Angus Deaton, a British-US professor at Princeton University, won the Nobel Economics Prize Monday for groundbreaking work on poverty and promptly warned that inequality is becoming a serious global threat. The 69-year-old academic, who has spent more than 30 years in the United States, was honoured for using household surveys to show how consumers, particularly the poor, decide what to buy and how policymakers can help them.
India, one of the fastest growing economies in the world, is a key area of his research. "His work has helped transform modern microeconomics, macroeconomics and development economics," the Royal Swedish Academy of Sciences said. "To design economic policy that promotes welfare and reduces poverty, we must first understand individual consumption choices. More than anyone else, Angus Deaton has enhanced this understanding," it said. Deaton described winning the prize as a little like being struck by lightning and joked that he initially worried it was a prank. "I was not lying in bed at six o'clock this morning thinking, 'Oh, that phone call should come,'" he told reporters at Princeton.
"There was a very Swedish voice, which is almost enough, who said, 'I would like to speak to professor Angus Deaton, there is a very important telephone call for him from Stockholm'," he said. "They said some very nice things about me, which was very nice," he said to laughter. "Then they were very keen to make sure I did not think it was a prank... and of course as soon as they said that I thought, 'Oh my gosh, maybe this is a prank.'"
Deaton was honoured for three related achievements: developing with his colleague John Muellbauer around 1980 a system for estimating the demand for different goods; studies of the link between consumption and income that he conducted around 1990; and for measuring living standards and poverty in developing countries with the help of household surveys. Deaton "looks more closely at what poor households consume to get a better sense of their living standards and possible paths for economic development. He truly, deeply understands the implications of economic growth, the benefits of modernity, and political economy," Tyler Cowen, an economics professor at George Mason University in Virginia, said on his blog Marginal Revolution.
Deaton's research has shown how clever use of household data can shed light on issues such as the relationship between income and calorie intake, and gender discrimination within the family. Deaton saw how an economic indicator such as gross domestic product (GDP) - which measures a country's economic growth and is the preferred indicator of governments and institutions - was insufficient in evaluating the general welfare of a people. Deaton is optimistic about economic progress in the world. In his 2013 book "The Great Escape," he outlined how overall human welfare - especially longevity and prosperity - has risen spectacularly over time, even though the inequality gap between rich and poor has widened.
On Monday, Deaton told reporters that he believed poverty would continue to decline. "I think we've had a remarkable decrease for the past 20-30 years. I do expect that to continue," he said, noting however that there were still 700 million extremely poor people according to the World Bank.
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