A bibliographic reference is made to 'The Economics of Welfare,' a book by Arthur Pigou. It was published in London by Macmillan & Co. The work was originally released in 1920 and a later edition was published in 1932.

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Arthur Pigou (1877–1959) was a prominent neoclassical economist and a founder of welfare economics. Although his work was overlooked for much of the 20th century, it laid the groundwork for modern labour economics and environmental policy. His theoretical work was primarily focused on utilizing economics for the betterment of society. While he was outgoing in his youth, his experiences as an ambulance driver and conscientious objector in World War I, along with health anxieties, led him to become much more reclusive later in life.

Arthur Pigou (1877–1959)

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A Pigouvian tax, named after economist Arthur Pigou, is a tax on activities creating negative external effects. The concept went largely unrecognized until the 1960s but has since become a key policy tool for mitigating pollution and environmental damage. The tax is designed to correct inefficient market outcomes by making producers internalize the true social costs of their actions.

Pigouvian Tax (Definition)

This 1912 book by Arthur Pigou was a significant work in labor economics, earning high praise from economist Joseph Schumpeter. It importantly provided the conceptual foundation for Pigou's subsequent work, 'The Economics of Welfare.'

Book: Wealth and Welfare by Arthur Pigou (1912)

In his economic analysis, Arthur Pigou extended his focus beyond narrow financial metrics to include broader concepts of human happiness and wellbeing. He recognized that non-economic factors, such as political freedom and an individual's relative social status, were important components of societal welfare.

Pigou's Focus on Broader Measures of Wellbeing

Arthur Pigou argued for the necessity of reallocating resources when there is a divergence between the private interests of a firm or individual and the broader interests of society. This conflict is the underlying cause of what are now termed 'externalities'.

Pigou's Rationale for Intervention in Case of Externalities

A book written by Arthur Pigou that became a subject of critique by John Maynard Keynes in his work, 'The General Theory of Employment, Interest and Money'.

The Theory of Unemployment by Arthur Pigou

Despite a shared intellectual background as heirs to Alfred Marshall's school of economics, economists Arthur Pigou and John Maynard Keynes had significant disagreements and engaged in mutual criticism. A key example is Keynes's critique of Pigou's 'The Theory of Unemployment' within his 'General Theory', which was met with a critical response from Pigou.

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