Sir Angus Deaton is a British-American economist, and one of the world’s most eminent in his profession. He was the sole recipient of the 2015 Nobel Memorial Prize in Economic Sciences, principally for his analysis of consumer demand, poverty, and welfare. But he is also among the world’s most famous (perhaps even notorious) economists for the work he has done to shine a light on inequality in America.

He is perhaps best known for his influential 2020 bestseller, Deaths of Despair and the Future of Capitalism, co-authored with his wife Anne Case, who is likewise an eminent economist at Princeton University, where both are emeritus professors. They coined the term “deaths of despair” to highlight the rising mortality rates among white non-elderly Americans, a change largely due to a rise in drug and alcohol poisonings, suicide, and chronic liver diseases and cirrhosis.

These rising mortality and morbidity rates, Case and Deaton further documented, accompanied increasing divergences between less-educated and well-educated Americans on other indicators of well-being including wages, labor force participation, marriage, social isolation, obesity, and pain – all of which, they concluded, pointed toward a rise in despair that was linked to broad social and economic trends.

In this podcast discussion, Sir Angus Deaton discusses his new book, Economics in America: An Immigrant Economist Explores the Land of Inequality. He talks about his education in Britain, the work that led to his Nobel Prize, the impact of the Nobels on the economics profession, and the principal questions he has wrestled with as an economist in his adoptive country, the United States. He also discusses his theory that what has led the U.S. to become an outlier among developed countries in terms of its declining life expectancy (as well as other indications of a failure of social flourishing) rests principally with the decline in jobs for less-educated Americans. And, he posits, this decline has come about in response to globalization and technological change, exacerbated by what he calls “the grotesquely exorbitant cost of our healthcare system” as well as the country’s fragmentary safety net.

Transcript

Angus Deaton: You have to say: Why is the U.S. leading the world in suicides? We’re getting up to the sort of level that you used to see in the Soviet Union, in really, really bad places. So even if you don’t care about the rest of it, that suicide thing is a big deal.

Geoff Kabaservice: Hello! I’m Geoff Kabaservice for the Niskanen Center. Welcome to the Vital Center Podcast, where we try to sort through the problems of the muddled, moderate majority of Americans, drawing upon history, biography, and current events. And I’m pleased and honored to be joined today by Sir Angus Deaton. He is a British-born economist who is currently a Senior Scholar and the Dwight D. Eisenhower Professor of Economics and International Affairs Emeritus at the Princeton School of Public and International Affairs and Princeton’s Economics Department. He has also been a professor at the University of Bristol and the University of Southern California.

In 2015, he was the sole recipient of the Nobel Memorial Prize in Economic Sciences for his analysis of consumption, poverty, and welfare. He has written numerous books including 2020’s hugely influential New York Times bestseller, Deaths of Despair and the Future of Capitalism, which he co-authored with his wife, Anne Case, who is likewise a renowned emeritus professor of Economics and Public Affairs at Princeton. And most recently, he’s the author of the recently published Economics in America: An Immigrant Economist Explores the Land of Inequality. Welcome, Angus!

Angus Deaton: Thank you. I’m delighted to be here.

Geoff Kabaservice:

And congratulations on the publication of Economics in America. Your new book is marvelous, really. It’s a many-sided examination of the field of academic economics and your experiences in that field, with a particular focus on American inequality writ large. The book draws upon a quarter-century of bulletins that you wrote for Britain’s Royal Economic Society, so there’s an autobiographical element to it. But it strikes me as not a memoir so much as a set of thematic essays on the enduring questions you’ve encountered in the course of your experiences as an economist in this country. Would you agree with that characterization of the book?

Angus Deaton: Yes, it’s wonderful. That’s what I was aiming for. I’m delighted it came through.


Geoff Kabaservice: Very good. It did indeed. If I may, though, I’d like to ask you some questions about your background and history as a way of getting at some of the themes of the book. You were born in Edinburgh, Scotland. You wrote that your father started life in the coal mines in Yorkshire in Northern England, and your mother was a carpenter’s daughter.


Angus Deaton: That’s right. She was a nurse, at least during the Second World War. And my dad, who had enlisted — Britain declared war in Germany on his twenty-first birthday — had been invalided out of the army in 1943 with tuberculosis. He was actually born in the plague year, the influenza year, in a really pretty dreadful mining village in Yorkshire. So he didn’t have the best of starts in life. But he was very keen for me to be educated. He did that in a very surprising way. He managed to get me a scholarship to what is Scotland’s prime public school, or one of them, and where the fees were as much as he got paid, and where I had a wonderful high-quality education — perhaps not socially quite as fun as it was intellectually. But I had a really good start there and then went to Cambridge.


Geoff Kabaservice: You were certainly a collaborator in this effort of your father. In fact, you were what I think we would now characterize as an early beneficiary of meritocracy. Your performance on exams helped you win a scholarship to Fettes College (which is that private school in Edinburgh), which I believe is also the alma mater of Tony Blair. And then you won another exam-based scholarship to Cambridge University where you would receive your B.A., your M.A., and your Ph.D.


Angus Deaton: That’s correct. Some people have argued that my generation was the only generation of meritocrats, and that somehow the system broke itself after that. And you’ve obviously been reading the book because there’s a chapter there which I muse about that and how proud we were of this meritocracy. The cracks in that system and its underpinnings have become clearer over time. And we’ve got to this place, which is what worries me a lot about America in particular but also Britain, with this sense of an educated elite that’s sort of running the world and not paying much attention to other people — who are very interested in taking their revenge in one way or another.

Geoff Kabaservice: This could be a subject to which we return, but the term meritocracy was coined by Michael Young in the U.K., where he basically said that test-based meritocracy was an unstable basis for a society, particularly a democratic society. But it could be said of that first generation — yours — that this was before the meritocracy had hardened into an -ocracy. 

