Angus Deaton's Economics Nobel Prize Matters To India. Here's Why

12/10/2015 5:53 PM IST | Updated 15/07/2016 8:25 AM IST
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Angus Deaton, the Princeton economist who's been awarded this year's Nobel for Economics has been awarded for trying to draw the links between poverty, consumption and welfare.

The Nobel Prize Foundation lists among his achievements: the system for estimating the demand for different goods that he and John Muellbauer developed around 1980; the studies of the link between consumption and income that he conducted around 1990; and the work he has carried out in later decades on measuring living standards and poverty in developing countries with the help of household surveys.

However important aspects of Deaton's work deal with India and have contributed to clarify (and provoke) discussions on the most accurate way to measure poverty in India. Here are some of those:

1. Poverty And Inequality In India:

This paper published along with economist Jean Dreze of the Ranchi University, in 2002 was part of a special series on poverty in India. Deaton and Dreze argued that the liberalization of the Indian economy in the '90s failed to improved nutrition by any significant measure in India. While there was certainly a fall in the number of people who lived in poverty, it was much less than official estimates.

The abstract in the Economic And Political Weekly goes:

poverty decline in the 1990s proceeded more or less in line with earlier trends. Regional disparities increased in the 1990s, with the southern and western regions doing much better than the northern and eastern regions. Economic inequality also increased within states, especially within urban areas, and between urban and rural areas. We briefly examine other development indicators, relating for instance to health and education. Most indicators have continued to improve in the nineties, but social progress has followed very diverse patterns, ranging from accelerated progress in some fields to slow down and even regression in others. We find no support for sweeping claims that the nineties have been a period of 'unprecedented improvement' or 'widespread impoverishment'.

2. Angus Deaton and Alessandro Tarozzi argued about the limitations of household surveys, the favoured method, in establishing poverty numbers.

The abstract from the June 2007 study goes:

We use data from the 2000 census of Mexico to construct synthetic “household surveys” and

to simulate the poverty mapping process. In this context, our simulations show that while the

poverty maps contain useful information, their nominal confidence intervals give a misleading

idea of precision.

Also Read: 2015 Economics Nobel Prize Awarded To Britain-born Angus Deaton

3. Angus Deaton and Valerie Kozel published a seminal review analysing the range of the positions and debates that the numbers on India's poor had provoked.

They argued that issues that ought have been left to statisticians were taken over by politicians and concluded that "although poverty fell in the 1990’s, the extent of the decline in rural areas might have been overstated by official numbers."

4. Angus Deaton in an intellectual clash with Arvind Panagariya, of the Columbia University and now chairman of the Niti Aayog sought to defend the position that the the heights of Indian children, were below the world average because of poor nutrition and not, as Panagariya endeavoured to show, a result of "genetic programming."

This is the abstract as it appeared in the pages of the Economic and Political Weekly in August 2013:

Indian children are very short, on average, compared with children living in other countries. Because height reflects early life health and net nutrition, and because good early life health also helps brains to grow and capabilities to develop, widespread growth faltering is a human development disaster. Panagariya acknowledges these facts, but argues that Indian children are particularly short because they are genetically programmed to be so

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