Angus Deaton’s great escape

Angus Deaton, from Princeton University, was awarded the 2015 Nobel Prize of economics “for his analysis of consumption, poverty and welfare.” It was good news for all economists, and researchers from other disciplines as well, devoting their research efforts to the understanding of poverty and the design and evaluation of policies dedicated to alleviate it.

Angus Deaton‘s works contribute to all aspects of the analysis of poverty and well-being, from the most fundamental questions about the definition of human well-being to the more applied questions of how to interpret and handle well-being data.

Deaton has since long been interested in the way individuals make their choices regarding consumption, labor supply, fertility, as a function of their income, prices, taxes and subsidies, liquidity constraints, uncertainty, etc (see in particular [1]). Some of his most cited works, indeed, deal with the estimation methods of the way people behave and, therefore, reveal their trade offs between the different dimensions of their well-being. This is essential if one wishes to assess who gains and who looses from tax and transfers policies, for instance from food price subsidies, which are widespread in developing countries (see [3]).

As many researchers and policy makers point out nowadays, income is an important, but not the only source of well-being. Deaton has acknowledged this early in his research and has worked a lot on the analysis of especially health, its determinants, and how it relates (or not) to income (for instance in [2], showing that, contrary to some received wisdom in the field, ill-health is correlated to income poverty but not to income inequality). While health and material well-being are two dimensions to which Deaton has devoted most of his research on human well-being, he also acknowledges the importance of other dimensions, such as education and social participation.

His works have led Deaton to be interested in how people themselves assess their well-being. In the last few years, he has analyzed notions of subjective well-being and their measurement through the use of satisfaction data. In a famous paper co-authored with Daniel Kahneman (see [4]), he refers to recent surveys to document the distinction between “being satisfied with one’s life” and “feeling happy”, a distinction that was not clearly done in the literature on “the economics of happiness.” The authors show for instance that the feeling of happiness is much less correlated to income than the cognitive evaluation of one’s life. This justifies being cautious in the use of satisfaction and/or happiness data in a theory of well-being. Deaton considers that emotional states are one component of well-being (it is important to feel well), but no more than one component among many others, in particular material consumption and health.

Deaton has often offered detailed critical empirical analyses of questions related to well-being and poverty. Recently, for instance, he analyzed, together with his colleague Jean Drèze from the Delhi School of Economics, the puzzling evidence of the decrease in average calorie intake in India over the last 25 years (see [5]). Deaton and his co-author explored the possible ways of making sense of such facts, from the deficiencies of the data collections in the major nutrition surveys in India to the influence of better health conditions on the behavior of people.

Two years ago, Deaton published a book entitled “the Great Escape.” The book offers an impressive survey of what we currently know about the distribution of well-being across the world and how the current situation is the consequence of natural conditions, institutions, choices, policies, etc. (see [6]). It is a must for all people interested in questions of poverty and well-being.

Looking back to Deaton’s works, we think there are three main reasons why the Nobel Academy made a justified choice. First, Deaton’s works have deeply impacted the discipline, as well as practitioners and policy makers. His painstaking and creative empirical research goes beyond the mere surface of the statistics and raises many challenging questions. He typically goes beyond the obvious, and he challenges/pushes common wisdom. Second, the questions that he has raised are of the highest importance for our societies, especially in these days of repeated crises, low growth and rising inequalities. Third, Deaton’s research is consistent with crucial and sometimes neglected values: critical appraisal of economic concepts and methods, and the care devoted to all steps of the development of an approach including the handling of awkward details.

[1] A. Deaton and J. Muellbauer 1980, ‘Economics and Consumer Behavior,’ Cambridge: Cambridge University Press.

[2] A. Deaton 2003, ‘Health, inequality and economic development,’ Journal of Economic Literature, vol. 41(1), pages 113-158.

[3] A. Deaton 1997, The Analysis of Household Surveys, Baltimore: Johns Hopkins University Press.

[4] D. Kahneman and A. Deaton 2010, ‘High income improves evaluation of life but not emotional well-being,’ Proceedings of the National Academy of Sciences of the United States of America, 107(38) 16489–16493.

[5] A. Deaton and J. Drèze 2009, ‘Food and nutrition in India: facts and interpretation,’ Economic and Political Weekly, XLIV (7) 42-65.

[6] A Deaton 2013, The Great Escape: Health, Wealth, and the Origins of Inequality,’ Princeton: Princeton University Press.

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