The Nobel Prize for Economics this year has gone to a Princeton University professor for “his analysis of consumption, poverty and welfare.”
Scottish-born Angus Deaton was awarded the annual prize Monday two years after the publication of arguably his most influential work, “The Great Escape: Health, Wealth and the Origins of Inequality”, which contained a controversial critique of the ineffectiveness of foreign aid.
The award of the prize to an internationally-acclaimed expert in inequality comes a year after the jury conspicuously passed over the French economist Thomas Piketty, whose “Capital in the Twenty-First Century” contained some similar criticisms of rising inequality in developed countries such as the U.S..
Deaton’s analysis of the theme in The Great Escape gave far more weight to the process by which rising wealth in China and other emerging markets has reduced inequality between states, as opposed to Piketty’s greater focus on rising inequality within them. Even so, Deaton too has been critical of the rise in inequality in the U.S. in recent years and has called Piketty’s work ‘seminal’.
Deaton’s other work includes an oft-cited 2005 critique (with Valerie Kozel) of the Indian economy in the 1990s, in which the authors tried to sift out reality from politicised sloganeering over the first decade of pro-market reforms after the end of the Cold War. They argued that poverty had indeed fallen, albeit not by as much as the political establishment and its supporters claimed.
Deaton has won plaudits for going beyond narrowly-defined economic measures of well-being, such as gross domestic product, to gauge the actual improvement in people’s lives. He highlights indicators such as height and relative life expectancy (the gap in the latter between rich and poor countries has narrowed substantially in the last 70 years).
However, it’s Deaton’s comments on foreign aid in The Great Escape that had, until today, brought him the most fame (or notoriety, depending on your point of view). Bill Gates was appalled by Deaton’s arguments that aid keeps poor countries from growing and that (in Gates’s summary) “the most compassionate thing we can do is to stop giving it.”
‘Economic Sciences’ is a relatively young addition to the list of Nobel Prizes, having been set up by the Swedish central bank in 1968. The other five prizes were set up through Alfred Nobel’s own will at the end of the 19th century.