Today, the « Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel » was awarded to British Princeton professor Angus Deaton for « his analysis of consumption, poverty, and welfare, » according to the jury’s statement.
Angus Deaton is primarily known in academic circles for his demand model, created in the late 1970s with John Muellbauer, called AIDS: Almost Ideal Demand System. This system makes it possible to maximize an agent’s consumption under budget constraints, taking product prices into account. It serves as the basis for many other economic analyses and models, for example to assess the impact of a tax increase on consumption.
Deaton is also the originator of the Deaton paradox, which shows that consumption often resists income shocks because agents regulate it by adjusting their savings.
Finally, he has also contributed significantly to development and welfare economics. By focusing onthe microeconomic analysis of individual behavior, he has been able to measure individual welfare levels more accurately. His analyses have made it possible to examine various economic issues, such as the link between consumption and health, in particular « the relationship between income and the amount of calories consumed, » or « the extent of gender discrimination within the family. »
More broadly, in his book The Great Escape: Health, Wealth, and the Origins of Inequality, he shows the limitations of international development aid programs and proposes a number of solutions, such as incentives to encourage pharmaceutical companies to invest in drugs that can cure diseases affecting the poorest people, or the temporary facilitation of migration to encourage higher education in the countries concerned through scholarship systems.
Finally, he also conducted a study with Daniel Kahneman, showing that « money does not buy happiness » above $75,000 per year.
Sources: Le Monde, Les Echos
