July 2016 newsletter – Maurice Peston

Maurice Harry Peston, was born on the 19th March 1931 and died 23rd April 2016. He is survived by his wife Helen, whom he had known from when they were teenagers and whom he married in 1958. They had three children; Juliet, Ed and Robert of TV fame and two grandsons, Simon and Maximilian.

Maurice grew up in the East End of London and obtained a first at the London School of Economics before winning a Fulbright scholarship that took him to Princeton University. He returned to Britain for national service and — because of his research in the US into game theory — he was promoted to senior scientific officer in the Army Operational Research Group. Still in his mid-20s, he held the notional rank of lieutenant colonel. After a spell as a lecturer and reader at the LSE, at the age of 34, he was invited to establish and head a (Cockney) economics department in Queen Mary College in the University of London on the Mile End Road in the East End and within the sound of Bow bells! He remained there for more than 20 years retiring as emeritus professor in 1988.

He was an economic adviser to the Treasury (1962-64); to the Ministry of Defence (1964-66), and to the House of Commons select committee on nationalised industries (1966-70 and 1972-73). In 1987 he was created a life peer as Baron Peston of Mile End, (where else)? He chaired the House of Lords committee on monetary policy from 1998 to 2001. In his Lords biography he is listed as having been a member of fifteen committees ranging from the Library and Computers Sub Committee in 1987 — he had to start somewhere — and then progressed on to the Economic Affairs Committee in the early 2000s. In the mid-1980s Maurice did a weekly thirty-minute slot on LBC radio and also enjoyed occasionally writing Bill Keegan’s column in the Observer. His education writing was important to him, in his regular 1970s column in the Times Educational Supplement; and he had lots of fun on Robert Robertson's Radio 4 Saturday evening programme, 'Stop the Week'. 

I first encountered Maurice in 1984. I had arrived as a rather old lowly graduate student at Queen Mary College to do a PhD. It was my first economics seminar at QMC and I quickly realized that Professor Peston was sitting in the back of the class clearly paying little attention to what was going on. Half way through the seminar Maurice piped up ‘but have you thought about this…’? Of course the presenter hadn’t and it was downhill from there. I heard Maurice ask the killer seminar question so many times. It was a great training and a hard act to follow.

His students of course, loved him and still do. He was especially proud of the success of his first student Dame Dame Collette Bowe Chairman of the Council of Queen Mary, University of London, who chairs the Banking Standards Board now and of Gerard Lyons, from 1999 to 2012 at Standard Chartered and subsequently adviser to the then Mayor of London, Boris Johnson. He was proud of the fact that I was a dissenter on the MPC; he simply assumed he had taught me well and as usual was probably right. There is an annual lecture in Maurice’s honour at what is now Queen Mary, University of London, that has attracted a who’s who of economists, including Charles Goodhart, Sushil Wadhwani, David Currie and Richard Lipsey. Most recently Bank of England Governor Mark Carney gave the 2016 lecture on the fiftieth anniversary of the Economics Department that Maurice set up. His beloved son Robert gave the lecture in 2015. He said it well ‘Dad is a world class economist, who stayed firmly rooted in the economic landscape originally discovered, charted and developed by Keynes’. Indeed.

Maurice along with my other mentor at QMC, Bernard Corry, emphasized the importance of the economics of walking about. You breathe in the air and listen to what people say and take it seriously. If you tracked what business and consumers said, what Keynes called animal spirits, in the early part of 2008 it told you a nasty recession was coming. Maurice especially liked my story that a cab driver on Oxford Street in early 2008 told me that something was up as he noticed for the first time ever that shoppers didn't have bags. He also liked my story that a firm that serviced tyres and had tachometers on delivery trucks had told me that they noticed that the number of miles being driven was markedly down at Easter 2008, which was the start of the Great Recession in the UK. The Bank of England Agents’ scores started to turn down in early 2008 but they were largely ignored, also but the hard quantitative data didn’t turn down until much later.

