Angus Deaton of Princeton University was awarded the 2015 Nobel Prize in Economics for his analysis of consumption, poverty and welfare, the Royal Swedish Academy of Sciences said on Monday.
When the Academy called, “I was pretty sleepy...I was delighted,” Deaton told reporters via a phone line created with the Swedish capital on Monday. “Like many economists, I knew this was a possibility, and was delighted to hear” from Stockholm.
Fans were quick to applaud the choice. “Angus Deaton is the Obi-Wan Kenobi of Economics,” Amitabh Chandra of Harvard University said in a tweet.
The 69-year-old laureate’s research has focused on health in both rich and poor countries, as well as on measuring poverty in India and around the world. Born in Scotland, and a citizen of the U.S. and the U.K., Deaton obtained his Ph.D. from the University of Cambridge. His 2013 book, “The Great Escape,” maps the origins of inequality and its fallout spanning 250 years of economic history.
“To design economic policy that promotes welfare and reduces poverty, we must first understand individual consumption choices,” the Academy said. “More than anyone else, Angus Deaton has enhanced this understanding. By linking detailed individual choices and aggregate outcomes, his research has helped transform the fields of microeconomics, macroeconomics and development economics.”
Deaton’s early research has helped develop a greater understanding of consumer spending patterns and how people adapt their consumption to their incomes. His more recent focus on household surveys has helped change development economics from a theoretical field based on aggregate data to an empirical field based on detailed individual data, the Academy said.
According to Mats Persson, a member of the committee that hands out the prize in Stockholm, Deaton’s work on development economics “is very practically applicable,” he said after the announcement. “How to measure poverty, how to make statistics of living standards in poor countries, has poverty increased or decreased, and if so, by how much, and how should we direct foreign aid?"
Deaton’s studies into demand systems also shed light on how policy measures feed through to households in an economy, Persson said. “If, for instance, a government decides to change the value-added tax on food, you can, through his research, see how that affects consumption and what impact it would have on food and other goods," he said.
The recognition the prize carries has helped previous winners bring their economic theories closer to policy making. Past laureates include Milton Friedman, James Tobin, Paul Krugman and Friedrich August von Hayek. Last year’s award went to Frenchman Jean Tirole of the University of Toulouse for his work on how governments can regulate industries from banking to telecommunications.
Annual prizes for achievements in physics, chemistry, medicine, peace and literature were established in the will of Alfred Nobel, the Swedish inventor of dynamite, who died in 1896. The prize in economic sciences was added by Sweden’s central bank in 1968. The total amount for each of the 2015 prizes is 8 million kronor ($977,000).