Sir Angus S. Deaton

Nobel 2015 | Does Wealth Make you Happy?

Few argue about the existence of the one percent in society. And it’s easy to imagine that in addition to financial success, these people have achieved happiness and health too. Sir Angus S. Deaton knows better. He has answers to questions that border on the philosophical, but his research on poverty and happiness is very much economically driven.

He insists that foreign aid doesn’t function in isolation from the internal concerns of the donor state; that a World Bank is not a World Bank when it’s dominated by the United States; and that despite economic growth, a country can have almost exclusively malnourished citizens.

Three words catch your eye when looking at Deaton’s bookshelf: The Great Escape. It could be the defining work of his life. Or it could be an agenda to make the dream of wellbeing and prosperity come true for everyone in every nation. Deaton is a Scottish migrant, whose bow tie stands out in the flurry of business suits. Raised in a poor environment, he quickly learned that education and hard work are the keys to progress; and may also lead to a richer life for us all.

Deaton’s insights in terms of economic analysis can be attributed to his background. But the work he has produced over the course of his career stands on its own. His articles have been highly influential and the Nobel committee has praised every single result he presented, ultimately calling his Nobel Prize a lifetime achievement award.

Sir Angus S. Deaton

Sir Angus S. Deaton

The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel, 2015

At a glance

Born: 1945, Edinburgh, Scotland

Field: Microeconomics; development economics

Prize-winning work: Analysis of consumption, poverty, and welfare

Trademark: Colorful bow ties

Spoken Accent: Was mocked in school for having a Scottish accent

Addictions: Reading

Should the rich share with the poor?

The street leading to his white wooden house seems right out of a Norman Rockwell painting. Sprinklers water the perfectly mowed lawn and kids play basketball in the driveway while small squirrels stay just out of range of the thumping ball. If there’s still an American dream, it lives here. Through his living room window, you can hear the economist playing on his grand piano, it’s Beethoven’s Moonlight Sonata. But Deaton doesn’t take his affluence for granted, his own path to Princeton, New Jersey has been a long one.

“It’s very difficult to overcome the simplistic view that if you’re poor and I’m rich and I give you money, that’ll make you better off,” he says. "It doesn’t work for nations.”

In an intense conversation about foreign aid, globalization and dictatorships, Deaton says that if USAID or the World Bank donates money to a foreign country that rightfully deserves help, they are in his mind, pumping money into a broken system. In his opinion, this influx of foreign money shifts the governmental responsibility towards the donors instead of the country. As a result, changing how governments function and ultimately makes development impossible.

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Is foreign aid a bottomless pit?

Is foreign financial aid useful?

"Let’s say you’re living in a small village and someone moves in next door,” he says. “That person is a man who belongs to a strange cult, he has strange religious beliefs, for example he sees his wife as a slave. The wife is very poor and has to do terrible things. So you would like to do something to make the woman’s life better, right? Foreign aid is like giving money to her husband. And it’s quite unlikely that it’ll help because the problem here is that the poor person, in this case the wife, is locked in a power relationship with someone who doesn’t want her to be well-off. If you think of poor people in many countries as being locked in a relationship with a government that’s predatory, I think that’s a helpful analogy."

How can we measure poverty?

Poverty is a very complex issue, and not one simply about a lack of money or investment. The economy in India, for instance, is growing rapidly but to Deaton, this is no indication that the country is bettering the lives of its citizens.

“You can have lots of money, but have very poor health, and think you’re poor,” he says. “Children in India are malnourished and yet their income and consumption are growing.”

As Deaton witnessed during his childhood, having little money is not necessarily an indication of poverty. "When I grew up, we were in an environment where there certainly was hardly any money," he remembers. "But I don’t think I was conscious of being poor. We didn’t have a car, but we had vacations and we did not live in a terrible slum, we lived in a very nice part of Edinburgh. In Britain in those days, in the 60s, not many kids went to university anyway."

How can we measure poverty?

What do people need to be happy?

