Arthur Cecil Pigou

Arthur Cecil Pigou

Overview
Arthur Cecil Pigou was an English
England
England is a country that is part of the United Kingdom. It shares land borders with Scotland to the north and Wales to the west; the Irish Sea is to the north west, the Celtic Sea to the south west, with the North Sea to the east and the English Channel to the south separating it from continental...

 economist
Economist
An economist is a professional in the social science discipline of economics. The individual may also study, develop, and apply theories and concepts from economics and write about economic policy...

. As a teacher and builder of the school of economics at the University of Cambridge
University of Cambridge
The University of Cambridge is a public research university located in Cambridge, United Kingdom. It is the second-oldest university in both the United Kingdom and the English-speaking world , and the seventh-oldest globally...

 he trained and influenced many Cambridge economists who went on to fill chairs of economics around the world. His work covered various fields of economics, particularly welfare economics
Welfare economics
Welfare economics is a branch of economics that uses microeconomic techniques to evaluate economic well-being, especially relative to competitive general equilibrium within an economy as to economic efficiency and the resulting income distribution associated with it...

 but also including industrial fluctuations
Business cycle
The term business cycle refers to economy-wide fluctuations in production or economic activity over several months or years...

, unemployment
Unemployment
Unemployment , as defined by the International Labour Organization, occurs when people are without jobs and they have actively sought work within the past four weeks...

, public finance
Public finance
Public finance is the revenue and expenditure of public authoritiesThe purview of public finance is considered to be threefold: governmental effects on efficient allocation of resources, distribution of income, and macroeconomic stabilization.-Overview:The proper role of government provides a...

, index numbers
Index (economics)
In economics and finance, an index is a statistical measure of changes in a representative group of individual data points. These data may be derived from any number of sources, including company performance, prices, productivity, and employment. Economic indices track economic health from...

, and measurement of national output. His reputation was affected adversely by influential economic writers who used his work as the basis on which to define their own opposing views.
Discussion
Ask a question about 'Arthur Cecil Pigou'
Start a new discussion about 'Arthur Cecil Pigou'
Answer questions from other users
Full Discussion Forum
 
Recent Discussions
Encyclopedia
Arthur Cecil Pigou was an English
England
England is a country that is part of the United Kingdom. It shares land borders with Scotland to the north and Wales to the west; the Irish Sea is to the north west, the Celtic Sea to the south west, with the North Sea to the east and the English Channel to the south separating it from continental...

 economist
Economist
An economist is a professional in the social science discipline of economics. The individual may also study, develop, and apply theories and concepts from economics and write about economic policy...

. As a teacher and builder of the school of economics at the University of Cambridge
University of Cambridge
The University of Cambridge is a public research university located in Cambridge, United Kingdom. It is the second-oldest university in both the United Kingdom and the English-speaking world , and the seventh-oldest globally...

 he trained and influenced many Cambridge economists who went on to fill chairs of economics around the world. His work covered various fields of economics, particularly welfare economics
Welfare economics
Welfare economics is a branch of economics that uses microeconomic techniques to evaluate economic well-being, especially relative to competitive general equilibrium within an economy as to economic efficiency and the resulting income distribution associated with it...

 but also including industrial fluctuations
Business cycle
The term business cycle refers to economy-wide fluctuations in production or economic activity over several months or years...

, unemployment
Unemployment
Unemployment , as defined by the International Labour Organization, occurs when people are without jobs and they have actively sought work within the past four weeks...

, public finance
Public finance
Public finance is the revenue and expenditure of public authoritiesThe purview of public finance is considered to be threefold: governmental effects on efficient allocation of resources, distribution of income, and macroeconomic stabilization.-Overview:The proper role of government provides a...

, index numbers
Index (economics)
In economics and finance, an index is a statistical measure of changes in a representative group of individual data points. These data may be derived from any number of sources, including company performance, prices, productivity, and employment. Economic indices track economic health from...