Angus Deaton: That’s right.

Geoff Kabaservice: And therefore the drawbacks weren’t yet in sight.

Angus Deaton: And we thought it was wonderful, we really did. I’d grown up on what was essentially a huge estate of the Duke of Buccleuch in the south of Scotland. We were very resentful of this aristocracy, or some of us were. I subsequently very recently met the Duke of Buccleuch and find him one of the most charming men on the planet. And now he says I can fish in any one of his rivers I like, which I certainly couldn’t do as a child. But at the time, we were very excited about this: the world opening up to those of us just based on talent rather than on a hereditary basis. 

Geoff Kabaservice: What was your college at Cambridge?

Angus Deaton: Fitzwilliam College. That’s another story, because I was admitted to play rugby. British universities, as I’m sure you know, do not have football scholarships of the equivalent that American universities do. I’d thought for many years the only reason I went to Cambridge was because I was a rugby player. I was called for an interview, and this gentleman who was the senior tutor of Fitzwilliam (who’d been a rugby player himself) asked me… I was all brushed up on my math questions and all the things I needed to know and having smart answers. And the only question he asked me was: “What’s your school rugby record this year?” And I said, “Well, eight and one.” And he said, “Who did you lose to?” And I told him. He said, “That side is great. What position do you play?” I said, “Second row forward.” He said, “Fitzwilliam needs good second row forwards.” And then three days later I got a telegram saying I’d been admitted to Fitzwilliam College, so I could be forgiven for thinking I was admitted because of my rugby skills. But as I later discovered, that’s not quite the way it worked. I also got an Exhibition in Mathematics to Cambridge, which I could not have gotten based on my rugby-playing skills. So there was more to it than that, as I discovered in later years.

Geoff Kabaservice: I too played rugby second row in college. My ears have never been the same since.

Angus Deaton: You’re lucky they weren’t bitten off.

Geoff Kabaservice Exactly. So you transferred at some point from Maths to Economics?

Angus Deaton: Yes. I was never really a mathematician. And in college, or at least in high school at Fettes, mathematics had been a very convenient way of making time to do things I was interested in, like sports and music and English. I spent a lot of time learning to write, which did me an enormous favor. But when I got to Cambridge, there were really serious mathematicians there, and it was pretty clear that that was really not for me. And so I was pushed into economics almost accidentally, or at least my tutor said, “Well, you have two choices. You could leave” — which my father would’ve been very upset about, me not so much — “or there’s one thing for people like you and it’s called Economics.” And I said, “Okay, I’ll give it a try.”

Geoff Kabaservice: Were you still an undergraduate when you went to the United States in 1965?

Angus Deaton: Yes.

Geoff Kabaservice: And how was that initial experience with America?

Angus Deaton: Well, it was very exciting. It was a very exciting in romantic way. I had a summer job on the Queen Mary and the Queen Elizabeth, and we chugged back and forwards between Southampton and New York for two whole summers. And there was dancing every night and a lot of drinking, and it was like I was a teenager let out on the world. I went to the World’s Fair in New York in 1966, and I remember being enormously impressed by this great cornucopia of American productivity and industry, which seemed so marvelous to me.

Geoff Kabaservice: One of the fascinating aspects of this new book is that you have this unique perspective, as both an economist and a dual citizen of Britain and the United States, on our country. And although readers should buy the book and find this out for themselves in fuller detail, what seem to you to be some of the most salient differences between our societies as you’ve experienced them?

Angus Deaton: Well, one thing that we’ll probably talk about some more is health care. Anyone who comes to America from Britain discovers that this system, which is still greatly valued by Brits and was even more valued by them when I was born, is not really present here. And it’s a sort of nightmare dealing with that system. But more broadly, what I said about the World’s Fair… There was this sense of: What a marvelous, wonderful place. Look at the size of things. Look at what can be done. And when I became an economist, the great economists were here: people like Samuelson, Solow, Milton Friedman (who I was less sympathetic with.) But very important figures, and this was where it seemed to be really happening. One of the working titles for the book was Shock and Awe, and I was enormously in awe of this extraordinary productivity and skill and artistry almost — just amazing talents were here.

On the other hand, there were amazingly bad things too, one of them being that there wasn’t much of a social safety net. And there was the race issue, which I think permeates the book one way or another, which is something that’s very different if you come from Britain. I’m still musing about that, because it’s not as if racism is absent in Britain. But Britain seems to have been relatively successful currently compared with other countries, including the U.S. but also including France, for example, which has taken much more active steps in that direction. There’s an ethnic Indian prime minister. Life expectancy — now the lowest group is white Brits. So there’s been a real, successful building of a multiracial society, which seems to have been more difficult here, although I think it’s improving here a lot. So those were things that were very different: the lack of health services and race just being a very important undercurrent in almost everything that was going on. I was just going to say politics seemed much more brutal here too, and that’s still true.

Geoff Kabaservice: It used to be said that the United States had a racial divide that was the counterpart to Britain’s class divide.

Angus Deaton: I think there’s some truth to that. And I think it’s interesting that in Britain it’s still the case that there’s almost complete dominance of professions and arts and many sports by people who went to private schools. That’s just not true here, and it’s one of the aspects here where there’s in a way less inequality in the U.S. than there is in Britain.

Geoff Kabaservice: Your thesis advisor at Cambridge when you were getting your Ph.D. was Richard Stone, although you said that he taught you more by example than instruction.

Angus Deaton: I wanted to be like him, yes.

Geoff Kabaservice: And you wrote movingly about his collaboration with another great Cambridge economist, James Meade, on their work on improving estimates of national accounts. And I should add that Meade won the Nobel Prize in Economics in 1977 and Stone in 1984.

