On Deaton and development: consumption, poverty and well-being

By Marcelo Neri, Director of FGV Social, Professor at EPGE-Fundação Getulio Vargas, Former Brazilian Minister of Strategic Affairs, Executive Secretary of the CDES Council for Economic and  Social Development and President of Ipea Institute for Applied Economic Research

The Royal Sweden Academy of Sciences titled Angus Deaton’s Nobel prize “Consumption, Poverty and Welfare.” The evaluation commission organised Deaton’s scientific contributions during the last 40 years under three headings: i) demand models for groups of consumption expenditures, such as food, housing, etc., that already had earned  his mentor, Sir Richard Stone (1913-1991), a Nobel in 1984; ii) the study of the choice between consumption and saving, which was the object of the prizes awarded to Franco Modigliani (1918-2003) in 1985 and Milton Friedman (1912-2006) in 1976; and iii) studies about “poverty” and “welfare” that already had conferred Amartya Sen with a Nobel in 1998. I would include a fourth element of Deaton’s work, not cited by the commission, on “subjective indicators and well-being” for which Daniel Kahneman earned a Nobel in 2002.

Continue reading

Social protection: Worldwide priority, local solutions

By Alexandre Kolev, Head of the social cohesion unit at the OECD Development Centre

The past decades have seen the dramatic expansion of social protection programmes in developing countries. Today, about 2 billion people in developing countries have access to social safety net programmes. Virtually all countries, even some in fragile contexts, have interventions in place that aim to address consumption deficits, and some middle income countries, especially in Latin America, have introduced cash transfers to encourage human capital development. Conditional cash transfers now exist in 64 countries, a dramatic increase from 2 countries in 1997 and 27 in 2008.

The recent rise in social protection has been fuelled by overwhelming evidence that social protection schemes deliver real results. Numerous evaluations around the world — 86 alone between 2011 and 2015 — show positive impacts, including a reduction in poverty by 50% for the most successful cases, increased household income and consumption, better health and education, and increased investment in productive assets and savings. Continue reading