his years somewhat secluded and would rarely discuss economics openly or in conversation. It is for this reason that it is believed that some of his best ideas might have been lost when he died in Cambridge, England, on March 7 of 1959.Pigous Contributions to the Study of EconomicsOne of Pigous major contributions to economics was his work in Welfare economics. He was a pioneer in this field. Probably his best work was done in the study of this. In 1912 he published his most important book titled Wealth and Welfare, which was later expanded and renamed The Economics of Welfare in 1920. This book played a major role in the education of many economists through the years. In it, Pigou discusses primarily three things, the full conditions of maximum satisfaction, the conditions under which private and social products might be different, and the measures which might be taken to bring the two into equality. Pigou thought that practical policies based on propositions from welfare economics were not possible because of the fact that comparisons of utility between people cannot be made. His distinction between private and social products was key to government economic policy in the field of public expenditure. He wrote a theory of welfare that was applicable in practice.Another of Pigous major contributions to economics was the real balance effect. Being the first to clearly state this concept, it ended up being called the Pigou effect. The Pigou effect is a stimulation of employment brought about by the rise in real value of liquid balances as a consequence of a decline in prices. As the real value of wealth increases, so will consumption increase, thus increasing income and employment. This was one of the processes which brought about the idea that full employment equilibrium could be obtained as a result of a reduction in real wages. The real balance effect became a well-respected idea in economics over time.Pigou also made sev...