Angus Deaton: Yes, that’s right. And they were people I wanted to be like. They were scholars. They were a little withdrawn. They didn’t really indulge in faculty politics, I think to some extent because they’d been beaten down so badly by some of those very fierce Keynesians like Joan Robinson and Nicky Kaldor and so on. So they had sort of withdrawn to their gardens and to their studies, and they were doing what seemed to me the sort of work I wanted to do — James more theoretically. Richard Stone had always been an empiricist, and that was what I wanted to be.

Geoff Kabaservice: My sense at Cambridge was that the economists were very cosmopolitan figures, more so than the average professor, and they also tended to have more money. One thinks of Keynes with his great interest in ballet and the arts. And I believe Richard Stone’s wife was a concert pianist as well.

Angus Deaton: Yes, she had been a concert pianist, and in fact, she had performed in Rome for the American troops when they arrived in the city near the end of World War II. Bob Solow of MIT was in the audience that day and remembered hearing her playing Bach harpsichord concertos. There are wonderful ways in which the world loops around and people whom you think of in very different spheres actually come into contact one way or another. I don’t think Keynes was very typical, though.

Geoff Kabaservice: Well, true. Is it fair to say, though, that economics used to be more oriented toward broad sociological, even philosophical questions? One thinks about Friedrich Hayek’s comment that “Nobody can be a great economist who is only an economist,” and “the economist who is only an economist is likely to become a nuisance if not a positive danger.”

Angus Deaton: Isn’t that a wonderful quote?

Geoff Kabaservice: It is.

Angus Deaton: When I read that, I sort of jumped up and down with glee. I thought, “Well, I’m going to use this. This is very much my thing.” I know you talked to Jennifer Burns about Milton Friedman, for example, and even Friedman was much more of a philosopher. It’s not what he’s remembered for, but he deliberately moved away from mathematical economics and technical economics towards a much broader perspective, a perspective based on libertarianism. But if you go far enough back, if you read Adam Smith, it doesn’t look anything like modern economics at all, because Smith was concerned with all these philosophical political issues and this issue of empathy and so on. There’s not a lot of empathy in modern technical economics.

Geoff Kabaservice: Although it must be said that you in the younger generation, coming out of places like Cambridge in the early ‘70s, were more mathematically inclined than a lot of your predecessors.

Angus Deaton: Absolutely, and that was a trend in the profession. I’ve always believed that the mathematics was helpful. It’s one of these things that I’ve used throughout my life, throughout my professional life as an economist. And there’s lots of things where you’re thinking through the way something works, and unless you can check it mathematically you’re not at all sure whether there’s some hidden flaw in your argument. And mathematics is necessary to check that, because a lot of these intuitions we have are self-contradictory, and mathematics is very good at dealing with that. So I don’t regret the invasion of mathematics into economics; I think it’s helped a tremendous amount. But if it’s at the price of the philosophy and all the rest of it, that’s a price that’s too high to pay.

Geoff Kabaservice: I note that your early work was on individual consumption choices. And there was some overlap then with some of Milton Friedman’s work as well, at least according to what I recall from Jennifer Burns’ biography.

Angus Deaton: That’s right. I read this paper by Arthur Cecil Pigou which was published in The Economic Journal in 1910, which was very relevant to something I was working on — as you say, the demand for individual goods. And Milton Friedman had written a paper in The Quarterly Journal of Economics, which may have been his first published paper in economics, and I thought it was garbage. I still think it’s not right. And he just didn’t know what it was that… There were people like Klein and Samuelson and so on who’d worked on this problem, and the mathematical conditions were known for it to work.

Pigou’s thing was not a piece of mathematics. It was an approximation, and as an approximation it was perfectly valid. I think Friedman got the wrong end of the stick on that. I think he was in hospital when he wrote that, somehow — I’m not sure whether I got that from Jennifer Burns or from George Stigler — so I thought maybe he was in a fever dream or something. He certainly was able to do the mathematics. That was not an issue.

Geoff Kabaservice: Was Keynesianism the dominant school at Cambridge?

Angus Deaton: Yes, very much so. And in fact, a lot of the Keynesians were still there. Joan Robinson was there, her ex-husband Austin Robinson, Lord Kahn was there of that older generation. Nicky Kaldor was an incredibly creative person who worked on commodity prices, he worked on economic growth, he was working with Jim Mirrlees on a model of economic growth. A very creative, very lively, difficult, impossible man. He would go to sleep during meetings and wake up with devastating comments, which was always a little hard to deal with. And Joan, of course, had gone into her Maoist phase and was jumping up and down with glee over Pol Pot and so on. So it was a pretty weird place. 

But it did give me a very different background from the way most American economists of my generation were trained, in that these people were very far to the left. In those days calling someone a Fabian socialist was an insult — that was calling someone a right-winger. And I remember someone calling someone else “a filthy little Fabian socialist” from his position as a Communist party organizer. There was a lot of that going on. 

I think I tell the story in the book of when I read George Stigler’s paper saying why economists are necessarily right-wing, and arguing that if you understand economics it moves you to the right. And I thought it was a typo. I’d never met a right-wing economist. You couldn’t be further away from Chicago than in Cambridge in the early ’70s.

Geoff Kabaservice: There was an amusing passage in the book which I just want to quote a bit from… You had written that “Economics is much closer to politics and public affairs than are physics, chemistry, and medicine, and so the economics prizes [in the Nobels] give (some) laureates a public platform that is only occasionally open to laureates in other fields.” And the most famous example, you wrote, was Friedrich von Hayek in 1974, which would’ve been around the time that you were getting your Ph.D. You wrote: “He had battled Keynes in the 1930s and decisively lost — at least according to what we were taught in Cambridge, England — and had vanished from sight. If asked, around 1970, I should have replied that he was probably dead. His Nobel Prize in 1974 resurrected him, intellectually if not literally, and made him famous, giving his work renewed influence with many, including, most famously, Margaret Thatcher.”

