the application of costs and benefits to science. Governments are ever wary of being friendly with academic economists. The only real friends economists have are impersonal adverse events: inflation, unemployment, and hard times.

But this is not the whole truth. Scientists made it possible to increase the resources of society. Humanists, historians and social scientists clarify human values. Economists analyze the interplay between human preferences and scarce resources.

Folklore notwithstanding, economists do count their words as poets do, but for a different reason. It is not beauty that economists seek; their aim is to save time. I know that you also value your time highly.