At about 6 a.m. last Monday, Princeton University economist Dr. Angus Deaton received a call from members of the Nobel committee, informing him that he'd been selected to receive the 2015 Nobel Memorial Prize in Economic Science. The award marks the culmination of a career that, as the Royal Swedish Academy of Sciences put it, transformed "the fields of microeconomics, macroeconomics, and development economics" by "linking detailed individual choices and aggregate outcomes."
Over the course of nearly five decades, Deaton, who colleagues have called "enormously funny and witty and well read, frighteningly erudite and very good company," has pioneered ways to better understand subtle human behavior through data—and he's shaped public policy in the process.
We had the opportunity to speak with the Cambridge-educated professor, who's hoping this award will allow his ideas to reach new audiences.
The Nobel committee has acknowledged that the prize is meant to honor the work you've done over your entire career. That being said, is there a particular project or moment or breakthrough you are most proud of?
I'm one of these people who are fortunate enough [to have] my recent project be the one I'm most excited by; it always seems to be the best. Some people would call that fickle, in that I'm always giving up on one thing and moving onto something else. It sort of keeps you young, I think. I'm always very excited about what I'm doing.
Do you notice a common thread between the times when other researchers or members of the media are excited about your work, and when they are not?
Not really. I think that has more to do with them than it has to do with me. I could give you an example on both sides: I worked for a long time to try to understand why the prices of primary commodities have behaved the way they do, and I can tell you it's something most people don't get very excited about—how the price of copper fluctuates. On the other hand, in recent years, I've been working on happiness, and I can tell you everybody gets very excited about that.
You've said that, while economic data might show higher national incomes improving the health and well-being of most people in the world, there are still many groups missing out. Which groups are those, and can you point to a linking factor that is leaving specific groups behind?
Well, the latter question is much harder than the former. If we knew the answer to the latter, maybe we'd be able to do things about it. There has been this extraordinary decline in poverty rates around the world over the last 30 to 40 years, and there's been this huge decline in rates of infant mortality—more kids are seeing their fifth birthday than ever. If you go back not so long, certainly since the Second World War, there were many countries in Africa where the median age of death was about five, meaning that about half of all people who were born were dead by the time they were five. I don't think there's any country in the world where infant mortality rates have not fallen over the last 50 years or so.
The bad side is that, even if we get down to 10 percent of the world being poor, meaning living in something pretty close to destitution, imagine trying to live in the United States—and take housing and health care out of this—on $1.90 a day, and I think that would give you some idea of the level of living for many people around the world. And there are 700 million of those people alive—twice the population of the U.S.—living in something pretty close to total destitution.
You've said that you think life is better now than at any point in history. Why might that be?
There's more democracy in the world than there's ever been, there's more people getting a chance to go to school, especially girls, many of whom throughout human history have had no chance at all. In my book I talk about doing survey work in the state of Rajasthan, in Western India. When we interviewed people in their homes I don't think we found a single [mother] who could read or write, and yet you could look out the windows of the houses and you could see little columns of girls going to school. Now, a lot of those schools leave something to be desired, but that's just an enormous amount of progress. For many of us—though my parents could certainly read and write, my father left school at age 12—it's not so far away. There's just been a huge amount of improvement.
You semi-controversially said before that delivering foreign aid to countries with developing economies is not necessarily a good thing, or at least a constructive thing. Can you explain your thought process to me?
I think that, especially in countries, many of which are in Africa, where almost all government finance is coming from abroad, giving more foreign aid is not a very good thing. And it's not that the country is welfare dependent; it's that the government is welfare dependent, and then the government is not very interested in helping its own people. The government has to respond to the aid agencies rather than the demands of their own people. This is not to say that some of that aid doesn't do good things. If you give antiretroviral therapy to people who have HIV, then you're going to help save their lives, and that's a huge gain. On the other hand, at some point, if all the money comes from outside, the government is not going to build hospitals or clinics or schools or whatever it needs.
I didn't say that aid for Africa is a bad thing, but that aid in Africa tends to be the problem. I think the aid for Africa can be very good, especially if that money is used, for example, to do basic scientific research on diseases that Africans suffer from, or to help African countries be better represented in multi-lateral trade talks, or to help do something about American farm policy that hurts farmers around the world.
You've made a career out of using big data and numbers to try to explain, or at least understand, human behavior, most notably as it relates to consumption. It seems like you're trying to merge economics and psychology.
[Applied economics'] roots are in psychology, and psychology is about understanding behavior. But yes, I think these distinctions have been breaking down a lot in recent years, and I think that's just terrific.
