November 1, 2015

Review Corner

We do not know for sure why the gap opened up, but there are many good guesses. This was the British Enlightenment, summarized by the historian Roy Porter as a time when people stopped asking "How can I be saved?" -- a question that over the past century had brought little but mayhem, including a civil war -- and asked instead "How can I be happy?"
Angus Deaton won the Nobel Prize for economics this year. I figured the least I could do was to buy his book: The Great Escape: Health, Wealth, and the Origins of Inequality. I had heard his EconTalk podcast with Russ Roberts but was still not certain what to expect.

The topic is my favorite: mankind's making the great escape from poverty and privation, in this case compared to the 1963 film in which Steve McQueen and company escape from Stalag Luft III. The first thing that separates Deaton from the Deirdre McCloskey David Deutsch school is his pointing out that all the prisoners [SPOILER ALERT] are eventually recaptured. Deaton is no pessimist, but the choice is telling. Our gains are not "locked in." Threats exist, yet:

I find the optimistic argument the more compelling: ever since people rebelled against authority in the Enlightenment, and set about using the force of reason to make their lives better, they have found a way to do so, and there is little doubt that they will continue to win victories against the forces of death. That said, it is too optimistic to think that life expectancy in the future will grow at the same rate as it did in the past; falling rates of infant and child mortality make life expectancy grow rapidly, and that source of growth is largely gone, at least in the rich countries.

Less optimist/pessimist, this is an amazingly non-ideological work. Deaton wants to measure things accurately , and follow the data where it goes.The book is a measurement masterpiece, looking at proxies for wealth and wellbeing across time and culture. Unlike last week's selection, Deaton is clear about the limitations and benefits of proxies: life-span, size, NGP are valid measurements, but never the entire story.
Unless we understand how the numbers are put together, and what they mean, we run the risk of seeing problems where there are none, of missing urgent and addressable needs, of being outraged by fantasies while overlooking real horrors, and of recommending policies that are fundamentally misconceived.

He accepts inequality qua inequality as bad, yet makes many ThreeSoruces-friendly arguments about general well being, Pareto efficiency and inequality's natural existence as wealth is created. He is brutally honest about the failures of international aid, channeling and quoting William Easterly, yet tallies the successes in fights against AIDS, promotion of sanitation, and advances in prenatal care. Again, he does not -- ever -- state an ideology, but one thinks him pretty utilitarian, modestly looking for efficacy and benefits.
For every four years of calendar time, the world's highest life expectancy increased by a year. Oeppen and Vaupel see no reason why this long-established rate of progress should not continue. Their diagram also marks the many previous estimates of the maximum possible life expectancy, each of which was swept away by actual events; many previous sages have forecast that the gains to life span will slow or stop, and they have all been wrong.

Deaton is less worried about those forced to drive a Camry instead of a Lexus, but rather the great disparity between poor and developed countries. Accepting that so much progress has been made raising people from sub $1.25/day wages, how can we bring up the last billion?
This division of the credit for increases in well-being between income and knowledge will occupy us throughout the book. I shall argue that it is knowledge that is the key, and that income-- although important both in and of itself and as a component of wellbeing, and often as a facilitator of other aspects of wellbeing-- is not the ultimate cause of wellbeing.

If I'm doing a poor job pigeonholing this book, it's because it is tough. You could hand this to any of your Facebook friends and it would come back with some sections highlighted. Your basic economics geek will like it best, he's ready to look at the small but incontrovertible effects of smoking, the statistical difference is saving children over adults.
Saving the lives of children has a bigger effect on life expectancy than saving the lives of the elderly. A newborn who might have died but does not has the chance to live many more years, which is not the case when a 70-year-old is pulled through a life-threatening crisis. This is also one of the reasons why the rate of increase in life expectancy has slowed down in recent years; mortality among children is now so low that progress can only really take place among older adults, among whom reductions in mortality rates have smaller effects on life expectancy.
A very interesting book, and a bit of a check on everyone's ideology. Huzzah for the Nobel committee (Economics still enjoys the best picks). I'll pile five stars on the accolades.

Review Corner Posted by John Kranz at November 1, 2015 5:46 PM

Pareto efficiency! I love having the proper technical term up my sleeve - "zero-sum" game/scenario isn't so evocative that it can't be replaced.

Posted by: nanobrewer at November 2, 2015 10:59 AM

That's what we're here for!

Posted by: jk at November 2, 2015 12:25 PM | What do you think? [2]