Dalton, Edward Hugh John Neale (1887–1962)

Abstract

British fiscal economist and prominent Labour politician, Hugh Dalton was a student of A.C. Pigou and J.M. Keynes. His main professional interest was in the use of taxation as an instrument for the redistribution of income and wealth, an interest inspired by Pigou’s teaching and by his revulsion at the contrast between the sufferings inflicted on younger generations by the First World War and the material gains of those who financed or profited from the war itself. (Dalton spent four years on military service in France and Italy and lost several close friends, including the poet Rupert Brooke.) His main contribution was to investigate the properties of a modification of Bernoulli’s formula dw = dw/x where w = economic welfare and x = income but in which equal increases in welfare should correspond to more than proportionate increases in income, a condition satisfied by Dalton’s formula dw = dx/x² so that w = c − 1/x where c is a constant. Using this formula he concluded that economic welfare would be improved by transfers from rich to poor (Dalton 1935), a proposition that has excited the interest of ‘modern’ public finance theorists of the neo-utilitarian school (see Fishburn and Willig 1984). He elaborated his ideas in several works including his highly successful standard text Principles of Public Finance and in his lectures as Reader in Economics at the London School of Economics (1923–36). There he was responsible for teaching and for recommending Lionel Robbins to be Professor of Economics, a typical example of his desire not only to ‘corrupt the young’ (as he termed it) but also to promote the interests even of those with whom he disagreed.