Nobel Prize

Angus Deaton: 2015 Economics Nobel Laureate

"We've seen a remarkable decrease over the past 20 years, and I do forecast that will continue."

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AngusDeaton
Princeton

Princeton University economist Angus Deaton is this year's recipient of the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel. Deaton's work has focused on how to reconcile economic theory with economic data, specifically looking at various measures of well-being, health, inequality, consumption, and economic growth. During a teleconference after the prize announcement, Deaton declared:

"I do foresee a decrease [in poverty]. We've seen a remarkable decrease over the past 20 years, and I do forecast that will continue….But I don't want to sound like a blind optimist."

A great deal of his life's work is summarized in his 2013 book, The Great Escape: Wealth, Health, and the Origin of Inequality. From the introduction:

LIFE IS BETTER NOW than at almost any time in history. More people are richer and fewer people live in dire poverty. Lives are longer and parents no longer routinely watch a quarter of their children die. Yet millions still experience the horrors of destitution and of premature death. The world is hugely unequal. Inequality is often a consequence of progress. Not everyone gets rich at the same time, and not everyone gets immediate access to the latest life-saving measures, whether access to clean water, to vaccines, or to new drugs for preventing heart disease. Inequalities in turn affect progress. This can be good; Indian children see what education can do and go to school too. It can be bad if the winners try to stop others from following them, pulling up the ladders behind them. The newly rich may use their wealth to influence politicians to restrict public education or health care that they themselves do not need.

From the publisher's press release:

Deaton describes vast innovations and wrenching setbacks: the successes of antibiotics, pest control, vaccinations, and clean water on the one hand, and disastrous famines and the HIV/AIDS epidemic on the other. He examines the United States, a nation that has prospered but is today experiencing slower growth and increasing inequality. He also considers how economic growth in India and China has improved the lives of more than a billion people. Deaton argues that international aid has been ineffective and even harmful. He suggests alternative efforts–including reforming incentives to drug companies and lifting trade restrictions–that will allow the developing world to bring about its own Great Escape.

With regard to falling global poverty, the World Bank earlier this month forecasted:

The number of people living in extreme poverty around the world is likely to fall to under 10 percent of the global population in 2015, according to World Bank projections released today, giving fresh evidence that a quarter-century-long sustained reduction in poverty is moving the world closer to the historic goal of ending poverty by 2030.

The Bank uses an updated international poverty line of US $1.90 a day, which incorporates new information on differences in the cost of living across countries (the PPP exchange rates). The new line preserves the real purchasing power of the previous line (of $1.25 a day in 2005 prices) in the world's poorest countries. Using this new line (as well as new country-level data on living standards), the World Bank projects that global poverty will have fallen from 902 million people or 12.8 per cent of the global population in 2012 to 702 million people, or 9.6 per cent of the global population, this year.

Congratulations to Professor Deaton.

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  1. “The newly rich may use their wealth to influence politicians to restrict public education or health care that they themselves do not need.”

    Stupid question: where does this actually happen? Excluding cases where the newly-rich are the politicians.

    1. I kind of wondered that myself. Are there really newly rich people that are trying to limit access to education and health care?

      I can absolutely believe that entrenched current providers of education and health care are trying to limit new entrants, which in turn limits access for the poor. But is some new Chinese millionaire or billionaire from the manufacturing industry really on a mission to keep his workers’ children out of school?

      1. I would guess that for people who actually came by their money through honest exchange, it is pretty obvious that keeping people in poverty is not in their own best interest.

        Of course “access” to something is also often a code word for someone else paying for it.

      2. I think he’s using progspeak, so “denying access”= doesn’t want to pay for someone else’s free shit.

        1. Maybe. I know nothing about him but he doesn’t seem like a garden variety progressive. He seems to acknowledge that inequality can actually be a good thing insofar as differences in outcomes still give people incentive to work hard to try and achieve something better than their status quo.

    2. What they mean is that rich people might use their wealth to campaign for politicians who won’t raise their taxes, thereby restricting funding to public education, blah blah blah…

    3. I’m guessing “restrict access to” is progie-speak for “don’t want to foot the bill for”.

      1. That’s what he means. Note the “public” education and health care.

        Public = paid for by somebody else.

        1. And of course the only reason rich people want to limit this is to “stop others from following them, pulling up the ladders behind them”.

          Christ, my cat has deeper thoughts than this. Can she get a Nobel?

          1. That would be a Nipel.

          2. In fairness to this guy, the ladder analogy often comes to mind whenever I hear about Warren Buffet.

    4. And in the case of India, I think a lot of the “newly rich” got that way via private schools, not public education.

    5. R: The main concern here is the rise of crony capitalism. Something along the lines of Mancur Olson’s The Rise and Decline of Nations. See this blogpost for more information.

      1. I don’t see what crony capitalism has to do with lobbying against public education or healthcare. Or if he meant “crony capitalism” why didn’t he just say that?

      2. Since when do crony capitalists oppose more government programs? I thought that was the whole point of being a crony capitalist – to have a lot of government programs to dip your beak into.

