Arthur Cecil Pigou (1877–1959)

Who They Were

Arthur Cecil Pigou (1877-1959) was a British economist and a central figure in the Cambridge school in the first half of the twentieth century. A successor to Alfred Marshall at Cambridge, he helped establish welfare economics as a distinct field concerned with how economic arrangements affect overall wellbeing. Working through the early and mid-twentieth century, he analysed the ways in which private economic activity can impose costs or benefits on third parties, and how policy might respond. His name endures in a concept taught in introductory economics: a corrective tax designed to make people account for the wider effects of their actions. He remains a foundational reference in the economics of externalities and public policy.

Key Contributions

Pigou is best known for the analysis of externalities - situations where an activity imposes costs, or confers benefits, on people who are not party to it. His central policy idea gives his name to the Pigouvian tax: a tax that makes a polluter face the cost their activity imposes on everyone else, so that private decisions better reflect their true social cost. This provides a rationale for taxing activities such as pollution and remains a standard tool in environmental and public economics. More broadly, his work helped found welfare economics, the study of how economic outcomes relate to social wellbeing. Because the site provides little detailed grounding on him, this entry keeps to these well-established contributions and avoids attaching precise dates to specific publications.

On EconRecall

British economist of the Cambridge school who founded modern welfare economics and gave his name to the Pigouvian tax. Play the games that feature Arthur Cecil Pigou:

• Match The Economist To Their Theory