Angus Deaton: That’s absolutely right. It’s a wonderful story of the power of the Nobels to do that, and he was someone who was given a new lease of life. But there are many more stories on the other side (probably less in economics) about people who were never given the prize they should have been given or it was given to other people that they shouldn’t have done. And it’s important enough, or it gets publicity enough, that it does rewrite history to some extent. So there’s a danger that people get written out of history. 

And that’s the story I tell with the Meade and Stone story. The collaboration that was the most important thing in their lives was working in the Cabinet Office in Whitehall during World War II, trying to improve the national accounts for Keynes’ work on how to pay for the war. That was the most precious thing to them that had happened. And it was something they would, over a bottle of wine, be reminiscent about. That was the most important thing to them and it bound their friendship together. And then Meade was written out of that by getting the Nobel Prize in something else. You can’t feel too sorry for him; after all, he got the Nobel Prize for something else. But it really upset him and made him very unhappy that his role in this had been written out of history.

Geoff Kabaservice: Your stories about the Nobelists are really a treat. But I would point out, in terms of context, that in the 1970s what you saw was stagflation in America and the discrediting of the Phillips Curve, which really opened the door to Milton Friedman and his ideas.

Angus Deaton: That’s right. And also the history of the Nobels itself… The prize [in Economic Sciences] was only introduced in 1969. And it was clear that the people who fought to have it introduced were very keen on what today would be called neoliberal economics, and the politics of Sweden were very opposed to that, and they were using Nobel Prize to try and make that happen. So the fact that Milton Friedman got it pretty early on is part of that story. Of course, it wasn’t really maintained, because they gave it to all sorts of people on all sides of the picture at the same time. And I think they worried a lot about preserving the credibility of it by not being seen as a purely political organization.

Geoff Kabaservice: Yes. Hayek was awarded the Nobel at the same time as Gunnar Myrdal — about the two most ideologically opposed people you can imagine.

Angus Deaton: Yes. And you could imagine Joan Robinson being given it with Milton Friedman or something. There are combinations you could think of which would’ve been even weirder than that, but that one was pretty weird. And especially it was weird because we all thought Hayek was dead.

Geoff Kabaservice: You wrote that “Economics, like a species, needs diversity to provide the material for change in times of crisis.” Would that actually be a critique to level at programs that are too dominated by one ideological school or another?

Angus Deaton: I think so, except that one of the things about economics that I think is good and gives me hope is that it’s a very young profession. Many professions are dominated by old people, especially old men. And until you get to these higher positions — think of the Senate, for instance — you can’t really do anything until you’re old, and then you lose all the new ideas that are coming out. And ours is still a profession where you can be tenured in a top university in your mid-twenties, and that seems to me a very good thing. And there’s a lot of smart people doing original work, moving around in different directions, reshuffling the politics. I think of Niskanen as doing that: moving from one direction to another and combining diverse viewpoints that weren’t combined before. And a lot of us have learned a lot by looking at these opposing things. Joan Robinson and Milton Friedman together, both influences on my work, could not be further apart.

Geoff Kabaservice: Well, thank you, we appreciate that. Did Thatcher’s ascent have anything to do with your decision in 1983 to move from Bristol University to Princeton University in the United States?

Angus Deaton: Yes, very much so. The story of British universities is sort of a sad one. They’re publicly funded by and large, a little less so now than they were then. But there was a five-year funding system, and every five years there was a big political hoo-ha and it was decided how much money they would have. And then that was quite down for five years. But then what happened was it was not inflation-proofed, so the inflation in the 1970s really killed that system. And it meant that individual universities were going bankrupt unless they were bailed out by the state. And the universities had given up their ability to raise any money on their own.

So what happened to me in the early ’80s was that Bristol was running out of money. It was firing tenured staff. It was closing departments. And when that happens, the members of the university just sit around vituperatively trading insults with each other, trying to save themselves a place in the lifeboat. And that was not a very constructive place to be. I had visited Princeton in ’79, ’80, and various universities had made me offers around that time. And I thought, “Maybe it’s time to think about that.”

Geoff Kabaservice: I was struck by your observation that in the United States at that time, the subject of inequality was not one that was much on anyone’s mind in the economics profession.

Angus Deaton: Right. Well, remember, that was the trough of inequality, if I’m correct, in 1970 or something. So it wasn’t really happening. The data wasn’t really doing anything. I think I tell the story of my friend Alan Blinder, who’d written a thesis on the effects of inequality and really couldn’t find anything because it wasn’t waggling around enough for you to be able to see what its effects were. And I think that was the state. I think it was Henry Aaron who said it was like watching the grass grow. It was not a very exciting thing to do. And of course, that really did change as time went on, especially in the ’90s.

Geoff Kabaservice: And why did the economics profession begin to pay more attention to the subject of inequality?

Angus Deaton: When the data started changing, really. And also, when I came to the States in 1983, economics was very technical. The core courses in a graduate course were micro and macro, and micro was general equilibrium theory and macro was becoming general equilibrium theory. And the other course was econometrics. So there was nothing about poverty and inequality or policy or any of those things. And so we just weren’t technically equipped, if you wanted to be successful in economics way back then, to do those things. A few exceptional individuals certainly did break out of those barriers. But when the data started changing… And it wasn’t just inequality. There was very little research on poverty; we left that to sociologists, for example. I think that did change over time, but I think a lot of it was data-driven.

Geoff Kabaservice: It is relevant to our story that in 1997 you married Anne Case. She is the Alexander Stewart 1886 Professor of Economics and Public Affairs Emeritus in Princeton’s Department of Economics and the School Formerly Known as the Wilson. She’s also greatly distinguished in the fields of labor economics, health economics, and development studies. Did she impact your interest in inequality in any ways?

