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After receiving his BSc (Econ) degree from UCL, John Pencavel and his friend Tony Phipps were encouraged by Professor John Spraos to return to UCL to take up the new one year MSc degree. They did so and thereby became the first students in this new programme. About half-way through that year, John Spraos encouraged Pencavel to do some graduate work in the USA, Pencavel wrote to the US Embassy in London who sent him information on scholarships at Harvard, Yale, Princeton, and MIT. He applied to the Princeton and Yale fellowships and got one to Princeton. The planned one year at Princeton University turned into three and he earned a PhD degree there. Although he was intending to return to England or to take up a position in Canada or New Zealand, unexpectedly, he was offered a position at Stanford University in California. This seemed too good an opportunity to turn down so he accepted it and although he has had opportunities to leave Stanford, he was enticed to stay. John Pencavel has now been at Stanford for over forty years.
Why did you choose to become an economist? Was it a good choice?
In my sixth form at grammar school, when applying to university, I applied both to departments of Economics and to History. When offered places at both, I chose Economics and I suppose that marks my choice to become an economist. I think it was a good choice for me. I still read a lot of history but I am pleased to have become an economist.
Why did you choose to study at UCL?
One of my teachers at grammar school (Edward Clark who taught Economics and Economic History) was a UCL graduate and he encouraged me to study at UCL. I am glad I took his advice.
Do you think your time at UCL has had an important impact on your career?
Yes. My time at UCL (three years as an undergraduate and one year doing the M.Sc. Degree) was a wonderful time. My interest in Economics waxed and it was a remarkable time to live in the centre of one of the world’s great cities. I had fine teachers and, in particular, John Spraos’ instruction and advice were very consequential. His blend of theory and empirical research was very attractive and I have tried to emulate it in my own research.
What do you see as your main contribution to Economics?
I identify two main contributions. One has been the development of behavioral models of trade unions. When I was a student, although economists endowed individuals and firms with goals and constraints, trade unions used to be treated as if they were beyond formal characterization and they were left to industrial relations specialists (heavy in sociology) who emphasized rules and conventions. A number of scholars have brought unions and labour market bargaining within the reach of economists’ familiar models and I like to think that I have been one of those scholars.
My other contribution has been to construct and apply models of worker cooperatives. Why are most firms owned and managed by those who supply the financial capital instead of those who supply labor? I have had some success in answering this question and in comparing the reactions of capitalist firms with the reactions of worker co-ops to common shocks to their economic environments.
Less solemnly, one of my contributions to Economics has been the JEL Classification System (that the Royal Economic Society has adopted in modified form) . I was editor of the Journal of Economic Literature for a number of years. During that time, I took it upon myself to revise the system for classifying articles and books in Economics. The system that I developed was adopted by the American Economic Association and remains (with amendments) to this day. It is not an accident that Labour Economics has the letter code of J !
Do you think Economics is in good health?
I think the field within Economics that I know best - Labour Economics - is in good health. My concern about Economics is not so much with Economics research, but more about the uses of Economics for public policy. Economists enamoured of the ability of markets to allocate resources have encouraged the extension of markets into areas where markets operated subject to restrictions and amendments. Thus, over the last forty years or so, more dimensions of Health, Education, Housing, and other necessities have become exchangeable on markets: one may purchase better medical care, access to highly touted universities, and larger and better equipped houses. The set asides and subsidies for certain levels of medical care, education, and housing have been trimmed. This is why having an income and, indeed, a high income matters more today than it did 40 years ago. The scope of things traded on markets has become greater. Of course, income inequality has grown over this period; in other words, income inequality has grown over a period when the market allocates more “necessary” resources.
Work is another necessity. The absence of paid employment is not merely a material blight on people’s lives; it is also a psychological and emotional scourge. Formal economics does not recognize this. On the contrary, increases in hours of work generate disutility so no wonder some economists are apt to treat unemployment as an issue of second-order importance in economic policy.
If you want more along these lines, I recommend an old classic “The Gift Relationship” by Richard Titmuss (ostensibly about the market for blood but, more generally, about health) and, more recently, “What Money Can’t Buy” by Michael Sandel.
What are the most important questions to be addressed over the coming years?
I don’t know. I would like to see economists talk more about Ethics.
How do you see UCL Economics in comparison with U.S. departments?
Obviously, UCL Economics has a deservedly excellent reputation. If you seek some indication of that, I offer as evidence the Stanford University Department of Economics which has on its faculty six people with degrees from UCL Economics.
Have you kept in contact with your peers from your time at UCL?
Yes. One of them, Tony Phipps (already mentioned above) was a very good friend from grammar school, but I have also kept in touch with others. A reunion was organized last summer and I was delighted to attend.
When will we next see you back at UCL?
I don’t know. I attended a conference at the IFS last summer. My sister and her family live in East Anglia and I make an effort to see them as frequently as my dislike of long air journeys permits.