Nobel economist foresees 'terrifying' rise in midlife mortality in the U.S.

Princeton University's Angus Deaton won the Nobel Prize for economics by bringing his ivory-tower profession down to earth and into homes where people are uplifted - or punished - by social, industrial, trade, and tax policies.

The Scotland-born Deaton, 69, earned his degrees at Britain's elite Cambridge University back when it gave students few mandatory courses and lots of discretion to pursue their interests, he told an applauding crowd Monday at Princeton's Woodrow Wilson School of International and Public Affairs hours after learning he had won the prize from the Sweden-based Nobel selection committee that included a Princeton colleague.

The Nobel committee in a statement said Deaton helped discredit old "theoretical" models of how economies work. Instead, Deaton showed how "empirical" analysis of household-data surveys can be used to better detail effects of changing prices and taxes on calorie intake, mortality, and other measures of personal and social welfare.

Deaton is an optimist about the world's rising living standards of the past 250 years since English and Dutch capitalists began exporting modern methods of wealth accumulation and social organization - with very mixed results but a general rise in life expectancy and quality.

He also noted that hundreds of millions still live in poverty, "which should be distressing to us all." He detailed this general but uneven progress in his 2013 book The Great Escape: Health, Wealth, and the Origins of Inequality.

The slowdown in Western growth rates since the recession "poisons everything and makes politics much harder," Deaton said. "People's lives are not as fulfilled as they were." He sees a "terrifying increase in midlife mortality in the U.S.," with drug, alcohol and suicide deaths at high levels, as formerly middle-class people whose jobs have vanished amid the rise in global trade find themselves with lower living standards.

Deaton "has woven together economic and econometric theory with painstaking data analysis," said James Poterba, president of the National Bureau of Economic Research, which is responsible for dating the beginnings and endings of U.S. recessions and a professor at the Massachusetts Institute of Technology. "He has developed new tools for studying consumption and welfare that are used by economists around the globe."

"High income buys life satisfaction but not happiness," Deaton wrote in a 2010 paper with Princeton colleague Richard Kahneman. Their data showed "emotional well-being" peaking at an income of around $75,000; at lower incomes, people have a tougher time handling "misfortunes as divorce, ill health, and being alone." Wealthier people had richer, more diverting lifestyles, and personal capacity, but also felt more stress.

While vital to understanding nations and policies, measuring wealth, poverty, and equality is hard, Deaton told the crowd. Data collection often is political: While Brazil and Argentina have "bucked the worldwide economic trend and become more equal," Latin Americans generally tend not to disclose their real incomes; India's government proclaims high growth rates, but surveys of Indian families don't corroborate those claims; African data is often scanty or "made-up," making it hard to track foreign aid results. "There are huge vested interests in keeping the data systems exactly the way they are, "even if they are scanty and antiquated," Deaton said.

In the U.S., National Science Foundation funding for economic research has declined, he noted; the National Institutes of Health has taken up part of the slack.

Deaton has defended President Obama's health-care reform law, which expanded Medicaid for low-wage workers. Yet he is also skeptical of attempts to end poverty through sweeping national mandates that ignore the level at which a state and its economy are actually delivering services: "That's not the right way to go about it," Deaton said.

For example, India's constitution calls free health care a right, "but it's not being delivered" in many of the country's understaffed hospitals, he noted. "Governments not well organized to help economies grow are typically the ones who can't deliver or regulate health care," he said.

Health quality correlates better with vaccination rates, water and sewer quality, and getting enough to eat than with the mere availability somewhere in a society of modern technologies. "Americans should be very careful about preaching health-care solutions, because we in America aren't that good at it," Deaton said, occasionally rolling soft vowels, the only British-sounding feature in his avuncular delivery.

Inequality can act as a spur to growth, but the gap between the influential rich and the mass of people has gone "past that point" in the U.S. and has become a danger to many people here, Deaton told the crowd.

"I do worry about a world in which the rich write the rules, which we then have to obey," he said. If powerful people resist global warming because addressing "climate change" costs them money, they can be expected to fight reform.

Prosperity has a lot to do with "luck," Deaton concluded. His father was sick when a World War II commando raid killed the rest of his unit, "or I wouldn't have been born." His dad later encouraged his teenager to read, while others in the family were pushing him to leave his studies for a job in Britain's doomed coal mines. "If you reshuffle the deck," Deaton concluded, "there but for the grace of God go I."

Bloomberg News contributed to this article.

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Awarded to: Angus Deaton, 69, Princeton University professor of economics and international affairs

The Royal Swedish Academy of Sciences said Deaton's work addresses three central questions:

How do consumers distribute their spending among different goods?

How much of society's income is spent and how much is saved?

How do we best measure and analyze welfare and poverty?

Prize amount: 8 million Swedish krona (about $1 million U.S.)

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