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Ideas Over Methods

Deaton knows the importance of both theory and data in solving social problems.

Written by Rohit Lamba |
Updated: October 19, 2015 12:41:06 am
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As a first-year graduate student, confused about potential research fields, I had a conversation with Angus Deaton. He patiently explained to me his passion for solving puzzles. “You can do theory, or finance, or development, as long as the questions attract you. I would try to look at it as solving puzzles, if they interest you, and you want to find answers to them, research is fun.” This is how I started my research statement for the academic job market last year. After writing it, I realised it might be improper to use a private conversation for a job application. I emailed Deaton, asking for his permission. He replied quickly, “Yes of course, I’d be delighted and humbled.” When I heard that Deaton had won the Nobel Prize in Economics, I was not surprised in the least — it was long overdue.

Deaton is one of those truly exceptional scholars who are purely excited by questions. He has worked on a breadth of topics — the theory of income and consumption, poverty, inequality, measurement of relative prices, health, foreign aid and more. In the 1970s and ’80s, economics as a discipline was grappling with drawing connections between the micro and the macro. How do small economic decisions made by an individual aggregate into the macro economy? How should we measure these small decisions? How should we estimate economically meaningful variables from observed data? How to break down big issues of development into manageable and actionable economic problems? Deaton has made an indelible impact in his quest for answers.

The Nobel committee classified his contributions into three categories, of which the most important, in my opinion, is his research on consumption and poverty. His work on measurement through consumption rather than income, through surveys rather than aggregates, through tracking cohorts rather than individual households, laid the foundations of modern development economics. A common thread in all of Deaton’s work is an appreciation for both theory and data, and the importance of their coexistence in confronting social problems. The Nobel committee called it a “desire to build bridges between theory and data”.

Never one to shy away from learning new techniques, his strong emphasis on putting ideas over methods has led him to become a vociferous critic of trends in applied microeconomics, and especially development. These are masterfully expressed in his article, “Instruments, Randomisation, and Learning about Development”. Prominent among them is his persistent critique of the so-called RCT (randomised control trials) revolution. To the best of my knowledge, Deaton has never criticised the use of RCTs as one important possible tool in the arsenal of development economists, but has little patience for it being treated as a gold standard and the solution to understanding economic problems in developing countries. The overemphasis on recognising simple causal patterns at the cost of neglecting theoretical building blocks in understanding the underlying mechanisms, the pitfalls of treating “approximately random” as actually random, limits on external validity, and channelling precious resources on the basis of methods rather than questions are some of his potent critiques.

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Much of his work on development — healthcare and health service delivery, measuring prices and poverty, and food and nutrition — has been focused on India. In his work with Jean Dréze, he brought into notice the crises of nutrition in India, which came to be recognised the calorie consumption puzzle: Why, despite growth in income at every percentile, had the composition of food intake, especially amongst children in poor families, deteriorated?

Deaton has been a great ambassador for the profession — with a welcome touch of Scottish elegance. Even with his large frame, he is proudly dressed in a suit to work, with the signature bowtie and, sometimes, red socks.

The writer is currently assistant professor of economics at Pennsylvania State University

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First published on: 19-10-2015 at 12:41:03 am
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