, and measurement of national output. His reputation was affected adversely by influential economic writers who used his work as the basis on which to define their own opposing views. He reluctantly served on several public committees, including the Cunliffe Committee
Walter Cunliffe, 1st Baron Cunliffe
Walter Cunliffe, 1st Baron Cunliffe GBE was Governor of the Bank of England from 1913 to 1918, during the critical World War I era. He was created 1st Baron Cunliffe in 1914.-Early life and education:...

 and the 1919 Royal Commission
Royal Commission
In Commonwealth realms and other monarchies a Royal Commission is a major ad-hoc formal public inquiry into a defined issue. They have been held in various countries such as the United Kingdom, Australia, Canada, New Zealand, and Saudi Arabia...

 on Income tax
Income tax
An income tax is a tax levied on the income of individuals or businesses . Various income tax systems exist, with varying degrees of tax incidence. Income taxation can be progressive, proportional, or regressive. When the tax is levied on the income of companies, it is often called a corporate...

.

Early life and education


Arthur Cecil Pigou was born at Ryde
Ryde
Ryde is a British seaside town, civil parish and the most populous town and urban area on the Isle of Wight, with a population of approximately 30,000. It is situated on the north-east coast. The town grew in size as a seaside resort following the joining of the villages of Upper Ryde and Lower...

 on the Isle of Wight
Isle of Wight
The Isle of Wight is a county and the largest island of England, located in the English Channel, on average about 2–4 miles off the south coast of the county of Hampshire, separated from the mainland by a strait called the Solent...

, the son of Clarence George Scott Pigou, an army officer, and his wife Nora Biddel Frances Sophia Lees, daughter of Sir John Lees, 3rd Baronet
Lees Baronets
There have been three Baronetcies created for persons with the surname Lees, all in the Baronetage of the United Kingdom.The Lees Baronetcy, of Blackrock in the County of Dublin, was created in the Baronetage of the United Kingdom on 30 June 1804 for the soldier and politician John Lees.The Lees...

. He won a scholarship to Harrow School
Harrow School
Harrow School, commonly known simply as "Harrow", is an English independent school for boys situated in the town of Harrow, in north-west London.. The school is of worldwide renown. There is some evidence that there has been a school on the site since 1243 but the Harrow School we know today was...

 where he was in Newlands House and became the first modern head of school. The school's economics society is named The Pigou Society in his honour. In 1896 he was admitted to King's College, Cambridge
King's College, Cambridge
King's College is a constituent college of the University of Cambridge, England. The college's full name is "The King's College of our Lady and Saint Nicholas in Cambridge", but it is usually referred to simply as "King's" within the University....

, as a history scholar where he first read history under Oscar Browning
Oscar Browning
Oscar Browning was an English writer, historian, and educational reformer. His greatest achievement was the cofounding, along with Henry Sidgwick, of the Cambridge University Day Training College in 1891...

. He won the Chancellor's Gold Medal
Chancellor's Gold Medal
The Chancellor's Gold Medal is a prestigious annual award at Cambridge University for poetry, paralleling Oxford University's Newdigate prize. It was first presented by Prince William Frederick, Duke of Gloucester and Edinburgh during his time as Chancellor of the University of Cambridge...

 for English Verse and the Cobden, Burney, and Adam Smith prizes, and made his mark in the Cambridge Union Society
Cambridge Union Society
The Cambridge Union Society, commonly referred to as simply "the Cambridge Union" or "the Union," is a debating society in Cambridge, England and is the largest society at the University of Cambridge. Since its founding in 1815, the Union has developed a worldwide reputation as a noted symbol of...

 of which he became President in 1900. He came to economics through the study of philosophy and ethics under the Moral Science Tripos. He studied economics under Alfred Marshall
Alfred Marshall
Alfred Marshall was an Englishman and one of the most influential economists of his time. His book, Principles of Economics , was the dominant economic textbook in England for many years...

, whom he later succeeded as professor of political economy
Political economy
Political economy originally was the term for studying production, buying, and selling, and their relations with law, custom, and government, as well as with the distribution of national income and wealth, including through the budget process. Political economy originated in moral philosophy...

. His first and unsuccessful attempt for a fellowship at King's was a thesis on "Browning as a Religious Teacher."

Academic work


Pigou began lecturing on economics in 1901 and started giving the course on advanced economics to second year students on which was based the education of many Cambridge economists over the next thirty years. In his early days he lectured on a variety of subjects outside economics. He became a Fellow of King's College on his second attempt in 1902, and was made Girdler's lecturer in the summer of 1904. He devoted himself to exploring the various departments of economic doctrine, and as a result published the works on which his worldwide reputation rests. His first work was more philosophical than his later work as he expanded the essay which had won him the Adam Smith prize in 1903 into Principles and Methods of Industrial Peace.