Deaton is sitting in his living room chair in an interior that oozes European chic. On the surface, the image offers the usual picture of prosperity. Surrounded by precious antiquities, he describes happiness as a complicated issue. "Have I had a lot of happiness in my life? Yes,” he says. “Have I had a lot of sadness in my life? Yes. Have I had a lot of misery in my life? Yes. So I think the good life, actually, has a lot of bad emotions in it as well as good emotions.”

While Deaton could point to his father as an example of a life filled with hardship that became the foundation for his own personal values, he has been touched by people from all walks of life. He might be talking about people in Rwanda or the Chinese man he once met who didn’t have shoes as a child and is now a multimillionaire. Fairytales? No, but testaments that escape is always possible. "Lots of people made that escape," Deaton explains but he insists that to help society, it takes more than one person to make a change.

The great tragedy is that there are many people around the world who are still extremely poor. So the question is, what’s to be done about that? And who should do it?

How can foreign aid be delivered effectively?

When should rich nations stop transferring money to poor nations, Deaton asks, and how could they start investing in things that serve us all? Is there even a type of help that is unselfish and useful – aid that promotes the wellbeing of everybody?

Health may seem like an obvious example but it also reveals how nations still think of the health of their citizens first, since money is spent on researching diseases that afflict people of a certain populace. "The US doesn’t spend a huge amount of money on malaria research, for instance,” he says. “Compared to cancer or heart disease, which are the things that really afflict Americans."

He does cite one example where wealthier nations haven’t completely failed. The global AIDS crisis prompted the aid in developing anti-retroviral drugs HIV-positive people. The global community could learn from these kinds of past successes and replicate them in similar situations.

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Should we provide free international healthcare?

Does extremism force us to develop a new form of idealism?

Faltering economic growth and rising inequality in any country makes people feel left behind. Their anger becomes an engine for political alternatives and anger, in the end, often harms humanity. Whether it’s rightwing exclusionism or leftwing radicalism that leads to terrorism in its cruelest forms, the results have an impact on all of us.

That’s why economists like Deaton remind us to think about more than ourselves. He reminds us that humanity has no universal, one-size-fit-all idealism, peace and love isn’t for everybody. We must be inclusive enough to also pay attention to the needs of those who harbor anger and resentment against others and finds way to change those feelings.

“It requires a lot more sympathy for the plight of people who are being left behind than I’m seeing in the United States,” he says.

These people may have views that we really don’t like and find morally reprehensible in lots of ways, but they have a real grievance. Bad things have been happening to them for quite a long time. I think we have to stop that.

By making America great again? Deaton hesitates, and looks worried. "I would prefer to make politics work again for the people who are being left behind rather than try for a whole new form of party." For Deaton, this is true not only in America, but also in Europe. "I don’t know what a whole new form of politics is, fascist dictatorship does not seem to me a desirable new form of politics," he says thoughtfully.  

Why does inequality lead to fascism?

Is a rich life possible for everyone?

As an economist, Deaton stands out by being one of the few laureates who was not awarded the Nobel Prize for one specific piece of work. In 2015, his wide range of topics created a new understanding of consumption, poverty and welfare. But even the prize comes at a price. Deaton confesses that he wasn’t as good a father as he wanted to be, and that he often feels guilty about not having had enough time for his daughter and son. A rich life, he says, combines a whole range of emotions and struggles, and these feelings exists in every class of society.

There may be many reasons to worry, but Deaton doesn’t finish a conversation without some parting inspiration. "My father was born in 1918 in this mining village in England and now his great-granddaughters and great-grandson will probably be alive 100 years from now, given the amount of progress,” he says. “This is a huge escape for our family and it’s worked through education, it’s worked through migration, and it’s worked through hard work.”

Do we really have more opportunities for greater health and happiness than our ancestors? No one knows for certain. But we do have diverse opportunities for success. As Deaton heads back to his home office, it’s time to leave the American Dream Avenue. Time to roll up one’s sleeves and get back to work – this world isn’t going to save itself.

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