Congrats Angus Deaton, Nobel Prize winner
The WSJ has a profile on the latest winner
“Life is better now than at almost any time in history,” he wrote. “More people are richer and fewer people live in dire poverty. Lives are longer and parents no longer routinely watch a quarter of their children die.”
Across its 370 pages, Mr. Deaton sought to explain why the world is a better place than it used to be, with substantial increases in wealth, health and longevity, but also why there are vast inequalities between and within nations.
He concluded that international aid had little to do with that progress, and suggested that free trade and new incentives for drug companies would make a larger contribution in the future.
According to the textbook Managerial Economics: A Problem Solving Approach, by Froeb, McCann, Shor, and Ward, 4th Edition 2016, South-Western Cengage Learning (ISBN: 978-1-305-25933-1), anything that impedes the movement of assets to higher valued uses destroys wealth. Free trade would help the people of impoverished countries to make this kind of shift for themselves and therefore help to reduce the “vast inequalities between and within nations.”. In addition however, the govenrments of impoverished nations would serve their citizens better by diminishing any regulations or taxes that are impeding the individuals and businesses abilities to move assets to higher valued uses.ReplyDelete
Mr. Angus Deaton, is a well-known U.S. economist that won the Nobel Prize this year for his analysis of consumption, poverty, and wealth. I total comprehend and support his analysis. Deaton states the following:ReplyDelete
“Life is better now than at almost any time in history, more people are richer and fewer people live in dire poverty. Lives are longer and parents no longer routinely watch a quarter of their children die.” Thank goodness, times have changed drastically over the last 50 years. I could only imagine how difficult things were back then.
Well I would like to attempt to answer this question Mr. Deaton asked during his analysis “why are there vast inequalities between and within nations?
The vast inequalities between and within nations, are due to government’s regulations. Authors, Froeb, McCann, Shor, and Ward, state “governments play a critical role in the wealth-creating process by enforcing property rights and contracts-legal mechanisms that facilitate voluntary transactions. By making sure that buyers and sellers can keep the gains from trade, our legal system makes trade much more likely and is responsible for our nation’s enormous wealth-creating ability (p. 18).” One way to obtain wealth is through home ownership. Today, throughout the U.S. we have a significant increase in home ownership over the years.
Conversely, the authors state “the absence of property rights contributes to poverty. Without private property and contract enforcement, wealth-creating transactions are less likely to occur, and this stunts development. Ironically, many poor countries survive largely on the wealth created in the so-called underground, or black market, economy, where transactions are hidden from the government (p. 18).” This is the main reason why there are huge inequalities between nations.
Froeb, McCann, Shor, & Ward, (2014). Managerial Economics "A Problem Solving Approach". Boston, MA: Cengage
In an article by New York Times author Binyamin Applebaum, he writes about Angus Deaton’s studies, life, and what interests him about economics. Professor Deaton said had taken an interest in economic development because “there’s a real moral urgency to understanding how people behave and what we should or might be able to do about it” (Applebaum 2015). In the text, Managerial Economics A Problem Solving Approach, it states “If people act rationally, optimally and self-interestedly, then mistakes have only one of two causes: either people lack the information necessary to make good decisions or they lack the incentive to do so (Froeb, McCann, Shor, & Ward 2014 p.xiv)” Understanding why people make poor or unethical choices allows us to anticipate the behavior and protect against it. This is a fundamental teaching of economics and the core principle Deaton has used throughout his studies and teachings. Devoting his career to improving the data that shape public policy, including measures of wealth and poverty, savings and consumption, health and happiness, has led to his winning of the Nobel Memorial Prize in Economic Science (Applebaum 2015).ReplyDelete
“A good theoretical account must explain all of the evidence that we see,” Professor Deaton wrote in a 2011 essay on his life in economics. “If it doesn’t work everywhere, we have no idea what we are talking about, and all is chaos (Applebaum 2015).”
APPELBAUM, BINYAMIN. (2015) Nobel in Economics Given to Angus Deaton for Studies of Consumption. The New York Times. OCT. 12, 2015
Froeb, L.M., McCann, B.T., Ward, M.R. & Shor, M. (2014). Managerial Economics: A Problem Solving Approach. Mason, Ohio: Southwestern Cengage Learning.
When Angus Deaton was notified that he has won the Sveriges Risbank Prize in Economic Science, he had thought that it was a prank call at first. His work was not something that he completed in a day but instead, it had taken his whole career. The main focus that attracted the Nobel Committee was his work on transforming the way economists estimate demand. The model he utilized for this work was called the “Almost Ideal Demand (AID) System” (The Economist, 2015). This new system allowed for correct figures instead of assumptions on income levels. Deaton was also praised for his understanding the gap between microeconomics and macroeconomics, especially between income and consumption.ReplyDelete
The Economist. (2015, October 17). Reality Cheque: Angus Deaton wins the Nobel prize for bringing economics back to the real world. The Economist.