Angus Deaton: The Economics Nobel Prize Winner 2015

It’s out. It’s Angus Deaton. A prize for outstanding empirical contribution towards understanding consumption, poverty and health better.

Angus Deaton has been on the Nobel radar for a while now and whilst I haven’t really read him extensively, there are a few things that I’ve always admired about him and I thought an informal, quick blog on his contribution today wouldn’t be really out of place.

For starters, Angus Deaton isn’t your average talk-smart-so-that-noone-understands-you economist. The man writes in pure English (FULL points from me on this!) and it is here that his entire explanation of poverty becomes extremely accessible and interesting for the student of economics or even for an averagely intelligent common man. His book titled “The Great Escape: Health, Wealth and the Origins of Inequality” is one of the most interesting pieces of work done by a Nobel Laureate.

The book starts by talking about the movie “The Great Escape.” For those of you who haven’t seen it, the movie is about a South African from    the Royal Air Force who was captured by the Nazis and re-escaped the camp multiple times only to be re-captured multiple times. The movie shows how a handful of prisoners build three tunnels Tom, Dick and Harry right under the nose of the Nazis to escape from the camp. All but three were re-captured and a few died.

What is it that the enterprising prisoners wanted? They wanted freedom, and were willing to risk their life for gaining a better life. Such great escape episodes have happened numerous times in the history of mankind. The Industrial Revolution or Reforms initiation in India could be examples of a concerted effort by a section of the population to move towards a better, more unencumbered life.

It is here that Deaton comes out with a mind-boggling issue. He says that even if the movie did not, it makes sense for a social scientist to dwell on what happened to those who did not manage to escape. Superb! Very often, it is the others left behind who suffer the consequences of the great escape in that it is them who bear more physical hardships or reduced freedom after the escape.

And herein lies the genesis of inequality. Inequality, says Deaton, is a natural by-product of those who desire growth. Re-escape and re-capture: That is the way growth progresses. But it leaves in its wake numerous and sometimes more severe problems for those who didn’t manage to escape. As global growth episodes sharpened, especially after 1985, there were billions who benefited by the process. Just as there were billions who got hurt due to the great escape.

How do we measure inequality? As an economist, one would be tempted to go by the usual GDP rule. Has the gap in terms of GDP widened? A lot of economists put a lot of energy in describing how to measure this gap. Deaton remarks that it is not about how to measure, but rather about what to measure. He is almost Amartya Sen-esque when he alludes to the rising health inequality being as important or maybe even more important than the rising wealth inequality. He has been prolific in terms of the empirical body of evidence he provides to prove that health gaps have increased so much in the past few years that measurement of the wealth gaps by themselves are almost meaningless.

Whenever great epidemics have made their presence felt, great escapes from the epidemics have also come out in the form of new vaccines. Vaccines for malaria and cholera helped everyone across the board, but to begin with, it helped the richer classes access a better life, broadening the gap in the living standards. That smoking causes cancer is a beaten-up statement; yet it is the richer classes that manage to quit smoking more successfully than the poorer classes. Here’s a beautiful quote from Deaton that I am particularly fond of “Necessity may be the mother of invention, but there is nothing that guarantees a successful pregnancy.”

There is one more thing about Deaton: He has been particularly fond of the Indian case-study in his numerous works on poverty, health and welfare. This prize should help the Indian reforms and growth-distribution debate to come into sharper focus and hence will hopefully create more insights for Indian policy-makers.

All in all, a superb choice. I have only one small concern which stems largely from my rightist orientation. The award is a Great Escape for the left camp. Let no one say that left is not right. I only hope it won’t cause more pain in the Great Left Behind camp of those policy makers that believe in growth. Modiji, are you listening?

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2 thoughts on “Angus Deaton: The Economics Nobel Prize Winner 2015

  1. I just recently found this blog. It is great to have these nuggets from Manasi Ma’m again. Haven’t read Mr. Deaton but you do make economics simple & lucid. Thanks for sharing. Can’t wait for the next one 🙂

    Liked by 1 person

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