Angus Deaton, a distinguished professor of economics and international affairs at Princeton University, spoke about inequality at this year’s annual Goldman Lecture in Economics last Thursday. Deaton is also a fellow of the American Academy of Arts and Sciences and former President of the American Economic Association, among many other honors. Deaton’s talk focused on the main ideas covered in his new book, “The Great Escape: Health, Wealth, and the Origins of Inequality.” He spoke about the concept of inequality, both between social classes and countries, by analyzing patterns in life expectancy, health care, child mortality rates and overall quality of life.
Deaton began by addressing The Great Divergence, the period of time when Western countries suddenly upstaged some of the previously more powerful civilizations such as Qing China and the Ottoman Empire. The sudden emergence of European powers was accompanied and strengthened by the Industrial Revolution, which brought about advancements in technology and medicine. Innovations such as inoculation against smallpox brought a surge in life expectancy of almost twenty years, but primarily in wealthy families. Contemporary advancements in health care in the western world, such as upcoming treatments for cancer, have allowed a similar trend in inequality to occur, by which less developed nations such as South Africa have had a dramatic decrease in life expectancy due to HIV and other illnesses.
“Health care is very uneven among socioeconomic classes,” Deaton said.
After delving into health inequalities, Deaton discussed the positives and negatives of income inequality. Income inequality drives skill-based technical progress, which raises returns to education and theoretically increases productivity and economic growth. He mentioned the concept of efficient Pareto improvements, which are advancements that make an individual better off without causing harm to others, and worried such improvements are more difficult to accomplish than they may seem.
“What I’m most concerned about is increases at the top,” Deaton said, “Even if others do not lose, these are not Pareto improvements because we lose in other parts of well-being.”
Deaton identified political inequality as a crucial problem, emphasizing how essential it is to stop income inequality from becoming political inequality as well. He noted the importance of participating in government to keep politicians responsible. He attributes the modern-day struggles of less developed countries with political inequality, despite the large sums of aid being provided by nations such as the United States.
Deaton suspected that the reason monetary aid from wealthier countries to less developed ones is ineffective lies in a lack of state capacity and corruption within the less-developed country’s government. He stated that rather than the aid going to those in need, it is instead pocketed by those in power, generating even more inequality. He suggested trade reforms, reduction of arms sales and assistance in disease research as possible solutions for the United States to help less-developed countries without producing inequality, essentially eliminating the need for direct monetary aid.
“Poor people, like rich people, need and deserve good government,” Deaton said to conclude the lecture.
Many students at the lecture agreed with some of his ideas but also had their own takes on inequality.
“I do agree with the majority of his points and how providing aid might not be the best way to help poor countries, especially when it undermines the authority of the government,” Helen Huang ’16 said. “But it’s just that there’s no other way to help them out in the short term.”
Hero Ashman ’16 also disagreed with some of his theory’s implications.
“He suggested that inequality was needed in order to improve healthcare and skills in the United States,” Ashman said. “I think it’s kind of dangerous saying that. How do you clear up the inequality afterwards?”
Ashman, an attendee of last year’s Goldman Lecture by the the President of the Chicago Federal Reserve Bank Charles Evans, stated that she enjoyed this year’s lecture more because Deaton was more opinionated and offered a course of action to solve some of the problems he discussed.
Another Wellesley student also present at last year’s lecture, Sarah Ertle ’16, appreciated that the lecture was multi-disciplinary.
“I really liked it because although it was an economics lecture, it really integrated some history and peace and justice studies even,” Ertle stated.