First, Thomas Piketty’s masterpiece ‘Capitalism in the twenty-first century’ took the economic world by storm. The major theme in this book was the finding that return on capital exceeds the overall economic growth rate and therefore, unless remedial measures are taken, inequality between the owners of capital and others will keep escalating.
On a different note, in a country like India the fruits of globalisation hadn’t trickled down to the extent that it ought to have. The argument that increasing the size of the cake would help hasn’t worked.
Next came another bestseller. This was colourlessly, titled ‘Inequality’, and was scripted by Sir Anthony Barnes Atkinson. By the way, Sir Atkinson has developed a highly rated but complex ‘index of inequality,’ which goes by the name ‘Atkinson Inequality Index.’ The Atkinson Index is useful in determining which end of the distribution contributed most to the observed inequality.
And now, the 2015, the Nobel Prize in Economics has been awarded exclusively to Prof. Angus Deaton (69), for his analysis of consumption, poverty and welfare. The laureate is a Scottish-born economist with dual citizenships, American and English and is the Professor of Economics and International Affairs at the Princeton University.
Prof. Deaton is known for his magnum opus, ‘The Great Escape: Health, Wealth and the origins of Inequality.’ Empirical evidence presented in this book shows that many groups of people have missed the development bus that ensures better health and well-being arising from growth in GDP. It is interesting to note that the Nobel laureate acknowledges that his recent research ‘focuses on the determinants of health in rich and poor countries, as well as on the measurement of poverty in India and around the world.’ Ha, when it comes to poverty, you cannot afford to leave out the world’s second most populated nation.
In awarding Deaton, the Nobel Committee observed, ‘To design economic policy that promotes welfare and reduces poverty, we must first understand individual consumption choices. More than anyone else, Angus Deaton has enhanced this understanding.’ Deaton has called himself as ‘someone who’s concerned with the poor of the world and how people behave, and what gives them a good life.’
The Royal Swedish Academy of Science said that economic policy intended to reduce poverty could only be designed once individuals’ consumption choices were understood, saying, ‘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.’
In winning the Nobel Prize, Deaton joins the enlightened company of Paul Samuelson, Wassily Leontief, Gunnar Myrdal, Milton Friedman, Franco Modigliani, Harry Markowitz, John Nash, Myron Scholes and Eugene Fama.
I would have liked the award to go to Thomas Piketty, but then at 44 he is probably too young to be considered for the Nobel Prize!