Angus Deaton’s contribution to Indian policy making

The main focus of the Deaton’s study is on measurement issues. In the 1980’s, the research in the economic development was mostly based theoretical and wherever it was empirical, it was based on the aggregate data from nation accounts. And the studies were based on several assumptions about individual consumption behaviour. Deaton questioned the notion of aggregate data and assumptions about individual data. He suggested ways for improvements in collection of data through surveys. He has also thought about how these data could or could not be used, how to reduce measurement errors, and what inferences one can, or cannot, draw from data that might suffer from measurement errors.

Thus, Deaton is best known for linking aggregate data with individual data. He replaced the assumptions about the individual behaviour with robust individual-level data collection and analysis. His research is an important driving force for transition of empirical studies to focus on the advanced analysis of detailed data from individual households.

It’s worth note that a large part of Deaton’s work is related to India. Deaton’s contribution to Indian policy making can be divided in two broad categories. Firstly, his contribution related to identification of poor and disadvantaged sections and his research on the evolving status of nutrition and health. Secondly, his belief that it is only through strong state intervention that people can be pulled out of poverty.

His contribution to understanding price indices and poverty estimations has been very important to India. He highlighted the problems associated with computation of price indices in India and how these affect poverty estimation. He used the National Sample Surveys to fine-tune the way consumption expenditure was calculated. His suggestion to use prices implicit in the data collected by the National Sample Survey Office was implemented by the Suresh Tendulkar committee. He pointed out the measurement inaccuracies in the 55th round of the NSS (1999-2000). Until the 55th round, NSS surveyors collected consumption data by asking respondents to recall their expenditure over the past 30 days. But in the 55th round, it was decided that data would be simultaneously collected for both a 30-day and a 7-day recall. It was Deaton, who had suggested for collecting data for a 7-day recall. It is because people better remember the expenditure over a 7-day recall than over a 30-day recall.  Any over estimation in 30-day data would lead to an underestimation of poverty, and vice versa.

Further, Deaton never allowed any ideological colour to his work. His work focussed on the quality of collection of individual data and allowed the evidence to guide the final conclusion.

His academic papers on poverty and nutrition triggered many debates with fellow researchers both on the Left and the Right. In 1999-2000, there was a lot interest among the scholars to estimate the poverty levels in the country as it was for the first time in the post-liberalisation period. The proponents of liberalisation were keen to show that poverty has declined whereas those against liberalisation not willing to accept the same. However the Deaton’s work along with Jean Dreze found that while the official claim (that poverty had declined in the post-liberalisation period) was true but the claim that there had been acceleration in the rate of decline was not.

In 2009, his research paper on the nutrition situation in India once again provoked economists on both sides of the ideological spectrum. The researchers of the left side argued that the decline in calorie consumption was a symptom of rising poverty. However, Deaton along with Dreze pointed out that calorie intake was declining even at given levels of real per-capita expenditure, especially among the better-off households, and discussed other possible reasons for this pattern.

More recently, a new technique “Randomised Control Trials” (RCTs) has taken development economics by storm. Deaton is one of the few voices to question the over-reliance on RCT experiments while that acknowledging it as a valid body of evidence. For him, the problem is not with RCTs per se but on how to use RCTs.

Along with poverty estimation, he has applied his deep understanding of several disciplines to work on mortality, health, nutrition and well-being. He subscribed to the Amartya Sen school of thought, which emphasises the need for an effective contract between the people and the government. He has always underscored the role of the government in pulling people out of poverty. He argues that the absence of state capacity is one of the major causes of poverty and deprivation around the world. {Written with inputs from The Hindu and Indian Express}