October 13, 2015
Some background on Princeton don Angus Deaton, the 2015 Nobel Laureate in Economics (www.wsj.com):
Before the work of French economist Thomas Piketty transformed the U.S. political discussion on income inequality last year, Princeton economist Angus Deaton devised important new ways of measuring household consumption, living standards and poverty that shaped the current political economy debate.
Those contributions earned Mr. Deaton the Nobel Memorial Prize for Economic Sciences on Monday (October 12, 2015) from the Royal Swedish Academy of Sciences. The academy said Mr. Deaton’s contributions to the study of individual consumption had provided crucial insights for policy makers addressing economic welfare and poverty reduction.
Mr. Deaton, a week shy of his 70th birthday, was born in Scotland and is a dual citizen of the United Kingdom and the United States. He earned his Ph.D. at Cambridge University and moved to the U.S. in 1983 to teach at Princeton University.
The Nobel committee highlighted three key questions that Mr. Deaton’s research had informed:
- How do consumers distribute their spending?
- How much do individuals save and spend their own income?
- How should poverty be measured?
The academy described the academic contributions that Mr. Deaton made to economics, including models that challenged existing methods for how to measure consumer demand for goods and that improved the understanding of how individual consumption levels vary in ways that can’t be seen in aggregate.
Here’s one good example that the academy draws attention to in its summary of his work that provides a flavor of his contributions to the field:
For a long time, economists have labored with the idea that a country may become stuck in a poverty trap. Low incomes can result in such low calorie intake that people cannot work at full capacity—thus their incomes remain low, and so does their calorie intake. The question of poverty traps is important in designing international assistance to the poorest countries. If assistance is geared towards encouraging economic growth, but increasing income still does not lead to noticeably increased calorie intake, there is an argument for reorienting assistance towards direct food aid. Deaton’s research on the relationship between income and calorie intake has shed important light on this issue: increased income does indeed lead to more calories being consumed. On the other hand, the evidence does not support the hypothesis that malnutrition explains poverty. In other words, malnutrition is largely the consequence of a low income, not vice versa.
He publishes a biannual column on developments in U.S. political economy and wrote a 2013 book on inequality. Those writings have covered a wide range of topics that include the need for regional price measurements, the risks of too much regulation in academia, the dark side of extreme income inequality that corrodes basic state institutions like the courts, and the failures of foreign aid to improve outcomes for the poor. One report on the minimum wage debate and the way it has divided the economics profession was written nearly 20 years ago, but the themes in it have aged little.
Angus Deaton of Princeton wins the 2015 Nobel Prize in Economics
@The Washington Post
Angus Deaton, a Professor at Princeton, has won the Nobel Prize in economics for his research into how people rich and poor make decisions about what to buy and how much to save.
“I’ve always been interested in what makes lives better for people and how they behave,” Deaton said Monday morning in a phone interview with the Post. Deaton’s research has made diverse contributions to the study of consumer spending, with particular attention to the world’s poorest.
The Nobel Prize committee recognized Deaton for his “analysis of consumption, poverty, and welfare” — a broad phrase to describe a broad body of research.
“His work covers a wide spectrum, from the deepest implications of theory to the grittiest detail of measurement,” the panel of Swedish economists wrote in its announcement of the prize.
“I always thought that because I’d worked on so many different things they would tend to pass me over,” Deaton joked. “But they did a wonderful job of sort of cobbling it all together and making it sound really integrated,” he said.
Deaton’s research into theories of consumption and survey techniques changed how economists think as well as how they conduct their research. His early work helped bridge the divide between those who study the choices of individuals and those who study the greater economic forces that stir countries.
In recent decades, he has spent much of his time using those ideas to investigate poverty in developing nations, especially India and South Africa. The prize Monday brings attention to the increasingly vigorous field of development economics.
“I’m so delighted, not just for myself, but that this sort of work is being recognized,” Deaton said by phone at a press event Monday.
Asked about the refugee crisis sweeping Europe, Deaton expressed sympathy for those who have been uprooted by poverty and war. “What we’re seeing now is the result of hundreds of years of unequal development in the rich world, which has left a lot of the world behind,” he said.
Deaton’s efforts surveying poor households — measuring malnutrition, living standards, and whether parents discriminate between boys and girls — has helped economists better understand those who live on less than a dollar a day. Through his research, often with the World Bank, he has been a first-hand witness to the decline of extreme poverty in recent decades.
At the press event Monday, Deaton expressed optimism about continued progress — but reminded the audience that several hundred million people still live in “something close to destitution.”
“You have to remember that we’re not out of the woods yet,” he said. “For many, many people in the world, things are very bad indeed.”
The Nobel prize in economics comes with an award of about $976,000, and most winners have been American. Edinburgh-born Deaton has joint British and U.S. citizenship. In 2014, economist Jean Tirole of France won the prize for research into market power and regulation.