Angus Deaton: I’m not sure it was inequality so much. When we first got together, we tried to write a couple of papers together. And we’re both very strong-minded people, and we fell out with each other. I remember a train ride coming back from New York one night, and it sort of was both saying, “Well, if that’s the attitude you’re taking, we’re never going to write any more papers together.” And we didn’t for quite a long time. And so the work on health, which became the “Deaths of Despair” work, was more or less accidental. We spent a month in Montana in the summer, and we were sitting at different ends of the same room. I had promised to write a paper on suicide and happiness, and whether suicide was higher in places where there was less or more happiness. And she was working on pain, which she was suffering from quite a lot; she has quite severe lower-back pain. And then I’d sort of finished the work on happiness and suicide, which didn’t really go anywhere; there’s almost no correlation.

And I was writing it up for a conference, and at that point, I discovered this increase in mortality in midlife. And she was working across the room and said, “There’s this huge increase in morbidity in midlife too.” So we thought, okay, we have something that we have to look at here, and then that started this rolling. And I don’t know why we were so well-suited on this; maybe it was after all these years of not trying. But we’re both pretty good with data — in fact, each of us is; she’s more careful, I think, than I am. But we both go through everything and talk about everything and bring each other down and push each other up, so it just works very well. There’s not any very obvious complementarity there.

Geoff Kabaservice: I want to skip ahead in time to a very momentous two-month period in your life. In October 2015, I believe, you were notified that you had won the Nobel Prize in Economics. And you wrote that although you had wanted to win something like this (or one does) in the manner of a dog wanting to catch a bus, the Nobel is not just catching the bus but being run over by it over and over again. And then a month later came the publication of the Case-Deaton paper “Rising Morbidity and Mortality in Midlife among White Non-Hispanic Americans in the 21st Century,” and that brought an even higher level of media attention. So, you continued, “Now there were several buses driving backward and forward over both of us.” Can you set the stage a bit then for this momentous two-month period?

Angus Deaton: Yes. Well, you go from leading a pretty quiet life to having buses running all over you in both directions. The Nobel Prize does attract a lot of publicity. I think it has been perhaps diminishing a little over time, but then it was everything. You get woken up at six o’clock in the morning or something, and you know which day it is because the date it’s going to be is announced. And I got up to pee early one morning and saw the clock and thought, “Well, it’s not this year.” And then the phone rang just as I came back. So you go through all that. And there were reporters on my doorstep within half an hour, which gives you some idea. And then of course, Princeton was very good at having press conferences, and they have a ritual which they do — there are quite a lot of Nobel Prize winners around here — which makes you feel sort of at home but also celebrated, which is a very nice thing. But there is all that publicity. 

We were very surprised, I think, by the publicity that the paper in the Proceedings of the National Academy of Sciences got. We thought it was a big deal, but it somehow just touched a nerve. The Nobel might have been part of that, but this was much, much bigger. We actually had gone off to Ireland for a conference, and we were in some castle trying to have a few days’ rest and relaxation. And I remember wandering around the gardens, where there was a little phone reception, talking to all these journalists out there, journalists out there, journalists. And then they had this nice habit, which I think has been restored post-Trump, of having the American laureates go to the White House, and that was pretty splendid. 

We were in that little anteroom room outside. And then we were told, “Would you reorder yourself, not in alphabetical order but with Angus Deaton in the front?” And the door was opened not by some flunky but by Obama himself. And as I shook his hand, I said, “I’d like to introduce you…” And he said, “Professor Anne Case needs no introduction to me. I’m a great fan of her work,” et cetera. And then he said, “We’re going to talk about that paper you’ve just written” — and the paper had only been out three or four days, and he wanted to talk about footnotes and things. It was pretty extraordinary. And I talked to Jason Furman afterwards and said, “Did you feed this to him?” And he said, “You don’t have to feed him anything like this. He sucks it out of the air,” which I thought was pretty amazing.

But he actually made a very good suggestion, which is a parallel we follow up in the book, which is that what had happened in the Black community in the ‘60s and ‘70s (and which William Julius Wilson and others had written about) was a very good parallel for what was happening in the white community now. And we were sort of vaguely aware of that, but that was a really very helpful suggestion. So if you get a little bit of help for your work from the president of the United States, why not?

Geoff Kabaservice: Those were a great set of anecdotes. So the Case-Deaton paper, which turned into the basis of your book on Deaths of Despair, observed that the death rate had been rising for white non-elderly Americans — a change that, you wrote, was largely accounted for by increasing death rates from drug and alcohol poisonings, suicide, and chronic liver diseases and cirrhosis. And the deaths from these causes you famously called “deaths of despair,” which was a term coined by your wife. You both further documented divergences between less-educated and well-educated Americans in terms of wages, labor force participation, marriage, social isolation, obesity, and pain. And these indicators, if I read you correctly, pointed toward a rise in despair that was linked to broad social and economic trends.

Angus Deaton: Well, that’s our story. The big bit about that paper — which now is almost a decade ago — that we would see now is this division between people with a four-year BA and people without a four-year BA. And that, to us, is this sort of one of the most fundamental and troubling facts in America today, and also especially the political divide in that those without a BA are largely making up the constituency that’s the populists, that are backing ex-president Trump. But the facts are just the facts: that their life expectancy has been falling since 2010 and fell very rapidly during COVID, whereas those with the BA, a four-year BA or more, their life expectancy continued to rise up until 2019, and of course fell during the pandemic. But the drop in the pandemic for people with a college degree is tiny compared with the drop for people without a college degree, because the people with a college degree were doing what you and I are doing now, and the people without a college degree were working in meat packing factories or in stores or driving buses and so on. So it’s that divide that seems, to me, the most important thing, and which permeates so much of what we see on long-term wage trends, on labor force participation, on morbidity, on marriage, and on pain. So those are the facts. Our interpretation is that this is due to a long-term neglect of the working classes by educated elites.

