Princeton University Professor Angus Deaton has received the 2015 Nobel Prize in Economic Sciences for his work regarding individual consumption choices and aggregate outcomes.
Professor Deaton received this year’s award for three achievements: for developing a system to estimate demand for different goods with John Muellbauer in the 1980’s; for his studies of the link between consumption and income in the 1990’s; and his survey work measuring living standards and poverty in developing countries.
In an interview with Adam Smith of Nobel Media, Deaton reflected on why so much of his work was focused at collecting data at the household level. “It’s about people in the end . . .you have to understand what makes people tick, and you have to understand, you know, what’s good for them. And for me it’s always been about trying to understand behavior and to try to infer from that behavior,” said Deaton.
Professor Deaton’s work on demand systems came about after a number of economists in the 1960’s and 1970’s found that existing models did not accurately predict how demand varied with prices and incomes. The work of Deaton and Muellbauer demonstrated that the existing models were too restrictive to reflect actual consumer choice. The new system which they developed is still a standard tool for studying economic policy today.