Angus Deaton wins 2015 Nobel Prize in Economic Sciences

This year’s Nobel Prize in Economic Sciences has been won by Angus Deaton “for his analysis of consumption, poverty, and welfare”.

Now Dwight D. Eisenhower professor of economics and international affairs at Princeton University, Scotland-born Deaton grew up in Edinburgh, a city to which, he once told Times Higher Education, he attributes “a strong empirical tradition” as well as his own “dour scepticism”.

Educated (like former prime minister Tony Blair) at Fettes College and the University of Cambridge, he has lived in the US since 1983 and has for many years written a column called Letter from America for the Royal Economic Society’s newsletter.

Listen: THE books editor Karen Shook in conversation with Angus Deaton (2013)

In presenting him with the award, the Royal Swedish Academy of Sciences stressed Professor Deaton’s achievements in three separate fields. He had shed new light on “how consumers distribute their spending among different goods”, something “necessary for explaining and forecasting actual consumption patterns, but also crucial in evaluating how policy reforms, like changes in consumption taxes, affect the welfare of different groups”.

In his early work, he developed “the Almost Ideal Demand System” as “a way of estimating how the demand for each good depends on the prices of all goods and on individual incomes". This and its later variants had now become established as “standard tools, both in academia and in practical policy evaluation”.

Equally important, explained the academy, was Professor Deaton’s work in analysing “how much of society’s income is spent and how much is saved”, in which he demonstrated that we need to go beyond data for aggregate income and consumption and look also at individual data if we hope to “untangle the patterns we see in aggregate data, an approach that has since become widely adopted in modern macroeconomics”.

Finally, the academy drew attention to Professor Deaton’s work on measuring welfare and poverty, in which he had “uncovered important pitfalls when comparing the extent of poverty across time and place” but also “exemplified how the clever use of household data may shed light on such issues as the relationships between income and calorie intake, and the extent of gender discrimination within the family”.

Professor Deaton’s most recent book was The Great Escape: Health, Wealth, and the Origins of Inequality (2013). His collaborators include his fellow Nobel economics laureate Daniel Kahneman, professor emeritus of psychology and public affairs at Princeton University’s Woodrow Wilson School.

 matthew.reisz@tesglobal.com