Reality cheque

AT 6:10 am on Oct 12, Angus Deaton, an economist at Princeton University on America's east coast, picked up the phone to a Swedish voice. The voice was so concerned to persuade him that this wasn't a prank call that he started to worry it was precisely that. No need. The Nobel committee had awarded him the Sveriges Riksbank Prize in Economic Sciences, "for his analysis of consumption, poverty, and welfare". The prize celebrated a whole career, in which he has used data to overturn sloppy assumptions, reimagined how we measure the world, and intertwined microeconomics and macroeconomics. He even has a paradox named after him.

The 69-year-old professor was working on issues of poverty and inequality long before the financial crisis made them voguish. As a designer of household surveys, he helped transform development economics from its sorry state in the 1980s, when it was stuck in a rut of murky data and unverifiable theories. He has explored how much more the poor eat when they get more income, how well insured they are when their earnings shrivel and, more broadly, the relationship between health and income growth. His thinking on the topic of inequality is typically textured. He frames it as a product of success - for there to be have-nots, there must be haves - but he is not a cheerleader for the elite. He thinks that digging into the data reveals how to help the millions of people who have been left behind to catch up.

Although his work on inequality may grab most attention, the Nobel committee also highlighted a couple of his earlier, more wonky contributions. The first was for his work in transforming the way economists estimate demand. Knowing how people respond to price changes is crucial to understanding the effects of governments tweaking taxes, supermarkets promoting products, and the like. Before Prof Deaton arrived on the scene, economists used simple models that made rigid assumptions about people's consumption patterns. But upon closer inspection, it turned out the assumptions in these models were inconsistent with real-life data on how people respond to changes in prices.