Pigou's Wealth and Welfare: A centenary assessment

Pigou's Wealth and Welfare offered a programme of action that was potentially very interventionist. Any economic policy should be assessed, he proposed, by its expected effect on the size, distribution and variability of the national dividend. His programme, though rough and ready, has proved to be more useful than the 'new' welfare economics, which tended to leave distributional questions for others and 'efficiency' questions to competitive markets. Pigou himself, however, took a conservative view of what might be done in practice. The impact of policies on the size, distribution and variability of income is still a central focus of both popular and technical interest. Some of the issues now recognised as important to well-being, such as welfare in unequal societies and the experience of unemployment, may be subsumed into Pigou's three criteria.