Comment on the Nobel Prize in Economics 2015

strannegard-tirole

2015-10-14

The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2015 was awarded to Angus Deaton "for his analysis of consumption, poverty, and welfare". Martina Björkman Nyqvist, Assistant Professor at the Department of Economics, is very happy about the choice of this year’s winner, who is a leading researcher in her field of research - Development Economics.

Why is Angus Deaton’s research important and how does it make a difference?

I think it is amazing that the prize is given to a person who for many years has worked on research that advances our understanding of poverty and inequality. Deaton’s most important contribution is developing tools to measure and understand the extent of poverty in the world, which is necessary for quantifying the depths of poverty and to study changes in poverty over time.

In order to measure poverty you need to know the income of all households. However, it is very difficult to find a good measure of income in poor countries where the household has dozens of small activities, varying from day to day, most of which are products the family consumes themselves. Deaton showed that by using data on expenditures and consumption you can get a pretty good measure of the poverty level. Deaton is a pioneer in developing tools to measure consumption at the very local level through detailed household surveys. He has also contributed by showing how much we can pull out of these simple household data.

Deaton’s research has influenced my work in several ways. First of all, during my very first field project I went to Uganda in 2003 and I was supposed to set up a large household survey. I brought with me Deaton’s book Analysis of Household Surveys, as the guiding tool for how to design my questionnaire that collected good data on the family member’s work activities, earnings, health, education, and what food and items they consumed. Deaton has also studied how to measure household’s differential priority between girls and boys in developing countries. He studied this in Africa by looking at whether the households changed their consumption pattern differently when a boy was born compared to when a girl was born. This was a key research paper that I studied in depth when I was a PhD student and wrote my paper on gender bias in Uganda.

To sum up, it is fantastic to see Angus Deaton as the winner of the Nobel Prize in Economics 2015 from the perspective of caring about poverty, inequality, and getting the evidence right.