With its emphasis on growth and development, as opposed to the inequality that inevitably accompanies it, [Deaton's] The Great Escape [Health, Wealth, and the Origins of Inequality] makes an ideal companion to Thomas Piketty’s Capital in the Twenty-First Century (Harvard, 2014). That, too, may have been part of what the Nobel committee had in mind.
The very wealthy have little need for state-provided education or health care… They have even less reason to support health insurance for everyone, or to worry about the low quality of public schools that plagues much of the country. They will oppose any regulation of banks that restricts profits, even if it helps those who cannot cover their mortgages or protects the public against predatory lending, deceptive advertising, or even a repetition of the financial crash. To worry about these consequences of extreme inequality has nothing to do with being envious of the rich and everything to do with the fear that rapidly growing top incomes are a threat to the wellbeing of everyone else.Bottom line: Deaton like Thomas Piketty has a hate for wealth and capital accumulation and maintains an absurd view on inequality (SEE:This Is What Those Who Are Concerned About Inequality Fail to Grasp) and sees a major role for government in changing the world so it looks more like the way he would like it.
This dovetails into your Nobel analysis.
Some messy economics hereWolfers writes in his NYT essay:
The central contribution of Angus Deaton, the latest winner of the Nobel Memorial Prize in economics, has been to shift the gaze of his fellow economists beyond measures of income, to broader measures of well-being.The problem with this Deaton work is two-fold. First it results in an emphasis on looking at inequality numbers as if inequality is a problem (SEE: This Is What Those Who Are Concerned About Inequality Fail to Grasp) and secondly, Deaton's work tends to imply that economics is an empirical science rather than a deductive one, That is, although empirical data collection is useful in the sense it is economic history, it is opposite the direction one wants to go in when considering economic theory, which can only be correctly arrived at using deductive logic based on fundamental principles,
Much of his research has focused on consumption — measures of the food people eat, the condition of their housing, and the services they consume. And he has been a trailblazer in shifting the attention of economists away from the behavior of economywide aggregates such as gross domestic product, and toward the analysis of individual households....
But perhaps Mr. Deaton’s most important effect has been within the field of development economics, which focuses on the economies of poor countries. This is a research program born of deep personal conviction. As he recently wrote, “Those of us who were lucky enough to be born in the right countries have a moral obligation to reduce poverty and ill health in the world.”...
More than that, he’s motivated by the questions that really matter, he is intellectually relentless, he has enormous integrity and he has devoted his life to understanding and improving the lot of the poor. He’s the perfect role model for any young economist.
More recently, Mr. Deaton has turned his attention to measures of subjective well-being, including happiness. In his 2010 Presidential address to the American Economic Association, Mr. Deaton highlighted the problems in constructing coherent measures of global poverty. Measures of income don’t offer much insight unless they can be thought of in terms of differences in purchasing power. But it is impossible to assess who has more or less purchasing power when people in different countries face different prices and choose to buy different goods. Given this problem, Mr. Deaton makes the radical suggestion that economists just ask people about their well-being instead.Needless to say, I am not happy with this turn in direction. Just ask me.
Many of the most important findings on subjective well-being reflect new sources of data that Mr. Deaton — together with the psychologists Ed Diener, Arthur Stone and Daniel Kahneman, a fellow Nobel laureate — have helped create through their role as a senior scientists at Gallup.
Angus Deaton has won the Nobel, which is wonderful — dogged, careful empirical work at the micro level, tracking and making sense of individual households, their choices, and why they matter...
Anyway, Deaton is also a fine writer with important things to say about political economy. Cardiff Garcia excerpts a passage in which he explains why we should care about the concentration of wealth at the top:
[T]here is a danger that the rapid growth of top incomes can become self-reinforcing through the political access that money can bring. Rules are set not in the public interest but in the interest of the rich, who use those rules to become yet richer and more influential.…To worry about these consequences of extreme inequality has nothing to do with being envious of the rich and everything to do with the fear that rapidly growing top incomes are a threat to the wellbeing of everyone else.
The world is a better place than it used to be. People are healthier, wealthier, and live longer. Yet the escapes from destitution by so many has left gaping inequalities between people and nations. In The Great Escape, Angus Deaton--one of the foremost experts on economic development and on poverty--tells the remarkable story of how, beginning 250 years ago, some parts of the world experienced sustained progress, opening up gaps and setting the stage for today's disproportionately unequal world. Deaton takes an in-depth look at the historical and ongoing patterns behind the health and wealth of nations, and addresses what needs to be done to help those left behind.Here is an FT video where he discusses the book.
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.
As part of the world becomes rich and no longer worries about day-to-day survival, it can look outward. Many residents of developed countries have a “need to help” those less fortunate.
But the attempts to help often – perhaps even usually – go awry.
As medical progress began to diffuse around the world, people stopped dying so young, and that made for an increase in population, especially in less-developed countries. Developed countries thought they would help poor nations by encouraging population control, based on the dubious proposition that more people means more poverty.
“What the world’s poor – the people who were actually having all these babies – thought about all this was not given much consideration,” Professor Deaton says, citing China’s continuing one-child policy as an example. He adds: “The misdiagnosis of the population explosion by the vast majority of social scientists and policy makers, and the grave harm that the resultant mistaken policy did to many millions, were among the most serious intellectual and ethical failures of a century in which there were many.”
Other types of foreign aid to developing nations have also been a disaster, he says, with “pictures of starving children being used to raise funds that were used in part to prolong war, or to N.G.O.-funded camps being used as bases to train militias bent on genocide.”
Professor Deaton’s book is primarily international in focus, and he insists that help for the American poor is different and more effective than aiding the world’s poor.
Nevertheless, American readers may be left wondering how much aid to American poor, is, as Professor Deaton says, “more about satisfying our own need to help, and less about improving the lot of the poor.”That said, Deaton does seem to be obsessed with inequality, including developed country inequality, as evidenced by this letter to the Royal Economic Society,
Deaton spearheaded the use of household survey data in developing countries, especially
data on consumption, to measure living standards and poverty. In so doing, Deaton helpedransform development economics from a largely theoretical field based on crude macro data, to a field dominated by empirical research based on high-quality micro data.
He showed the value of using consumption and expenditure data to analyze welfare of the poor, and identified shortcomings when comparing living standards across time and place.
Deaton’s research has addressed issues of great practical significance, and his contributions have influenced policymaking in developing and developed countries. His work covers a wide spectrum, from the deepest implications of theory to the grittiest detail of measurement. The common themes are connecting theory and measurement, and linking micro and macro data by using relevant statistical methods.Bottom line: The Noble Committee appears to be making a curtsey toward the socialist Piketty, and his rage against inequality, with this year's award.
