STOCKHOLM (Reuters, Bloomberg, AFP) - Angus Deaton of Britain and the United States won the Nobel Economics Prize for “his analysis of consumption, poverty and welfare”, the Royal Swedish Academy of Sciences said on Monday (Oct 12).
The academy said that Deaton’s work had been a major influence on policy making, helping for example to determine which social groups are affected by an increase of value-added tax on food.
“To design economic policy that promotes welfare and reduces poverty, we must first understand individual consumption choices,” the Royal Swedish Academy of Sciences said on announcing the 8 million Swedish crown (S$1.37 million) prize.
“More than anyone else, Angus Deaton has enhanced this understanding. By linking detailed individual choices and aggregate outcomes, his research has helped transform the fields of microeconomics, macroeconomics, and development economics.”
Deaton was honoured for three related achievements: for 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 the work he carried out in later decades on measuring living standards and poverty in developing countries with the help of household surveys.
His research has shown how the clever use of household data can shed light on issues such as the relationship between income and calorie intake, and the extent of gender discrimination with the family.
- Optimist economist -
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 so much over time.
Speaking to reporters at the Nobel press conference by video link, Deaton said he believed poverty would continue to decline.
“I do foresee a decrease. 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 “so we are not out of the woods yet.”
Deaton said poverty reduction would for example resolve the current refugee crisis. “What we see is the result of hundreds of years of inequal development ... that left a whole part of the world behind,” he said. “Poverty reduction in poor countries would solve the problem but not in the short term.”
Deaton, 69, was born in Edinburgh and has been a professor of economics and international affairs at Princeton University in the United States since 1983. He holds both British and US citizenship.
He will receive his prize at a ceremony in Stockholm on Dec 10, the anniversary of the death of the prizes’ creator, Swedish scientist and philanthropist Alfred Nobel.
The economics prize, officially called the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel, caps this year’s Nobel season. Last week, the two most closely-watched prizes, those for literature and peace, went respectively to Belarussian writer Svetlana Alexievich and Tunisia’s National Dialogue Quartet, four civil society groups that helped rescue the only democracy to emerge from the Arab Spring.
The recognition the economics prize carries has helped previous winners bring their economic theories closer to policy making. Past laureates include Milton Friedman, James Tobin, Paul Krugman and Friedrich August von Hayek.
Last year’s award went to Frenchman Jean Tirole of the University of Toulouse for his work on how governments can regulate industries from banking to telecommunications.
Annual prizes for achievements in physics, chemistry, medicine, peace and literature were established in the will of Alfred Nobel, the Swedish inventor of dynamite, who died in 1896.
The prize in economic sciences was added by Sweden’s central bank in 1968.