The Great Escape: Health, Wealth, and the Origins of Inequality, by Angus Deaton

Angus Deaton falls into that rare category of microeconomists and econometricians who are able to explain things clearly and elegantly using words as well as symbols. In fact, perhaps what marks him out is not just his ability to do so, but that he sees the point of doing it. Recalling his first encounter with economics, as a disgruntled mathematics student at the University of Cambridge in the early 1960s, he writes: “I understood that economics was about three things: theory that specified mechanisms and stories about how the world worked…evidence that could be interpreted in terms of the theory, or that seemed to contradict it, or was just puzzling; and writing (whose importance is much understated in economics) that could explain mechanisms in a way that made them compelling.”

For more than four decades, Deaton has dedicated himself to economics understood in just this way, first in the UK and then at Princeton University, researching and writing on a range of topics from consumer behaviour to poverty and economic development. He has always sought not only to further our understanding about the way the world works, challenging theory with evidence and evidence with theory, but also to tell the story in a way that is compelling and readable.

Inequality within rich countries can be a dangerous thing, and dismissing concerns about it as no more than envy is deeply misguided

The Great Escape is perhaps his most accessible book yet, and also his most magisterial, seeking to tell the enormous story of human progress in both income and health over recent centuries. In a moving and personal preface, Deaton draws on his own family’s experience to illustrate the book’s themes. Born in a coal-mining village in South Yorkshire, his father Leslie put himself through years of night school to qualify as a civil engineer, and then persuaded local schoolteachers to coach the young Angus for a scholarship to public school. Angus and his sister went on to become the first in the family to reach university; today Leslie’s grandchildren and great-grandchildren live in “a world of wealth and opportunity that would have been a far-fetched fantasy in the Yorkshire coalfield”. Leslie lived into his ninetieth year, and as Deaton points out, his story is one of huge improvements in health as well as financial security: both Leslie’s parents died young from accidents or disease that would be preventable today.

It is also a story of luck: not everyone escaped, and indeed none of Deaton’s cousins made it to university. Leslie’s hard work and determination had a lot to do with it but luck was important too, and Deaton’s aim is to tell the story not just of the escapees but also of those who didn’t make it. It is a book, he says, about “the endless dance between progress and inequality”, about how progress creates inequality, and how inequality can sometimes be helpful for those left behind, in providing incentives to catch up, and sometimes unhelpful, if those who have escaped pull up the ladder behind them.

Now, possibly, this preface builds unreasonable expectations about what is to come, because the people left behind in richer countries don’t really feature quite as much in the rest of the book as one might expect. Mostly this is a book about progress in the richer Western world, and the failure to progress in many other countries. It is also closer to being a collection of essays on the themes of health, wealth and inequality than to the grand theory that the title and preface might suggest, and even then there seems to be an essay missing, with the issue of continuing health inequality within rich countries almost entirely overlooked.

Nevertheless, these are wonderful essays, each combining the essential Deaton ingredients of theoretical insight, careful analysis of evidence and graceful writing. There are thought-provoking chapters on the history of health improvements and what has driven them; on material well-being in the US; and on the damage caused by aid to developing countries. Deaton has dedicated many years to thinking about each of these issues, with a long list of academic papers to show for it. Here, he seems to step back and reflect on what he has learned, offering us a sage’s wisdom.

The Great Escape is also a book rich in the details of measurement: of what we measure and why this matters, and of how we do it and why this matters, too. Never does Deaton simply accept that conventional indicators – life expectancy, gross domestic product, “dollar-a-day” poverty, self-reported happiness – are the right ones for the outcomes and values we want to capture. He interrogates both the choice of indicator and the way the data are gathered. Some parts of this will have broader appeal than others: the constructed defence of economic growth as (on the whole) a very good thing feeds directly into many contemporary debates; the discussion of exactly how purchasing power parities are measured is probably of more specific interest. But for students of applied economics or social policy, the book is jam-packed with valuable nuggets, shedding both light and colour on questions that are usually discussed, if at all, in dry technical terms that don’t always convey what is really at stake. (Just once here the dispassionate academic’s voice seemed to drown out that of the human being, in a detached discussion of whether our use of life expectancy measures places too high a value on the lives of the very young.)

Aside from providing a lesson in how to weigh and present evidence and set it against theory, Deaton has three take-home messages.

First, for many of us on the planet, life is longer, healthier and richer – in all senses of the word – than anything our ancestors could have imagined. Perhaps we lose sight of this sometimes.

Second, this is not universally true, and the main solution Western countries offer to poorer ones – aid – is part of the problem, not the solution. In the powerful chapter on aid, Deaton considers alternative policies that might be more effective, including removing unhelpful trade restrictions, enabling temporary migration and providing incentives for drug companies to invest in cures for illnesses such as malaria.

Finally, inequality within rich countries can be a dangerous thing, and dismissing concerns about it as no more than envy is deeply misguided. Here Deaton harnesses the principle of Pareto optimality – the idea that a change represents an improvement if at least one person is made better off and no one worse off. Intuitively appealing, the Pareto principle has been seen as providing a justification for “trickle-down” policies, but only because economists have applied it narrowly to income rather than to overall well-being. Take overall well-being into account, and some inequality may indeed be justified, but not the levels of inequality in the US today, which Deaton suggests undermine public services and give small interest groups too much lobbying power. The threat is not only to the well-being of the poor, but to democracy and economic growth, and Deaton warns us against taking either for granted: “Powerful and wealthy elites have choked off economic growth before, and they can do so again if they are allowed to undermine the institutions on which broad-based growth depends.” From an economist of Deaton’s pedigree, with his long-standing measured approach to theory and evidence, this is a weighty message.