Journal Article

A. C. Pigou’s rejection of Pareto’s law

Michael McLure

in Cambridge Journal of Economics

Published on behalf of Cambridge Political Economy Society

Volume 37, issue 4, pages 775-789
Published in print July 2013 | ISSN: 0309-166X
Published online October 2012 | e-ISSN: 1464-3545 | DOI: https://dx.doi.org/10.1093/cje/bes045

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In Pigou’s Wealth and Welfare, as well as in each of the four editions of his The Economics of Welfare, one chapter is dedicated entirely to the critical assessment, and ultimate rejection, of ‘Pareto’s law’ of income distribution. This note highlights Pigou’s uncorrected misreading of a critical aspect of Pareto’s analysis of income distribution; illustrates what his criticisms of Pareto’s law reveal about Pigou’s objectives for welfare economics; and indicates how Pareto’s analysis of income distribution could have been criticised in a manner that is consistent with Pigou’s objectives for welfare economics.

Keywords: Income distribution; Pareto’s law; Pigou; Economic welfare; B13; B31; I30

Journal Article.  6997 words.  Illustrated.

Subjects: Welfare and Poverty ; Individual Economists ; History of Economic Thought (to 1925)