Nobel to Deaton, good news for India

The award of the Nobel Prize in economics to Angus Deaton is of special significance to India because he undertook a good part of the work, for which he was given the prize, in India. Deaton’s work, in fact, had more to do with India than that of Indian economist Amartya Sen, who too has won the Nobel economics prize. The major contribution that Deaton has made is in the understanding of poverty, and this he has done with special reference to India. Poverty can be an abstract concept, a general or relative idea or a state of lack of basic needs. It has to be defined correctly for formulation of the right policies to deal with it, and Deaton’s work has helped in this. The Nobel committee said that he is being awarded for his analysis of consumption, poverty and welfare. He himself has maintained that the measurement of poverty in India and around the world is his main research interest.

Deaton laid great emphasis on collection of data, measurement and empirical verification. His seminal work with India-based economist Jean Dreze showed that empirical research can clear many misconceptions. For example, they showed that a decrease in calorie
intake by Indians in recent years is not a sign of increase in poverty but could be explained by the intake of a more diversified diet, which is a sign of falling poverty and a resulting nutrition transition. He challenged the reigning notion in economics that poverty can be measured by expenditure, and put forward the view that consumption patterns of individuals are a better indicator and a more reliable guide of economic wellbeing. He also believed that field data had to support such estimates. He was very critical of methods like “randomised controlled trials’’ which often fail to give a correct gauge of reality. He has himself spent many months in India collecting data the hard way from the country’s most backward regions. His work has done much to improve economic theory, and will act in future as a guide to framing of policies by governments.

Deaton cannot be characterised ideologically as a rightist or leftist, but he has championed the need for state-led employment schemes to reduce poverty. He accepts that economic growth results in inequalities, but also points out that without growth there cannot be a reduction in poverty. He also supports a socially-driven and comprehensive approach to economic growth, which characterises the  development model seen in Kerala. Importantly, Deaton shows how the ends of economics, which is reputedly amoral, can be human.

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