Nobel Prize in Economic Sciences 2015

The Nobel Prize in Economic Sciences 2015 was awarded to Angus Deaton of Princeton University, New Jersey, USA, “for his analysis of consumption, poverty, and welfare”.

Angus Deaton is a British born economist. He earned his PhD in economics from Cambridge University and later he moved to USA. Mr. Deaton is known for his work on consumption theory, welfare and inequality.

Deaton looks at the economic development from the starting point of consumption rather than income. Deaton’s first work known as the almost ideal demand system (AIDS)-which models how consumers spend their money, or “how the demand for each good depends on the prices of all goods on individual incomes.”

His work focussed on the three questions: How do consumers distribute their spending among different goods? How much of society’s income is spent and how much is saved? and How do we best measure and analyse poverty and welfare?

He questioned the date collected in large surveys and suggested the ways to improve it. He spearheaded the use of household survey data in developing countries, especially the data on individual consumption to calculate poverty and living standards.

His work has helped the governments to improve economic policy through tools such as how different social groups are affected by specific changes in taxation.

In his 2013 book, “The Great Escape,” Deaton expressed scepticism about the effectiveness of international aid. He noted that India and China have lifted tens of millions of people out of poverty despite receiving relatively little aid money. At the same time, many African countries have remained mired in poverty despite receiving substantial aid.