What do you think? Leave a respectful comment.

Nobel laureate hopes prize will spur more debate on inequality

The Nobel Prize in Economic Sciences was awarded to Angus Deaton, a Scottish-born scholar at Princeton University who has analyzed spending, poverty and welfare. The Nobel laureate joins Judy Woodruff to discuss his work and insight into inequality and society.

Read the Full Transcript

  • JUDY WOODRUFF:

    Next, the winner of the Nobel Prize in Economics.

    Scottish-born Angus Deaton was recognized earlier today for his analyses about spending, poverty and welfare. His work is based on economic models with a focus on individuals and on household surveys that reveal how different social groups make economic decisions, particularly in poorer countries.

    I spoke to him a short while ago at Princeton where he is a professor at the Woodrow Wilson School.

    Professor Deaton, thank you very much. And congratulations.

  • ANGUS DEATON, Nobel Laureate, Economics:

    Thank you. It's a pleasure to talk to you.

  • JUDY WOODRUFF:

    So you thought it might have been a prank call?

  • ANGUS DEATON:

    Well, I didn't think it was a prank call until they said it's not a prank call.

    (LAUGHTER)

  • ANGUS DEATON:

    I hadn't really thought of it until that moment. But then I thought, maybe it was a prank call.

    But I recognized two of the people on the committee, so I'm sure that was a joke. And it certainly made us all smile, even early in the morning.

  • JUDY WOODRUFF:

    You were honored for your measurement of basic economic indicators. For people who don't know economics, explain why measuring things matters.

  • ANGUS DEATON:

    Well, I mean, I think we tend to take a lot of things for granted.

    I mean, you know, the very word data means given. And yet most of the numbers we have are not given. They're produced by statistical offices, many of whom are under terrible budget pressure and threats from politicians who don't understand how important the numbers are.

    And, also, we can't — if we don't know what sort of progress we're making and how we're doing, we don't really know where we are. And, you know, a lot of people think the world is getting to be a worse place. A lot are thinking it is getting to be a better place. We have got to be able to resolve these questions and know what is happening.

    We talk about inequality a lot. Well, we have got to measure it and we have got to be able to say whether those people who say it is getting worse are right or those people who say nothing is happening are right.

    And so measurement is a very, very important part of this, and careful measurement is something that's not always in great supply.

  • JUDY WOODRUFF:

    So, give us an example of how you improved one kind of measurement.

  • ANGUS DEATON:

    Well, for instance, one of the things that we're interested in is whether — how much money people have and how much stuff they can buy given the amount of money they actually have.

    So, one of the things to do that is, you need to know what prices are like where they are. So you have to measure very carefully the prices of all the goods they buy. So, you know, if your rent goes up, even if you have the same income, you are poorer. And so that's been a real challenge, especially in global poverty, but also in measuring individual country poverty.

    So I have done a lot of work on trying to measure prices in India, for instance, and trying to match up those prices to individual people and to find out how well those people are doing.

  • JUDY WOODRUFF:

    How did a professor at Princeton University, which most people consider to be a pretty elite place, get so interested in inequality and in poverty and worry — and be worried about it?

  • ANGUS DEATON:

    Well, maybe — someone asked me this today, and I think it's true — that I grew up pretty poor.

    I have had experience — you know, I probably belonged to the 1 percent nowadays. I have an experience at both ends of the distribution. And that's taught me a lot. And I think, if you have never really been poor, it's hard to understand how — what most of the people in the world live through and live like, and how lucky those of us are who don't have to live these really, really difficult lives.

    Luck is an incredibly important thing. A lot of people who have done very well think it was entirely by their own efforts. Well, maybe it was. But, for most of us, we got to where we got by a lot of luck.

    So, I have always been very conscience of that. And Princeton has a public policy school and it really cares about these issues. So, I don't think there is any contradiction there. You don't want to think of Princeton as just a bunch of elite kids doing whatever elite kids do.

  • JUDY WOODRUFF:

    You — in your book that you wrote — I guess it came out two years ago — "Great Escape: Health, Wealth, and the Origins of Inequality."

  • ANGUS DEATON:

    Yes.

  • JUDY WOODRUFF:

    You did show how life on this planet Earth has just gotten a whole lot better for many, many people, better than it was a century ago, half-a-century ago.

    And yet you do emphasize inequality and why that is a problem, and why it's something people need to keep focused on.

  • ANGUS DEATON:

    That's exactly right.

    And one of the things that has delighted me, and as I have thought about inequality and worried about inequality all my working life — but it's not something that has been very much talked about. On the left, people denounced inequality. On the right, people denounced people who worried about inequality.

    And there's been very little serious discussion until recently. And I think inequality has its good sides. It's part of the reward for effort and part of the reward for new innovations and all the things that are propelling our lives forward.

    But it also can be a terrible threat if the people who get very rich try to deprive the rest of us of things that are important to us, like democracy, like public schools, like public health systems, and so on. So I think inequality is a very two-edged sword. I think it's very important that we have an enormous public debate about it, and if this prize helps towards having that debate, I would be absolutely delighted.

  • JUDY WOODRUFF:

    Professor Angus Deaton, the winner of the Nobel Prize in Economics, we congratulate you. And thanks.

  • ANGUS DEATON:

    Thank you very much, indeed. It's been a real pleasure.

Listen to this Segment

The Latest