If you go back to the '70s and '80s, there was a lot of comment on the fact that economics was moving into the other social sciences. The subjects that we were supposed to be conquering have invaded us instead, and I think that's very, very good. Psychology is [now] much more closely knit with economics, and I think the same is true with political science. Economists are thinking about politics, and there are a lot of political scientists who are thinking pretty hard about economics. The term "integrated social science" may be a little bit too much, but we're certainly moving in a very nice direction, and it's all to do with human behavior in some way.
How do you, as an economist, integrate social science?
I think we're [achieving this through] the invasion from psychology—economists talking seriously with psychologists, and vice versa. And often that's very, very difficult, because we might use the same word for two completely different things. I worked for a few years with Daniel Kahneman; those conversations were very productive, but occasionally very frustrating when we'd discover that we're talking about two very different things, but using the same term. You can suddenly feel the ground opening between your feet; you think you're communicating, and you're not. There's some really, really terrific work being done in what is now broadly called behavioral economics, which is really, you know, combined psychology and economics.
Can you think of any specific tools that have, over your career, allowed you to do your job better?
I can think of three of them: computers, computers, and computers. Of course, computers work in many different ways. I've already talked about the enormity of available data, which has had a huge difference. When I started out, you really had to rely on theory all the time because you didn't have any numbers to tell you whether the theory was right or not, so basically you took the theory as given and took the few numbers we had and hung them on the theory. Whereas now, theory, I think, to some extent has been in retreat, which is a pity because we need it; there's such an enormous amount of empirical evidence, and a lot of it doesn't fit very well with the sort of things we fought.
So the utilization of massive amounts of data has worked to knock down some theories?
Yeah. [After analyzing data,] people didn’t seem to do the simple things that [theories] had characterized. The models have been changing—I mean, you can't do without theory of some sort, but there's just a lot of work to be done in modifying and thinking about it. Behavioral economics in part has been a response to that.
Going forward, do you want to try to develop new models?
Gosh, I mean it's very hard. I really haven't recovered from last Monday. I don't know what the rest of my life is going to be like. I have a couple of fairly substantial projects going on right now, so as soon as I recover from this train that's hit me, I would like to get back to those; there's a lot of work to be done on those.
It would be remiss of me not to ask: What has this train been like? I'm sure it's been a whirlwind.
Ha, yes! It's been a whirlwind, but a very pleasant one. You know, I live a reasonably quiet life, and now all of a sudden my life is not a quiet one anymore. Some of it is sort of irritating—there are lots of people who want to talk to you who you have no particular interest in talking with. But there are a lot of people who you really do want to talk to, which is giving me a chance for my ideas to reach audiences that they wouldn't otherwise reach. I've also received emails from people I haven't heard from in 40 to 50 years, perhaps even longer than that, and that's a real treat. It does have a reach that other things, other prizes that are academic recognitions, don't seem to have.
The New York Times has called your work "deeply positive, almost gloriously so." Do you see yourself that way? Do you consider yourself an optimist?
I do. I come from Scotland; the Scottish enlightenment was the home of America in some manner. [Scottish Founding Father] John Witherspoon, a pastor, came to Princeton and trained with James Madison and bunch of other signers of the Declaration of Independence, bringing Adam Smith and the Scottish Enlightenment to America. The whole American Constitution is influenced by this sort of Scottish empiricism and enlightenment. I think the sense of people having the will and drive to prosper and to find their own meaning in life—that's just something that's very deeply engrained in human beings. That's the wellspring of scientific progress, and that scientific progress, that curiosity, that will to be happy and prosperous, is something that's never going to leave us.
I'm not an optimist in the sense that I think nothing bad is ever going to happen again; terrible things do happen, and bad politics can do awful things. But there's this will, which is never going to go away, to make the world better.
Did the Nobel Committee—or I suppose the media in its coverage—not mention a project or paper that you were proud of, that you wish they had?
Something that I think's been neglected? Boy, that would be churlish of me.
I think the Nobel committee has been unbelievably generous to my work. I've always sort of wondered if they'd have difficulty giving me this award, because they like to signal discovery or a particular feat—a discovery of something that wasn't there before. I've worked on a lot of different things in my life and they don't really give awards for life's work.
One of the things I was delighted to hear was them saying they'd found a thread through my work about looking at well-being and behavior, which integrates almost everything I've done; they managed to make it into a discovery, but also to make it a sort of lifetime achievement award, and for that I'm enormously grateful.
You said you're working on a couple of cool projects. Anything you can share?
A couple of things: There's a paper coming out next week in the Proceedings of the National Academy of Sciences in which a colleague—actually my wife, Anne Case—and I have identified this quite terrifying increase in all-cause mortality among middle-age white Americans; it's not happening to blacks or Hispanics. It's a real reversal of progress. Basically, since the turn of the century, their mortality stopped falling and started rising. So that's something we're very excited about and something we think is going to get a fair amount of publicity. But we still have a lot more work to do!
This interview has been edited for length and clarity.