As the years went by I came to know Maurice pretty well. We occasionally had lunch together at the House of Lords. I recall him coming back from the fortieth celebrations of the D-Day landings with Margaret Thatcher and striding into the common room and announcing that he had a great time and had even met Ronald Reagan. There were Americans and Canadians and Australians as well as even a few Germans, which he thought was fine. He objected though, with his usual twinkle in his eye, that somebody had invited the French along which he couldn’t understand as ‘they weren't there last time so it wasn’t clear why they were there this time’. Of course no offence intended, well not much. I also recall him explaining that the greatest movie of all time was Ghostbusters. I recall walking down a corridor at the House of Lords with him to show me a painting of the House of Lords. He was extremely pleased that he had persuaded the painter to put him in the picture twice. Only Maurice. When he was going for lunch with Governor Eddie George once at the Bank of England, they wanted to know if he wanted to park his car there and he said no problem as he was coming by bus. Apparently this caused some commotion and Eddie wanted to send a car to collect him but Maurice was insistent that the bus was fine.

We shouldn’t forget his major contributions to economic theory. His major publications are listed below including in the American Economic Review; the Quarterly Journal of EconomicsThe Review of Economics and Statistics; the Economic Journal and Economica. Of particular note are the papers he did on the balanced budget multiplier (Peston, 1958) and jointly with Baumol (1955). He had a well received 1982 book on macro policy. Maurice also wrote about a broad range of topics including industrial development areas; port costs and the demand for port facilities, public goods as well as later to issues in education and in the public finances. He applied his economics to problems that mattered in people’s lives. Maurice though, was not much impressed by what has been going on in economics as it has become divorced from the real world. His concerns, that I continue to share, were well expressed here on the twenty-fifth anniversary of the letter to the Times by 364 economists that he continued to believe were correct, complaining about Thatcher’s economic policies.

‘Economics journals continue to be full of weird and wonderful theories, which are for the most part rehashes of earlier weird and wonderful theories. What has changed is that it is now absolutely necessary to formulate everything in high-powered mathematical terms. I know I should be accused of churlishness if I were to add that this is intended largely to disguise the essential triviality of what is set forth. Occasionally, something of intellectual interest emerges, and there is even the odd article that throws light on the real world. Econometrics too gets more and more sophisticated, but rarely is anything of value discovered.’ (M H Peston, ‘The 364 were correct’, 2006).

He was a truly delightful friend and mentor and a fine, eclectic economist. Maurice was also a proud Arsenal fan. I can’t do better than finish with lines from the Van Morrison song ‘The Master’s Eyes’.

'And my questions all were answered
When the light shone from the master
When the light shone, from the master’s eyes’.

We will all miss him. A great man.


M H Peston, (1972), ‘The correlation between targets and instruments’, Economica, Vol. 39, No. 156, November, pp. 427-431

M H Peston (1960), ‘Income distribution in the Edgeworth Box diagram’ Economic Journal, Vol. 70, No. 278, June, pp. 331-335

M H Peston (1959a), ‘A view of the aggregation problem’, Review of Economic Studies, Vol. 27, No. 1, October, pp. 58-64

M H Peston (1959b), ‘On the sales maximization hypothesis’, Economica, Vol. 26, No. 102, May, pp. 128-136

M H Peston (1958), ‘Generalizing the balanced budget multiplier’, Review of Economics and Statistics, Vol. 40, No. 3, August, pp. 288-291

M H Peston (1957), ‘Acceleration and magnification’, American Economic Review, Vol. 47, No. 6, December, pp. 1000-1003

W J Baumol and M H Peston (1955), ‘More on the multiplier effects of a balanced budget’, American Economic Review, Vol. 45, No. 1, March, pp. 140-148

M H Peston and B S Yamey (1960), ‘Inter-temporal price relationships with forward markets: a method of analysis’, Economica, Vol. 27, No. 108, November, pp. 355-367

T M Whitin and M H Peston (1954), ‘Random variations, risk, and returns to scale’, Quarterly Journal of Economics, Vol. 68, No. 4, November, pp. 603-612

Danny Blanchflower
Dartmouth College, USA.