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Vilfredo Pareto

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Vilfredo Pareto

Vilfredo Federico Damaso Pareto (born July 15, 1848 in Paris, France - died August 19, 1923 in Lausanne, Switzerland) made several important contributions to economics, sociology and moral philosophy, especially in the study of income distribution and in the analysis of individuals' choices. He introduced the concept of Pareto efficiency and helped develop the field of microeconomics with ideas such as indifference curves.

The son of a Genoese father and a French mother, Pareto studied engineering at the University of Turin. The five-year course in civil engineering, the first two years of which were devoted to mathematics, deeply influenced Pareto's future intellectual outlook. In 1870 he graduated with a thesis on "The Fundamental Principles of Equilibrium in Solid Bodies." His later interest in equilibrium analysis in economics and sociology is prefigured in this thesis. From 1870 until 1893 he worked as an engineer (like his father). Residing in Florence, he studied philosophy and politics and wrote many periodical articles in which he was one of the first to analyse economic problems with mathematical tools. In 1893 he was chosen to succeed Léon Walras in the chair of political economy at the University of Lausanne, Switzerland. He died in 1923 in Geneva.

Pareto's first work, Cours d'economie politique (1896-97), included his famous 'law' of income distribution, a complicated mathematical formulation in which he attempted to prove that the distribution of incomes and wealth in society is not random and that a consistent pattern appears throughout history, in all parts of the world and in all societies.

In his Manuale di economia politica (1906) and Manuale d'economie politique (1909 - a translation of the preceding item but with a completely redone mathematical appendix) he further developed his theory of pure economics. In this book he laid the foundation of modern welfare economics with his concept of the so-called Pareto optimum, stating that the optimum allocation of the resources of a society is not attained so long as it is possible to make at least one individual better off in his own estimation while keeping others as well off as before in their own estimation.

His most important sociological writings dealt with his theory of the 'circulation of elites'. Pareto wrote a sociology of the political process in which history consists essentially of a succession of elites whereby those with superior ability in the prevailing lower strata at any time challenge, and eventually overcome, the existing elite in the topmost stratum and replace them as the ruling minority. In Pareto's view, this pattern is repeated over and over again.

There is a Pareto Home Page at the Centre d'Etudes Interdisciplinaires Walras-Pareto at the Université de Lausanne. It includes a biography of Pareto (in French).

Other References

J Schumpeter, Ten Great Economists: London, George Allen and Unwin, 1952, pp. 110 - 142.

G. Busino, "Pareto, Vilfredo", in The New Palgrave, A Dictionary of Economics,1987, Volume 3, pp. 799-804.

J Schumpeter, History of Economic Analysis: London, George Allen and Unwin, 1954, pp. 859 - 61.