“Literature and fiction are two entirely different things. Literature is a luxury; fiction is a necessity.”
G.K. Chesterton
Chesterton’s quote can be interpreted in four distinct ways. It is a criticism of intellectual elitism, a clarification of the distinctions between fiction and literature: between entertainment and insight, and between freedom of imagination and the prescribing of cultural values. It describes how Chesterton wrote his detective novels by combining fictional stories and moral purpose (the detective uncovering truth and ensuring justice). In another sense, it is also a heartfelt expression of the real human need for stories.
Each of the four interpretations is credible and important. But when Chesterton compares literature and fiction in his piece The Defendant, he states:
“But people must have conversation, they must have houses, and they must have stories. The simple need for some kind of ideal world in which fictitious persons play an unhampered part is infinitely deeper and older than the rules of good art, and much more important.”
This suggests Chesterton was highlighting the importance to humans of stories at a fundamental, emotive level: beyond any intellectual, artistic or societal understanding.
The Archive of Free Thinking 
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