In 1908 Pigou was elected Professor of Political Economy
Professor of Political Economy, Cambridge University
The Professorship of Political Economy is a professorship at the University of Cambridge, founded in 1828.-Professors of Political Economy:* George Pryme * Henry Fawcett * Alfred Marshall * Arthur Cecil Pigou...

 at the University of Cambridge
University of Cambridge
The University of Cambridge is a public research university located in Cambridge, United Kingdom. It is the second-oldest university in both the United Kingdom and the English-speaking world , and the seventh-oldest globally...

 in succession to Alfred Marshall. He held the post until 1943. One of his early acts was to provide private financial support for John Maynard Keynes
John Maynard Keynes
John Maynard Keynes, Baron Keynes of Tilton, CB FBA , was a British economist whose ideas have profoundly affected the theory and practice of modern macroeconomics, as well as the economic policies of governments...

 to work on probability theory. Pigou and Keynes had great affection and mutual regard for each other and their intellectual differences never put their personal friendship seriously in jeopardy.

Nevertheless, the externality concept remains central to modern welfare economics and particularly to environmental economics
Environmental economics
Environmental economics is a subfield of economics concerned with environmental issues. Quoting from the National Bureau of Economic Research Environmental Economics program:...

.

A neglected aspect of Pigou's work is his analysis of a range of labour-market phenomena studied by subsequent economists, including collective bargaining
Collective bargaining
Collective bargaining is a process of negotiations between employers and the representatives of a unit of employees aimed at reaching agreements that regulate working conditions...

, wage rigidity
Sticky (economics)
Sticky, in the social sciences and particularly economics, describes a situation in which a variable is resistant to change. Sticky prices are an important part of macroeconomic theory since they may be used to explain why markets might not reach equilibrium right away. Nominal wages are often said...

, internal labor market
Internal labor market
Internal labor markets are an administrative unit within a firm in which pricing and allocation of labor is governed by a set of administrative rules and procedures. The remainder of jobs within the ILM is filled by the promotion or transfer of workers who have already gained entry. Internal labor...

s, segmented labour market, and human capital
Human capital
Human capitalis the stock of competencies, knowledge and personality attributes embodied in the ability to perform labor so as to produce economic value. It is the attributes gained by a worker through education and experience...

.

In a couple of lectures delivered in 1949 he made a more favourable, though still critical evaluation of Keynes' work: "I should say... that in setting out and developing his fundamental conception, Keynes made a very important, original and valuable addition to the armoury of economic analysis". He later said that he had come with the passage of time to feel that he had failed earlier to appreciate some of the important things that Keynes was trying to say.

Life outside academia


Pigou had strong principles and these gave him some problems in World War I
World War I
World War I , which was predominantly called the World War or the Great War from its occurrence until 1939, and the First World War or World War I thereafter, was a major war centred in Europe that began on 28 July 1914 and lasted until 11 November 1918...

. He was a conscientious objector
Conscientious objector
A conscientious objector is an "individual who has claimed the right to refuse to perform military service" on the grounds of freedom of thought, conscience, and/or religion....

 to military service when it required an obligation to destroy human life. He remained at Cambridge, but during the vacations was an ambulance driver at the front for the Friends' Ambulance Unit
Friends' Ambulance Unit
The Friends' Ambulance Unit was a volunteer ambulance service, founded by individual members of the British Religious Society of Friends , in line with their Peace Testimony. The FAU operated from 1914–1919, 1939–1946 and 1946-1959 in 25 different countries around the world...

, and insisted on undertaking jobs of particular danger. Towards the end of the war he reluctantly accepted a post in the Board of Trade
Board of Trade
The Board of Trade is a committee of the Privy Council of the United Kingdom, originating as a committee of inquiry in the 17th century and evolving gradually into a government department with a diverse range of functions...

, but showed little aptitude for the work.