Geoff Kabaservice: So the facts are the facts, as you say. And the United States at this point is undoubtedly an outlier among developed countries in terms of its declining life expectancy as well as some of these other indications; as you also point out, the United States is really an outlier among developed nations in terms of its suicide rates. However, there is some question about the causes of these. The Case-Deaton story, if I could just recapitulate your explanation, is that the decline in jobs for less-educated Americans is the key. And this is in response to globalization and, maybe more important, technological change with robots, but it’s made much worse in the United States than elsewhere by what you call “the grotesquely exorbitant cost of our healthcare system” as well as our fragmentary safety net.

Angus Deaton: That’s exactly right. I agree with everything you said. You summarized it as well as I could have done. We also identify something that Niskanen has been very strong on, which is rent-seeking. There’s an enormous amount of upward redistribution going on by powerful forces in the U.S.: by tech backed by lobbyists, by hospitals, by healthcare (who have six lobbyists for every member of Congress), by banking, and of course the military. So all of these big corporate things are very good at sucking rents up from sort of ordinary people. 

And at the same time, the countervailing power, to use a term that Ken Galbraith made famous, which used to come from unions has largely evaporated — the presence in Washington, for one thing. All the unions together spend less than Alphabet spends in Washington. And also, unions had a big effect on people’s social life. They were the stalwarts of a lot of communities. They helped raise wages, and not just for their members, but for other people too. They had a big effect on working conditions and so on. 

I was brought up in Britain in the heyday of union abuse, when we hated the unions because they were messing us up all the time. And I’ve had to rethink that. It’s easier to rethink that when I can still get to work in the morning and I’m not suffering that. But I think some power for working-class people is one of the necessary things that we need to offset the power that has fallen into the hands of an educated elite. And we’re running a democracy in which you don’t just get to vote because you have a four-year college degree.

Geoff Kabaservice: So how would you respond to the critique that the deaths of despair appear to be largely driven by opioid overdoses, and that the principal difference between the United States and Europe in that sense is not economic policies or economic performances but just the health regulation of opioids and related drugs?

Angus Deaton: You could argue that, and it’s a very important part of the story. I don’t think we’ve ever denied that. And certainly I think it used to be a plurality of deaths but it’s now probably a majority of what we call deaths of despair. The other thing that we didn’t know in the original paper and should have seen was that those three causes, which Anne later called deaths of despair, were the fastest-rising. But the biggest account was from the fact that cardiovascular disease, the decline in mortality from which had driven the increases in life expectancy in the last quarter of the twentieth century, had ceased and was sort of turning around — and again, especially among people who don’t have a four-year college degree. So to come back to the opioid things… we think of the suicides as being… We’re getting up to the sort of level that you used to see in the Soviet Union and really, really bad places. So even if you don’t care about the rest of it, that suicide thing is a big deal. And you have to say why is the US leading the world in suicides? Also, ever since Durkheim we thought that suicides were more common among more educated people, and now that’s reversed. And when Anne and I went to talk at SAMHSA, which is the suicide bit of the National Institutes of Health, the director said, “You almost knocked me off my chair when I saw that graph, because that’s exactly the wrong way around. We’ve all been brought up to believe the other way around.” So something very, very strange and unpleasant and associated with the decline of communism is happening in America to working-class people — that’s without opioids.

Geoff Kabaservice: I do think that the opioid epidemic story is consonant with the captured economy story of poor regulation and industry that gets too chummy with its regulators.

Angus Deaton: Absolutely. That’s right. And also the opioid epidemics in history have been during times of acute social distress. So that’s one of the reasons that in the book we talk a lot about the Opium Wars in China. And most historians would regard the crumbling of the empire as being really the root cause, as well as disgraceful behavior by Brits and Scots in particular, which has a parallel with disgraceful behaviors by the pharma companies too. So we’re not excusing any of that. And one of the reasons they don’t have that in Europe to anything like the same extent is they have much better regulation of addictive substance. And they don’t let pharma companies do that, even though they’ve tried pretty hard.

Geoff Kabaservice: I was struck by this quote… You wrote: “Inequality is not always unfair. And it is unfairness more than inequality that is currently disaffecting many Americans.”

Angus Deaton: Yes. I’m not entirely sure what that means. Inequality is just a very, very slippery thing. And it’s certainly true I would want to distinguish between inequality and injustice. And there are some times when I’m very sympathetic to the argument that people who get very rich in the public interest should be allowed to get very rich. I don’t see anything wrong with that. It’s the rent-seeking that’s the problem in some sense, not just the people getting rich. And if people bring benefits to the rest of us, then I don’t have much problem with that. 

In fact, I wrote a previous book called The Great Escape, of which the subtitle is “Health, Wealth, and the Origins of Inequality.” And the argument is sort of that when economies are stagnant and nothing is happening, inequality is a really good symptom — because it tells you that something’s happening. And the secret is not that you want to stop that happening, stop that inequality growing. You just want to stop the people who are succeeding from taking over the world and becoming rent-seekers or becoming cozy with the regulators or all that sort of stuff. Philippe Aghion, who’s a good friend of mine, has written very well about this too. You want to encourage this first stage, but then the tricky bit is: Once these people become dominant, how do you stop them choking off the next generation?

