Newest Nobel laureate Angus Deaton: "Life is better now than at almost any time in history." http://nyti.ms/1NBlvSL
Nobel in Economics Given to Angus Deaton for Studies of Consumption
The
economist Angus Deaton has devoted his career to improving the data
that shape public policy, including measures of wealth and poverty,
savings and consumption, health and happiness.
Taking
advantage of faster computers and an explosion of newly accessible
information, he assembled the details of many individual lives to better
understand the sweep of economic trends.
On Monday around 6:10 a.m., when his wife handed him the telephone, Mr. Deaton, a professor at Princeton University, learned that he had won the 2015 Nobel Memorial Prize in Economic Science.
“To design economic policy that promotes welfare and reduces poverty, we must first understand individual consumption choices,” the Royal Swedish Academy of Sciences said
in announcing the economics prize, the last of this year’s Nobels.
“More than anyone else, Angus Deaton has enhanced this understanding.”
Professor
Deaton’s name has appeared for years on lists of likely laureates even
though he lacks a namesake theory or defining breakthrough. Despite his
relative obscurity, his colleagues and peers said he deserved
recognition for refining a rigorous approach to studying economic
development based on careful consideration of detailed data.
“Suppose
you wanted to understand the effect of a subsidy on rice on the
well-being of farmers,” said Dani Rodrik, a Harvard professor of
international political economy. “He has produced an approach that you
can actually use with household data to trace through the effect of
something like this on the well-being of different farmers.”
Professor
Deaton also has championed the collection and use of new kinds of data,
particularly about developing countries that often lack the statistics
readily available in the United States.
In his presidential address to the American Economic Association in 2010, Professor Deaton criticized some popular poverty measures, such as
the count of people living on less than $1 day. He said measures like
that overstated the prevalence of poverty; he encouraged increased
reliance on surveys of individual household circumstances.
“Simple
ways of looking at the world are often the basis of policy, and if the
statements are wrong, then the policy may be wrong also,” said the
economist Janet M. Currie, a Princeton colleague. “He’s always had a
concern for trying to capture the complexity of the real world.”
Professor
Deaton also has collaborated in recent years with the psychologist
Daniel Kahneman, a fellow Princeton professor and a previous economics
laureate, on work showing that happiness increases with income, but only up to about $75,000 a year. (Measures that ask people to assess overall well-being show that more money helps beyond that figure.)
Professor
Deaton, 69, was born in Scotland and educated at Cambridge before
taking a job at Princeton in 1983. He is a British and American citizen.
Professor
Currie, a former student of Professor Deaton’s and now his nominal boss
as chairwoman of the economics department at Princeton, described him
as “enormously funny and witty and well read, frighteningly erudite and
very good company.”
In
an interview on Monday, Professor Deaton said he had taken an interest
in economic development because “there’s a real moral urgency to
understanding how people behave and what we should or might be able to
do about it.”
He said the circumstances of his upbringing also played a role.
“I
grew up in Edinburgh,” he said. “It was a cold, messy and miserable
place to grow up, and I dreamed of going to tropical, colorful, hot
countries.”
Economics
before the 1980s relied on the assumption that the people represented
by a large economic aggregate behaved in roughly the same way, not
because that made sense but because accounting for diversity was too
hard.
Faster
computers allowed the creation of models that incorporated differences
in behavior. The Nobel committee cited Professor Deaton’s work around
1980 in modeling demand for individual goods, which was both some of the
earliest work in that vein and a model that remains in wide use.
In
continuing his research, he found that rising incomes tend to improve
calorie intake for the poorest families, but the effect diminishes at
higher income levels. Aggregate statistics, as a result, obscured the
benefits of income gains for very poor families.
“What
he’s shown is that you do learn a great deal more by looking at the
behavior that underlies the aggregates,” said Duncan Thomas, an
economist at Duke University and another former student.
Professor
Thomas said he also admired Professor Deaton’s clarity. “He will bring
evidence to the table in a way that makes you say, ‘Well, of course that
has to be right,’ ” Professor Thomas said.
His
work also is marked by an insistence that theories must explain these
more complicated sets of facts. “A good theoretical account must explain
all of the evidence that we see,” Professor Deaton wrote in a 2011 essay on his life in economics. “If it doesn’t work everywhere, we have no idea what we are talking about, and all is chaos.”
He has perhaps contributed more to the disruption of old understandings than the creation of new ones.
“There’s
a fair amount of policy agnosticism that comes from this — it
emphasizes more the heterogeneity of outcomes,” Professor Rodrik said of
Professor Deaton. “He’s somebody with quite a sharp tongue, and he’s
often had as his target people who make very strong statements about
this policy or that policy.”
Proponents
of foreign aid programs are a frequent target. Professor Deaton has
argued that such investments often undermine local governance and the
development of institutions necessary to sustain development.
One conclusion his writings have emphasized is the astonishing break between most of human history and modern times.
“Life is better now than at almost any time in history,” he wrote in the opening lines of his 2013 book “The Great Escape,”
a popular account of his work. “More people are richer and fewer people
live in dire poverty. Lives are longer and parents no longer routinely
watch a quarter of their children die.”
He counts climate change
and increased economic inequality in developed nations as threats to
this progress. He has noted in other work that inequality occurs
naturally because of divergent luck, but he has said that the growing
gaps in recent years pose a new economic and political challenge.
“I
think inequality has gone past the point where it’s helping us all get
rich, and it’s really becoming a serious threat,” he said. Professor
Deaton said he was “pretty sleepy” when he took the telephone from his
wife Monday morning.
“I was surprised and delighted,” he said. “It was wonderful to hear the voices of my friends on the committee.”
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