His sense of duty included a readiness to contribute to public service tasks. He was a reluctant member of the Cunliffe Committee
Walter Cunliffe, 1st Baron Cunliffe
Walter Cunliffe, 1st Baron Cunliffe GBE was Governor of the Bank of England from 1913 to 1918, during the critical World War I era. He was created 1st Baron Cunliffe in 1914.-Early life and education:...

 on the Currency and Foreign Exchange (1918–1919), the Royal Commission on the Income Tax (1919–1920), and the Chamberlain Committee on the Currency and Bank of England Note Issues (1924–1925). The report of the last body was the prelude to the much criticised restoration of the gold standard
Gold standard
The gold standard is a monetary system in which the standard economic unit of account is a fixed mass of gold. There are distinct kinds of gold standard...

 at the old parity of exchange. Pigou was elected to the British Academy
British Academy
The British Academy is the United Kingdom's national body for the humanities and the social sciences. Its purpose is to inspire, recognise and support excellence in the humanities and social sciences, throughout the UK and internationally, and to champion their role and value.It receives an annual...

 in 1925, but resigned in 1947. In later years he withdrew from national affairs and devoted himself to more academic economics and writing weighty letters to the Times on problems of the day. He was a foreign honorary member of the American Academy of Arts and Sciences
American Academy of Arts and Sciences
The American Academy of Arts and Sciences is an independent policy research center that conducts multidisciplinary studies of complex and emerging problems. The Academy’s elected members are leaders in the academic disciplines, the arts, business, and public affairs.James Bowdoin, John Adams, and...

, a foreign member of the Accademia Nazionale dei Lincei, and an honorary resident of the International Economic Committee.

He loved mountains and climbing, and introduced climbing to many friends, such as Wilfrid Noyce
Wilfrid Noyce
Cuthbert Wilfrid Francis Noyce was an English mountaineer and author...

 and others, who became far greater climbers. An illness affecting his heart developed in the early nineteen-thirties, however, and this affected his vigour, curtailing his climbing and leaving him with phases of debility for the rest of his life. Pigou gave up his professor's chair in 1943, but remained a Fellow of King's College until his death. In his later years he gradually became more of a recluse, emerging occasionally from his rooms to give lectures or to take a walk.

Major publications

  • Browning as a Religious Teacher, 1901.
  • The Riddle of the Tariff, 1903.
  • "Monopoly and Consumers' Surplus", 1904, EJ.
  • Principles and Methods of Industrial Peace, 1905.
  • Import Duties, 1906.
  • "Review of the Fifth Edition of Marshall's Principles of Economics", 1907, EJ.
  • "Producers' and Consumers' Surplus", 1910, EJ.
  • Wealth and Welfare, 1912.
  • Unemployment, 1914.
  • Some Aspects of the Housing Problem, Warburton Lecture, 1914.
  • "The Value of Money." 1917, Quarterly Journal of Economics, 32( 1), pp. 38-65.
  • The Economics of Welfare, 1920.
  • "Empty Economic Boxes: A reply", 1922, EJ.
  • The Political Economy of War, 1922.
  • "Exchange Value of Legal Tender Money", 1922, in: Essays in Applied Economics.
  • Essays in Applied Economics, 1923.
  • Industrial Fluctuations, 1927.
  • "The Law of Diminishing and Increasing Cost", 1927, EJ.
  • A Study in Public Finance, 1928.
  • "An Analysis of Supply", 1928, EJ.
  • The Theory of Unemployment, 1933.
  • The Economics of Stationary States, 1935.
  • "Mr. J.M. Keynes' General Theory of Employment ...," 1936, Economica, N.S. 3(10), pp. 115-132.
  • "Real and Money Wage Rates in Relation to Unemployment", 1937, EJ.
  • "Money Wages in Relation to Unemployment", 1938, EJ.
  • Employment and Equilibrium, 1941.
  • "The Classical Stationary State", 1943, EJ.
  • Lapses from Full Employment, 1944.
  • "Economic Progress in a Stable Environment", 1947, Economica.
  • The Veil of Money, 1949. First-page chapter-preview links
  • Keynes's General Theory: A retrospective view, 1951.
  • Essays in Economics, 1952.

See also

  • Pigou
    Pigou
    Pigou is an English surname of Hugenot derivation.The Pigou family originated from Amiens in France. The name was related to pique or pike, and the Pigou arms consist of three pike heads. Two sons of Lawrence Pigou of Amiens – Jacques and John - fled from persecution in France and settled with...

  • Pigovian tax
    Pigovian tax
    A Pigovian tax is a tax levied on a market activity that generates negative externalities. The tax is intended to correct the market outcome. In the presence of negative externalities, the social cost of a market activity is not covered by the private cost of the activity...

  • Pigou effect
    Pigou effect
    The Pigou effect is an economics term that refers to the stimulation of output and employment caused by increasing consumption due to a rise in real balances of wealth, particularly during deflation....

  • Pigou's two roads
  • Pigou's factory pollution

External links