Geoff Kabaservice: I think this actually gets to a pretty deep question about the legitimacy of elites. Because increasingly, working-class people have a sense that the system (however they define it) is rigged against them, that the elites are the ones making the system work for their own benefit while politics and society more generally are just tilted against the working classes. And I don’t want to say you have quite persuaded me, but I was very intrigued by your discussion about the elimination of the military draft. I had actually cited that in one of my earlier works as an example of successful collaboration between the right and the left. Milton Friedman was one of the contributors to the argument that the military…

Angus Deaton: …should be voluntary. 

Geoff Kabaservice: Yeah. But you asked if it’s really a good idea to draw our military from those with less education and fewer opportunities — because in 2015, only 8% of enlisted troops had bachelor’s degrees as opposed to 84% of officers. And there are even some studies that seem to show that inequality in the population, by undermining social solidarity, can spill over into the military and compromise battlefield success. And you wrote that the less educated are now being asked to fight for an educated elite, and “We have lost the social connectedness to and the respect for others who are different from us that came when all kinds of people served together.”

Angus Deaton: That’s right. There are other ways of doing that. You could have a non-military draft, which a lot of people on the left would support even though they don’t like the idea of young men and women having to serve in the military. I saw a piece the other day about Korea where, of course, there’s still compulsory military service, and they’re debating this issue as of now. And the issue I’m talking about is: Do you want your military just to be drawn from the lower orders of society, or at least the serving men and women? Is that a good idea? And a lot of people think it is not. I think the insurrection (if it was an insurrection) on January the 6th — if it turned out that the enlisted men and women in the army were pro-Trump to a man and woman, that seems like a very dangerous situation to have gotten us into.

There’s also the issue about lowering the cost of war if members of Congress don’t have kids who have to fight in that war. I remember during the Gulf War, when I had an eighteen-year-old son, that it hit me like someone that hit me with a two-by-four: “Oh my God, my son is under threat of having to do this.” He wasn’t. But for most parents, that’s a bad moment when you realize that’s going to happen. 

But also there’s a piece in one of Evan Osnos’ books about the asset-strippers and private equity, if you think of it that way. I know there’s a lot of controversy over that — asset-stripping the pension funds out of mines in West Virginia. And the guys in Greenwich Village who are running the private equity are not sending their kids into the military, whereas the people who’ve lost their pensions in West Virginia because the coal mine is being restored to efficiency by getting rid of its pension obligations are doing exactly that. And also, the five weeks we spend in Montana in the summer, we meet people who’ve got multiple kids in the military — because if you can’t get into a good college, that’s one of the few places to go.

Geoff Kabaservice: Yeah. And this very much pertains to our earlier discussion about the limitations of meritocracy.

Angus Deaton: Right, exactly.

Geoff Kabaservice: So there was an interesting debate of sorts that took place in October of last year between you and Larry Summers, the former Harvard President and U.S. Treasury Secretary. It was hosted by Princeton’s Bendheim Center for Finance. And you had just come out with the Case-Deaton paper “Accounting for the Widening Mortality Gap between American Adults with and without a BA,” which was a paper you prepared for the Brookings Papers on Economic Activity. And in this debate, you asked the question speculatively, I thought: Do economists have any responsibility for this kind of outcome that we’re witnessing? Did we do or think things that made the situation worse than it might’ve been?

And without getting too much into Larry Summer’s argument, there’s a saying in the legal profession that if the facts are on your side, argue the facts; if the law is on your side, argue the law; if the facts and the law are against you, pound the table and yell. And I thought Summer’s performance was a little too yellingly table-pounding, in a way that people with winning arguments rarely need to do. But nonetheless, it seemed that the bigger question was about the pros and cons of globalization and specifically the responsibility of Democrats for the kind of policies that were put in place during the era when globalization was coming upon us.

Angus Deaton: Right. There’s a recent book (I’ve forgotten the title) by Judis and Teixeira, which said that when they’re in power the Democrats have governed as Wall Street. And that seems like a problem. And the financial crisis seems to have undermined a lot of what economists were saying. They said, “The markets work okay. Let it go.” And then the financial crisis came along. And people who might’ve believed in trickle-down didn’t really believe in trickle-down anymore. And a lot of people got very badly hurt. So that’s part of it. 

But it’s also… I’ve come to worry about the trade thing, for instance. So economists to a man and woman are saying free trade is good, right? And I understand that argument. I am an economist. But as Dani Rodrik (among other people) has pointed out, the gains are basically a triangle, like a Harberger triangle. The people who lose lose less than the people who gain, and the difference between them is a relatively small amount. But if you look at that, the redistribution that’s taking place at low tariff rates becomes enormous relative to the gains, right? So you’re getting a lot of social disruption for relatively small efficiency gains. And the worry is that a lot of those efficiency gains have gone to Wall Street, and Wall Street is running the country, at least under Democrats. So that seems like a bit troubling. 

I’ve also become much more skeptical about immigration, and thinking that what ordinary people think about immigration may be much more right than what economists think about immigration. But what I’m worried about is this economist certainty that they’re right, and also the willingness to say, “We are the educated elite. We know how these things work. And if you don’t like that, you’re an ignoramus or a racist or something” — there’s a whole bunch of names that we could throw at people — “and you shouldn’t even be allowed to vote. Or at least we’re not going to count what you say.”

So it’s not so surprising that if you take those very strong views — which in many cases, I think, are challengeable; it’s not like the law of gravity… And economists are very good about talking about the national interest. What the hell is that? What it usually means is GDP is going up. Well, it could be that all goes to one person or it all goes to one set of people. And so I think we have been too sanguine about markets. We’ve not been very good at listening to people whose views differed from our own. And I also think that our empirical technique is not great either. I think a lot of what has happened is that what is called the credibility revolution has focused our attention onto questions that are credibly answerable, which tend to be very small questions. And the big questions about national policy and class and politics are just taken off the table.

