Angus S. Deaton, a Princeton University academic who holds both U.S. and U.K. citizenship, on Monday was named winner of the 2015 Nobel prize in economics for his pioneering research that includes linking income and consumption to explain capital formation and the magnitudes of business cycles as well as development of models that focus on actual relationships rather than aggregate data, according to statements announcing the award from the Royal Swedish Academy of Sciences, Stockholm.
Mr. Deaton — Dwight D. Eisenhower professor of economics and international affairs, Woodrow Wilson School of Public and International Affairs at Princeton — was recognized for research whose focal point includes promoting welfare and reducing poverty, although his work hasn’t directly focused on markets and investment management.
The Swedish academy will award Mr. Deaton the 8 million Swedish krona ($956,000) Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel.
“Deaton’s work has drawn together micro- and macroeconomics, with significant practical implications for economic policy in developed and developing nations,” said Bruce I. Jacobs, principal, Jacobs Levy Equity Management, in an e-mail. “It has had less direct impact on financial economics, although his research on the evolution of individuals’ savings behavior over time has provided useful insights into business cycles.”
The Swedish academy said in a statement, “Deaton showed that the prevailing consumption theory could not explain the actual relationships if the starting point was aggregate income and consumption. Instead, one should sum up how individuals adapt their own consumption to their individual income, which fluctuates in a very different way to aggregate income. This research clearly demonstrated why the analysis of individual data is key to untangling the patterns we see in aggregate data, an approach that has since become widely adopted in modern macroeconomics.”
Mr. Deaton was one of four academics listed as leading contenders for the Nobel prize in economics in 2012, according to a prediction from Thomson Reuters. Of the others on the list, Robert J. Shiller was a co-winner of the prize in 2013.
Mr. Deaton could not be reached for comment.