Commentary: The Mother Teresa Of EconomicsPeter Coy
You can say this for Amartya K. Sen, the latest Nobel laureate in economics: He's less likely than the 1997 winners to imperil the world financial system. Last year, the award went to Myron S. Scholes and Robert C. Merton of Long-Term Capital Management, the overleveraged Greenwich (Conn.) hedge fund that might have brought down the banks like a house of cards if the Federal Reserve hadn't engineered a $3.6 billion private rescue.
In honoring Sen, an Indian-born economist whose work focuses on the plight of the world's poor, the Nobel committee might have been trying to atone for the LTCM debacle. After all, the Nobel imprimatur likely helped the firm borrow long after other speculators would have been cut off.
"DEEP CONCERN." Sen, in contrast, is economics' answer to Mother Teresa. "There's a very, very strong moral thread that runs throughout his work. He has a deep concern in his work for people and human dignity," says David E. Bloom, who taught a course with Sen at Harvard University. Says Sen: "I've spent most of my life working on the downside of economics."
Sen was first intrigued by economic problems when, at age 9, he handed out tins of rice to victims of starvation in Bengal. Years later, he concluded that a shortage of food is only rarely the cause of famines. Rather, the problem is that the poorest people don't have the money to buy what food there is. Says Debraj Ray, a development economist at Boston University: "It's not a novel understanding that famines can be caused by market failure. But Sen was the one to pound it down the throats of people."
Sen's guiding principle is that well-being can't be measured only by wealth. It's a point that he says is an old one, but has been neglected by many economists. Sen provided some of the intellectual inspiration for the United Nations' Human Development Index, which ranks nations according to life expectancy at birth and educational attainment in addition to per-capita income.
Sen hasn't been afraid to criticize the failings of the developing world. In 1992, he called attention to the 100 million "missing" females in parts of Asia, where parents who prefer male children have aborted, killed, or starved baby girls. He has also heaped scorn on claims by Asian leaders such as former Singapore Prime Minister Lee Kuan Yew, that freedom is a Western value not suited for Asia and Africa.
Taking care of society's most vulnerable isn't just an ethical mandate, Sen has taught. It's also good for business. He argues that one reason India's economic growth has trailed China's is that India has failed to educate its masses. And he blames the current developing-world economic crisis largely on leaders who failed to prepare their populations for the global economy.
Sen also made contributions to more theoretical areas of economics, largely building on the work of American Nobel laureate Kenneth Arrow. In one paper, he advanced social-choice theory, proving mathematically that it is impossible to achieve a state of "Pareto optimality"--a measure of societal satisfaction--while also fully respecting each person's right to freedom of action.
Earlier this year, Sen left Harvard after 10 years to become Master of Trinity College at Cambridge University, where he received bachelor's and doctoral degrees. At 64, he hopes to relax a bit. "Wine is not a subject in which I lack interest," he told a British interviewer.
The name Amartya was given to Sen by Bengali poet and Nobel laureate Rabindranath Tagore. It means "one who deserves immortality." By forcing economists' attention on the problem of poverty, Sen has lived up to his name. His work is a welcome contrast to that of last year's winners. And, sadly, given the human devastation in which hot-money capitalism played a part, Sen has become very much a man for our time.