Geoff Kabaservice: Part of what makes you so interesting and appealingly heterodox in your views is that you are thinking about some of these broader, almost philosophical issues. You point out that both conservatives and progressives have gotten into a situation where they think of human welfare almost solely in terms of money, whereas ordinary people do care about jobs but they also care about the meaning that they get from those jobs. They care about families, children, communities. And you’re right, they care about leading a dignified life in a functioning community in a democratic society. In terms of what is to be done then, you suggest that “Perhaps we need to think more about predistribution, less about redistribution.” What do you mean by that?

Angus Deaton: Well, predistribution is… Things like the minimum wage would be a good example of predistribution, for example. And it interferes with the market instead of letting the market settle down and then doing the redistribution on top. So anything like place-based policies, for instance. A lot of what Biden’s doing now would qualify as predistribution. It’s interfering with what the market does before the market does instead of just waiting until it all settles and then redistributing using the tax system, for example. And the minimum wage is a pretty good example of that. And that’s something that economists, including economists on the left — Joe Stiglitz’s textbook condemns the minimum wage — regard as sort of a terrible thing. And yet that actually might be a pretty good tool, or at least we have to think about some of those. And if we just stick to redistribution ex-post, that’s going to be really hard and we’re not going to be able to re-enliven the working classes. So I think we could do that.

Geoff Kabaservice: As a final question… I realize this is unlikely to happen, but let’s imagine that you were to find a group of not completely nihilistic Republican legislators who were genuinely concerned about all of the problems afflicting working-class Americans (who really are their voting base right now) and they wanted to take some actions to combat these trends. What policies might you suggest to these conservative but not nihilistic Republicans that they might plausibly consider supporting?

Angus Deaton: I think I’m sort of with them on the control of the border. And I think the Democrats should stop the extreme positions of thinking — and there’s been this huge celebration just in the last few days that all the economic growth apparently in the last few months has come from immigrants. I presume not from undocumented immigrants; I don’t know how they would know that. But nevertheless… The unions used to have that position too. And it’s now the unions and the populist Republicans who are against immigration. And I think that is something we could really sort out. 

I was very impressed by the historian Jefferson Cowie, who argued, for instance, that the Black migration to the North in mid-century of the last century could not have happened if the immigration policy had not been so tough. And the industrial employers in the North would’ve preferred Italians and Germans and even Serbs if they could have gotten them, but they couldn’t get them and so you got these jobs for African Americans that would otherwise not have come about. So we need to get a sensible immigration policy. And if the Dems start jumping up and down saying all immigrants are good — which puts them in alliance with most employers who would like to see lower wages and who are very keen. And they’re the ones who keep saying, “Well, we need immigrants to grow the economy.” And the word “wages” never appears in that sentence. They’ve never heard of supply and demand, I guess. So that seems to me a live area right now on which some compromise was almost reached and then was scuttled by Mr. Trump. And that, I think, really would help. So that’s one area.

I don’t know what we can do about opioids. But in some ways, maybe that cat is out of the bag. One of the things that’s odd to me — and I’d be curious to know what you think about this — is that there’s all this “carnage” going on, to use Donald Trump’s phrase again. And all these people are dying, and the bodies are really piling up. A lot of these opioid deaths you could think of as suicides. There are some suicidologists (if they’re called that) who’ve said that’s classified as an accidental death, but it wasn’t an accident that the needle was in that person’s arm when they died. Sorry, I forgot where I was going with that…

Geoff Kabaservice: Well, I do think that the opioid epidemic, in some sense, represents a crisis of meaning. And this is a theme that you’ve come to in your work as well. When white, working-class men are the predominant victims of these deaths of despair, it has to do with partly the fact that they occupied some position in society that gave them meaning, and now they’re struggling to find that again. I share your admiration for Jeff Cowie. I think that some elements of his analysis and yours are also present in David Leonhardt’s book Ours Was the Shining Future.

Angus Deaton: I was delighted to see that. I’m actually talking with David when he comes here tomorrow. But here’s someone on the right side of things who’s writing very bravely about this, which others are not.

Geoff Kabaservice: I agree. And I think so probably some potential coming-together could be had between center-left Democrats of the kind that Ruy Teixeira and John Judis are writing about in Where Have All the Democrats Gone?…

Angus Deaton: Right, that was the book.

Geoff Kabaservice: … and maybe some sensible Republicans who believe in things like localism, local pride, religion and its potential for revival in an increasingly nihilistic society. But as to whether this will actually happen or whether Donald Trump will bring about the final collapse of the American experiment, we shall see.

Angus Deaton: It might happen. I’m encouraged by the fact that I’m not the only one in academia, among people I talk to, who thinks maybe we should be listening a little more to what the populace are saying. Not that you want to listen to everything Donald Trump says, but there’s genuine grievance there which needs to be listened to.

Geoff Kabaservice: I agree. And even though I am someone who has written about the rise of the meritocracy and the ways in which I think meritocracy is a deeply important force in society, I too have come around to the view that if this elite is going to deserve the legitimacy that past elites received, it actually has to, number one, acknowledge that it is an elite, and number two, do something to live up to those responsibilities.

Angus Deaton: And not condescend, yes.

Geoff Kabaservice: Yes. Well, Sir Angus Deaton, thank you so much again for joining me here. And congratulations again on the publication of your terrific new book, Economics in America: An Immigrant Economist Explores the Land of Inequality.

Angus Deaton: Thank you very much, Geoff. This has been a lot of fun.

Geoff Kabaservice: And thank you all for listening to the Vital Center Podcast. Please subscribe and rate us on your preferred podcasting platform. And if you have any questions, comments, or other responses, please include them along with your rating, or send us an email at contact@niskanencenter.org. Thanks as always to our Technical Director, Kristie Eshelman, our Sound Engineer, Ray Ingenieri, and the Niskanen Center in Washington, D.C.