Princeton economist wins Nobel for work on poverty

Angus Deaton has dug into obscure data to explore a range of problems: The scope of poverty in India. How poor countries treat young girls. The link between income inequality and economic growth.

The Princeton University economist's research has raised doubts about sweeping solutions to poverty and about the effectiveness of aid programs. And on Monday, it earned him the Nobel prize in economics.

For work that the award committee said has had "immense importance for human welfare, not least in poor countries," Deaton, 69, will receive a prize of 8 million Swedish kronor (about $975,000) from the Royal Swedish Academy of Sciences.

Deaton's research has "shown other researchers and international organizations like the World Bank how to go about understanding poverty at the very basic level," said Torsten Persson, secretary of the award committee.

He becomes the sixth scholar affiliated with Princeton to win the Nobel in economics since it first was given in 1969.

"That lightning would strike me seemed like a very small probability event," Deaton said at a news conference at Princeton. "There are many people who are worthy of this award."

Deaton grew up in a family of modest means. "Not having money can give you a perspective on the world that you don't get other ways," he said. "Most people in my family thought I should be out (working) in the fields, not reading books. Fortunately, my father didn't think that way."

For Deaton, who was born in Edinburgh, Scotland, and holds dual U.S. and British citizenship, everything starts with an analysis of data.

Deaton created tools that let governments in poor countries study how families adjust spending in response to, say, an increase in the sales tax on food.

"He's an economist's economist," said Dani Rodrik, a Harvard colleague. Deaton has done "very careful, detailed work" on data about poverty at the household level in poor countries "so that one could understand the effects of changes in policies on how people behave," Rodrik said.

Deaton discovered India had far more poor people in rural areas than previously thought, a finding that led the government to expand subsidies.

"Households that were not defined as poor before can now be reached," said Ingvild Almas, associate professor at the Norwegian School of Economics. "That is a direct result of Deaton's research."

He also hit upon what the Nobel committee called an ingenious way to discover whether families in poor countries spent less to care for daughters than for sons.

Among other things, he studied how much households spent on "adult" items, such as beer and cigarettes, to see whether families consumed things differently depending on the sex of newborn children.

His conclusion: They didn't.

Another Deaton study challenged the once-popular notion that malnutrition caused poverty by making people too weak to find work.

He found the relationship worked the other way: Being poor caused people to be malnourished.