    6. Savers do it every day.

  2. He examines the United States, a nation that has prospered but is today experiencing slower growth and increasing inequality.

    I don’t care how many iPhones you give the 99%, there won’t truly be an end to poverty until my tuition is paid for by someone else.

  3. And yet loads of people are determined to believe that things are getting worse for people in every conceivable way. Pathetic.

    Even for those of us who absolutely hate everything political that is going on, it’s nice to reflect on how pleasant things really are today for a whole lot of people.

    1. People don’t *actually* believe things are getting worse. They can look around and see that their iPhones keep getting better and they’re living longer and so on. The whole “the world is going to hell” thing is a fad. It’s a fad specifically because things are getting better. It’s just posturing and social signaling to scream that the sky is falling. Just like people scream about racism when we’re probably at a time where racism is at the lowest point it’s ever been; have you noted this trend?

      People are lazy as fuck and do shit when it’s easy. You know when it’s easy to endlessly whine about how bad things are getting? When it’s actually the exact opposite.

      1. I certainly have noted it regarding racism as well. You’d think we were heading back to Jim Crow the way some people go on.

        If it was just people making themselves miserable, I wouldn’t care so much. But it gets used by politicians to maintain a permanent crisis mode so we always must DO SOMETHING!

        1. Oh, it is definitely an attempt to spread the misery, to stick it to other people, etc. That’s just how (unpleasant) people roll.

        2. Politicians need all those little separations to have a cause to defend; thus justifying something that they can get little groups to rally around! The media then becomes the trumpet to announce all of these injustices. Politicians, newspapers, TV, etc. then justify themselves as products!

  4. Life will always be unequal for the stupid, the lazy, and the infirm. No fantasy can change that.

    1. How -ist, -centric, -phobic, and -archal of you.

      1. Realist, fact-centric, fantasy-phobic, and . . . OK, I got nuthin for “archal”.

        1. Matriarchal?

    2. I guess that includes everybody ever since equality is impossible.

    3. Or for the people who would rather just live a modest life and not work too hard. I could probably be rich if that’s what I had decided to pursue after college. But I had other priorities, so I’m not. That’s not a failure of the economy.

    4. Dean Wormer, is that you?

  5. Actually the reason for falling global poverty numbers is relatively simple. In much of the third world, leaders have taken to stealing slightly less output than they previously stole. The resulting gains in productivity (as producing makes sense as an activity to do, since you won’t have it all taken from you) have revolutionized standards of living.

  6. The book title is actually listed wrong. It is “health, wealth, and…” not, “wealth, health, and…”

  7. Not everyone gets rich at the same time, and not everyone gets immediate access to the latest life-saving measures, whether access to clean water, to vaccines, or to new drugs for preventing heart disease. Inequalities in turn affect progress. This can be good; Indian children see what education can do and go to school too.

    It’s really refreshing to see someone saying this. There is still support for meritocracy and unequal outcomes arising from differences in effort, skill, etc. But most people say they want equal opportunity. Well, yeah, that sounds nice, but I actually don’t.

    My grandparents and parents worked hard to send me to a private school because they valued that for me. Before that my grandparents worked hard to send my parents to college. If everyone was guaranteed the same quality of education (a fantasy in practice, but let’s say private schools were outlawed) then the incentive to work hard to improve opportunities for your children would be reduced. But that extra hard work benefits everyone. It created more wealth that my parents used for a better education for my brother and I.

    1. You’re describing the perils of equal outcome, not equal opportunity. Equal opportunity doesn’t omit the need to work hard for a better outcome.

      1. Equal opportunity does not guarantee equal outcomes.

        Equal rights do not guarantee equal opportunity.

      2. No, I’m saying that if equal opportunity was actually enforced, there would be no incentive for people to try and create better opportunities for their children.

    2. “My grandparents and parents worked hard to send me to a private school because they valued that for me.”

      Profiting from the work of your parents and grandparents is by definition an undeserved reward.

      1. Indeed. Those profits should be stripped from your parents, and distributed by the State.

        Because getting a handout from the State that has been forcibly seized from its owners is the very definition of a deserved reward.

        1. This sort of thing where, rather than responding to what was written one reacts to an imaginary declarative, is a form of fetishism. You’re arguing with yourself.

      2. Yeah, absolutely. I benefited from their hard work, but they worked hard in large part of my benefit. If they couldn’t have passed those benefits on to me, would they have worked as hard? I think it is likely that the answer is “no”. And then, not only might I have been worse off, but so would the other people who their work enriched.

  8. He examines the United States, a nation that has prospered but is today experiencing slower growth and increasing inequality.

    So if we decrease inequity, there will be faster growth. /prog

  9. [pedantry] It’s not a Nobel Prize. Yes, there is some crossover with the Nobel system (the selection committee is based at the same institution as is the Nobel committee for Physics and Chemistry, but also the same institution that awards honors for arthritis research and crystallography that don’t trade on the Nobel name). It is, however, a separate award established not by Alfred Nobel’s estate but by Sweden’s central bank. [/pedantry]

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