Nobel in economics 2015: Angus Deaton of Princeton wins for work on poverty

British-born economist AngusDeaton has won the 2015 Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobelfor his work onconsumption, poverty and welfare that has helped governments toimprove policy through tools such as household surveys and taxchanges.

The current upwards trends in inequality are veryworrying in many contexts around the world.- Angus Deaton, British-born Princeton professor,Nobel in economics winner

The Royal Swedish Academy of Sciences said themicroeconomist's work had been a major influence on policy
making, helping for example to determine how different socialgroups are affected by specific changes in taxation.

Deaton, 69, was born in Edinburgh but now works at Princeton University in New Jersey. He holds both U.S. and British citizenship.

"To design economic policy that promotes welfare and reducespoverty, we must first understand individual consumptionchoices," the award-giving body said in announcing the eightmillionSwedish crown ($978,000 US) prize.

"More than anyone else, Angus Deaton has enhanced thisunderstanding," it said.

Deaton, 69, has spearheaded the use of household survey datain developing countries, especially data on consumption, tomeasure living standards and poverty, the academy said.

Deaton looks at economic development from the starting pointof consumption rather than income, wrote Tyler Cowen, economicsprofessor at George Mason University and blogger.

"Think of Deaton as an economist who looks more closely atwhat poor households consume to get a better sense of theirliving standards and possible paths for economic development,"Cowen wrote on the blog Marginal Revolution.

"I think of this as a prize about empirics, the importanceof economic development, and indirectly a prize about economichistory," Cowen wrote.

'Not out of the woods yet'

In his first public comments after winning the Nobel prize,Deaton said that, while extreme poverty has fallen sharply in
the last 20 to 30 years and that he expected this trend tocontinue, he did not want to sound like a "blind optimist."

"While I expect things to get better, you have to keepremembering that we are not out of the woods yet and that for
many, many people in the world, things are very bad indeed,"Deaton told a press conference by telephone.

"I think the current upwards trends in inequality are veryworrying in many contexts around the world," he added.

Those contexts include climate change and politics, Deaton said in a later news conference at Princeton University, where he is professor of economics and international affairs.

"I do worry about a world in which the rich get to write the rules," said Deaton.

Deaton also linked inequality and slower economic growth to a "terrifying increase" in middle-aged mortality in the United States, which he is currently studying.

In one key work, "The Great Escape; Health, Wealth and theOrigins of Inequality,"Deaton describes the huge increase inglobal prosperity in the past two centuries, underpinned bymedical and technological advances, but also looks in depth atthe inequalities to which that progress has given rise.

Deaton developed a system for estimating how the demand foreach good depends on the prices of all goods and on individualincomes, now a standard tool for researchers and in practicalpolicy evaluation the academy said.

"Assume the government wants to change a tax like the VAT onfood or gasoline or something, or to change income taxes. Howwill that affect demand for different commodities? How will thataffect welfare for different groups in society?," Mats Persson,a member of the Nobel in economicsawarding committee, told Reuters.

Monday's announcement concludes this year's presentations of Nobel winners.

• The medicine prize went to three scientists from Japan, the U.S. and China who discovered drugs to fight malaria and other tropical diseases.
• Canadian Arthur B. McDonald sharedthe physics awardwith Japan's Takaaki Kajitafor discovering that tiny particles called neutrinos have mass.
• Scientists from Sweden, the U.S. and Turkey won the chemistry prize for their research into the way cells repair damaged DNA.
• Belarusian investigative journalist Svetlana Alexievichwon the literature award.
• The Nobel Peace Prize went to The National Dialogue Quartet in Tunisia for its contribution to building democracy in Tunisia following the 2011 Jasmine Revolution.

The awards will be handed out on Dec. 10, the anniversary of prize founder Alfred Nobel's death in 1896, at lavish ceremonies in Stockholm and Oslo.