Deaton wins Nobel prize in Economics

Deaton 

Princeton University’s Angus Deaton yesterday won the
Nobel prize in economics for his wide ranging work on
consumption that has helped redefine how poverty is
measured around the world, notably in India.
Deaton, 69, won the eight million Swedish kronor (about
$975,000) prize from the Royal Swedish Academy of
Sciences for work that the award committee says has
had “immense importance for human welfare, not least
in poor countries.”

The Secretary of the award committee, Torsten Persson,
said Deaton’s research has “really shown other
researchers and international organisations like the
World Bank how to go about understanding poverty at
the very basic level; so that’s perhaps the finest and
most important contribution he has made.”
Persson singled out Deaton’s work in showing how
individual behavior affects the wider economy and that
“we cannot understand the whole without understanding
what is happening in the miniature economy of our daily
choices.”

Deaton, who was born in Edinburgh, Scotland and holds
U.S. and British dual citizenship, said he was delighted
to have won the prize and was pleased that the
committee decided to award work that concerns the
poor people of the world.
In a press conference following the announcement,
Deaton said he expects extreme poverty in the world to
continue decreasing but that he isn’t “blindly optimistic.”
He said there are “tremendous health problems among
adults and children in India, where there has been a lot
of progress.” He noted that half of the children in the
country are “still malnourished” and “for many people in
the world, things are very bad indeed.”
The prize committee said Deaton’s work revolves around
three central questions: How do consumers distribute
their spending among different goods; how much of
society’s income is spent and how much is saved; and
how do we best measure and analyze welfare and
poverty?

Committee member Jakob Svensson said Deaton
introduced the “Almost Ideal Demand System,” which
has become a standard tool used by governments to
study what effect a change in economic policy – such as
an increase in sales taxes on food – will have on
different social groups and how large the subsequent
gains or losses will be.
The Royal Swedish Academy of Sciences also highlighted
the model that has become known as the Deaton
Paradox, in which he laid bare a contradiction between
earlier theory and data on consumer behaviour.
Ingvild Almas, associate professor at the Norwegian
School of Economics, said the Indian government has
changed its methodology for measuring poverty thanks
to research from the likes of Deaton and that has
affected poverty-reduction policies.
Yesterday’s announcement concludes this year’s
presentations of Nobel winners.

The medicine prize went to three scientists from Japan,
the U.S. and China who discovered drugs to fight
malaria and other tropical diseases. Japanese and
Canadian scientists won the physics prize for
discovering that tiny particles called neutrinos have
mass and scientists from Sweden, the U.S. and Turkey
won the chemistry prize for their research into the way
cells repair damaged DNA.
Belarusian investigative journalist Svetlana Alexievich
won the literature award while the peace prize went to
The National Dialogue Quartet in Tunisia for its
contribution to building democracy in Tunisia following
the 2011 Jasmine Revolution.
The awards will be handed out on Dec. 10, the
anniversary of prize founder Alfred Nobel’s death in
1896, at lavish ceremonies in Stockholm and Oslo.