The 2015 Nobel Memorial Prize in Economic Sciences—commonly but less than accurately referred to as the “Nobel Prize in Economics”—was awarded this month to Princeton’s Angus Deaton “for his analysis of consumption, poverty, and welfare.” (I personally was rooting for someone from Columbia, mainly because I thought there might be a party we grad students could crash.)
Deaton’s voluminous research spans a range of economic subfields. Among the contributions cited by the Nobel committee were his work on measuring and comparing poverty and inequality across nations, and his pioneering use of household surveys in poor countries. He has earned a reputation for following the evidence wherever it leads, and his nuanced perspectives on a number of important policy questions have made it hard to pigeonhole him ideologically.
Of course, that hasn’t stopped people from trying. Since the prize was announced, commentators from across the political spectrum have cited his work as vindicating their own views. His former Princeton colleague and fellow Nobel laureate Paul Krugman quotes him favorably in a blog post on the capture of the American political system by financial elites. The libertarian Cato Institute, which hosted Deaton in 2013 for a forum on his book The Great Escape: Health, Wealth, and the Origins of Inequality, also finds him simpatico. Writing for the Cato at Liberty blog, Ian Vásquez highlights Deaton’s skepticism about the effectiveness of foreign aid:
When thinking about aid, the developed world would do well by heeding Deaton’s advice and by not asking what we should do. “Who put us in charge?” Deaton rightly asks. “We often have such a poor understanding of what they need or want, or of how their societies work, that our clumsy attempts to help on our terms do more harm than good…We need to let poor people help themselves and get out of the way—or, more positively, stop doing things that are obstructing them.”
To anyone accustomed to thinking in terms of the usual conservative-liberal binary, it might sound like Krugman and Vásquez are talking about two different people. It’s not often you hear someone inveighing against the corrosive effect of money in politics and then arguing in the next breath that we’re doing too much on behalf of the global poor. In reality, Deaton’s views evince a clear logic. When considered through the lens of Catholic social thought and its workhorse concepts of solidarity, subsidiarity, and the common good, they actually make a great deal of sense.
Here he is on development and “state capacity” (I can only assume Cato would find this less compelling):
Americans, like many citizens of rich countries, take for granted the legal and regulatory system, the public schools, health care and social security for the elderly, roads, defense and diplomacy, and heavy investments by the state in research, particularly in medicine…
All of this is so obvious that it hardly needs saying—at least for those who live in rich countries with effective governments… The absence of state capacity—that is, of the services and protections that people in rich countries take for granted—is one of the major causes of poverty and deprivation around the world. Without effective states working with active and involved citizens, there is little chance for the growth that is needed to abolish global poverty.
Deaton doesn’t believe we should do nothing in the face of misery; he supports efforts to deal collectively with emergencies like the outbreak of disease, for example. And he actually stands in contrast to academics like NYU’s William Easterly, who takes an even more absolutist position on the evils of foreign aid. In a review of Easterly’s book The Tyranny of Experts, which makes the case for an approach to development that focuses solely on securing the rights of the poor, Deaton maintains that “it is too optimistic to believe that rights and democracy by themselves will guarantee growth and prosperity, and the argument that rights and democracy are both necessary and sufficient for population health is largely wishful thinking.”
Deaton’s primary desire is to see poor nations build effective states and robust civil societies. While he supports “teaching men how to fish,” he wants it done in a way that respects their culture and their right to self-determination. On this point, he is in sync with Pope Francis, who writes in Laudato si’ that “the development of a social group presupposes an historical process which… demands the constant and active involvement of local people from within their proper culture,” (144) and with Pope Benedict, who argues in Caritas in veritate that “[a]longside economic aid, there needs to be aid directed towards reinforcing the guarantees proper to the State of law…” (41) While taking seriously the need for the developed world to stand in solidarity with the poor, Deaton’s views echo the equally important Catholic notion of subsidiarity, which calls for devolving tasks to the lowest or least centralized level of government or civil society that can effectively handle them.
This is not to say that he lines up 100 percent with the Vatican on the subject of global poverty. In his review of Easterly’s book, he touches on the difficult tradeoffs involved in providing aid to those living under despotic regimes and suggests that “withholding aid” in such cases can encourage “local protest and… democratic uprising” that paves the way for better outcomes in the long run. It’s hard to see how the church could ever sign on to an agenda that involves ignoring urgent needs for the sake of some allegedly greater good.
Deaton’s award has been touted as a “triumph for evidence-based economics.” Given the degree to which discussion about economic matters can be poisoned by ideology, intellectual rigor in the social sciences is always something we should welcome and celebrate. But this prize is just as much a triumph for the idea, shared by the church, that economics can be effectively put at the service of authentic human progress. For this year at least, Stockholm and Rome are on the same page.
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