Business

Angus Deaton Wins the Nobel Prize in Economics

The Princeton economist is being recognized "for his analysis of consumption, poverty, and welfare."

By Bourree Lam
Johan Jarnestad / The Royal Swedish Academy of Sciences
Saved Stories

On Monday, the Royal Swedish Academy of Sciences announced that Angus Deaton of Princeton University is the winner of the 2015 Prize in Economic Sciences in Memory of Alfred Nobel "for his analysis of consumption, poverty, and welfare."

On a call with reporters on Monday morning, Deaton said that he was “pretty sleepy” when he got the Nobel call, but that he was also “surprised and delighted.”

The Nobel committee said that three areas of Deaton’s work is being recognized: First, his work on demand systems on how consumers distribute spending in order to forecast consumption patterns; second, his work linking consumption and income on the individual and aggregate level; and third, his more recent research on household surveys, which has led to a greater understanding about how poverty affects living standards.

Deaton’s 2013 book, The Great Escape, sought to place today’s economic woes into a more historical context, and, by that measure, Deaton argued, things were looking up. As David Leonhardt of The New York Times wrote in his review:

Deaton, a respected professor of economics at Princeton, does not stint on describing the world’s problems, be they income inequality in rich countries, health problems in China and the United States or H.I.V. in Africa. Large sections of the book revolve around such troubles and potential solutions. Yet Deaton’s central message is deeply positive, almost gloriously so. By the most meaningful measures — how long we live, how healthy and happy we are, how much we know — life has never been better. Just as important, it is continuing to improve.

Deaton is surely aware that many readers will view these claims with skepticism, especially coming from someone whose discipline often seems to elevate money over basic human needs. He addresses this skepticism with both sweeping and granular descriptions of how life has improved. Life expectancy has risen a stunning 50 percent since 1900 and is still rising. Despite the resulting population explosion, the average quality of life has surged. The share of people living on less than $1 a day (in inflation-adjusted terms) has dropped to 14 percent, from 42 percent as recently as 1981. Even as inequality has surged within many countries, global inequality has very likely fallen, thanks largely to the rise of Asia. “Things are getting better,” he writes, “and hugely so.”

Deaton is 69 years old. He was born in Scotland and holds both American and British citizenship. Deaton has taught at Cambridge University and University of Bristol, but he’s been at Princeton University since 1983. He was the president of the American Economics Association in 2009.  American economists dominate the economics Nobel: More than 80 percent of laureates are American. Princeton University has done particularly well in recent years, as economist Justin Wolfers pointed out in a tweet:

In my interview last week with analyst David Pendlebury of Thomson Reuters, which compiles a list yearly of “Nobel caliber” economists based on citation data, Pendlebury mentioned that he suspected this year’s Nobel might focus on public economics—and that if so, Deaton would be a frontrunner.

Deaton will be presented with the Nobel medal on December 10 in Stockholm at the Nobel Prize Award Ceremonies.