Tuesday, October 20, 2015

Angus Deaton wins the Nobel in economics

Angus Deaton earlier this month won the Nobel Prize in Economics (or, more formally, the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel).

In the entire field, Deaton is one of the top three or four economists I admire most and read most closely.

It has been fun to watch the news reports struggle to pin down exactly what Deaton's topic area is. He has made major contributions to the theory and methodology of analyzing consumer demand, development economics, analysis of government policies, the analysis of decision making under risk and uncertainty, and survey measurement.

Many years ago, I faced a similar struggle in reviewing Deaton's book The Analysis of Household Surveys: A Microeconometric Approach to Development Policy for the American Journal of Agricultural Economics. I felt Deaton had made the book more difficult to read by using real-world examples rather than simplified hypothetical examples. It would have been easier on student readers if he had cleaned up the extraneous details. Yet, the real-world experience is ultimately more rewarding and deserving of study. Here is the first paragraph of that review.
Like a safari, this text is a rugged tour through a broad swath of author Angus Deaton’s intellectual countryside. It succeeds admirably as a teaching tool about contemporary research methods using household surveys. Moreover, the author has a distinctive vision of economically sound and fundamentally empirical research, yoked to the service of important policy questions. The entire book will interest agricultural economists with a focus on developing countries, but many topics will interest any economist who studies household surveys. The book is sometimes eccentrically organized, prone to digression on any topic in applied economics, and— by the author’s own admission—it is incomplete as a manual on the analysis of household surveys. It relies on detailed real-world examples, which require lengthy explanations that might initially seem unrelated to the author’s main points. However, while more artificial examples might have helped some of this book’s teaching purposes, they would have done a disservice to its implicit vision of honest empirical research. I would rather encounter this material on Deaton’s safari than at the zoo, where the ride is smoother and the animals are easier to see, but where the habitat is make-believe.

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