THE GREAT ESCAPE
Health, Wealth and the Origins of Inequality
Angus Deaton, a well-known development economist, takes the reader on a fascinating journey on health and inequality starting about 250 years ago. Mr Deaton uses the famous movie, The Great Escape, as a metaphor. In the movie, some men escape, and many don't, from a prisoner-of-war camp in World War II. This book is all about deprivation and early death, and the endless dance between progress and inequality.
After describing his family's escape from poverty, thanks to his father's quest for education for himself and his children, the author discusses how luck favours some and not all. While some people escape deprivation, sickness and death, many others continue to struggle. The Industrial Revolution and the Great Divergence are among the benign escapes in history; but then, some countries were plundered and even conquered. Hence, the tales of progress and inequality are intertwined.
Mr Deaton argues that life expectancy has benefitted from higher income, medical research, the discovery of antibiotics, cleaner water, better nutrition and sanitation - although war, epidemic and extreme inequality make health worse at any income level. Rapid progress in the world economy has helped reduce global poverty rates, mainly because of efforts in China and India. But poverty and well-being are separate characteristics. It is knowledge, not income, that is the ultimate cause of one's well-being. Illustratively, when surveyed, people from many low-income countries recorded higher levels of happiness compared with those from many rich countries.
The three chapters under section I focus on health, and relate it to the age of hunter-gatherers and nomadic history. In chapter 2, after a lengthy discussion on nutrition, growth and sanitation, Mr Deaton concludes that scientific advancement - germ theory is an important example - led to an improvement in human well-being. Improvements in life expectancy at birth were a result of the effectiveness and the low cost of oral rehydration therapy, which is discussed in Chapter 3. Improvements in longevity, discussed in Chapter 4, can be attributed to the recognition of the perils of smoking, the discovery of innovative treatments for cardiovascular diseases, advancements in cancer treatment and provisions for better healthcare for the elderly. Generally, life expectancy first improves among the rich because they have access to the best treatment, but the benefits soon reach others. In view of globalisation, medical advancements reach low-income countries, with the result that global inequalities in life expectancy have been declining over the years. But improvements in education are the single most important cause of better health in low-income countries.
Has there been an escape from malnutrition? Height, a good indicator of nutritional deprivation, is changing. Although people are generally taller than their parents, the differential is substantial across countries. Illustratively, Indians are growing taller, but not as fast as the Europeans or the Chinese.
Chapters 5 and 6, in section II, focus on wealth and income inequality. The evolution of the poverty line in the United States is elaborately explained. Next, the distribution of income is discussed. Income inequality in the US has been widening, and fathers' and sons' earnings are closely related. Across countries, global inequality is stable or slowly falling, mainly because of high growth in China and India. Mr Deaton is very critical of the misdiagnosis of the population explosion by social scientists and policy makers, and India's sterilisation drive. He argues that every single mouth comes with two hands and a mind. In a globalised world, the mind would have helped to find or innovate means to feed the mouth.
Chapter 7, under section III, discusses different strategies to help those who are left behind and poverty-stricken. A number of interesting aspects about foreign aid are lucidly presented. The author, for example, convincingly argues that aid has not helped any country recover from poverty, mainly because such countries suffer from poor institutions, corrupt and oppressive regimes and toxic politics. In fact, aid - generally politically motivated and conditional - is not effective and is "likely to perpetuate and prolong poverty and not eliminate it", since fixing poverty is not as easy as fixing a broken car. Yet foreign aid is being easily made available by multiple donors, even though they are aware that it is being misused and that recipients play one donor off against the other. The World Bank, a conduit for much of this aid despite being aware of the pitfalls, continues to extend aid. Mr Deaton argues it is difficult to develop other people's countries from the outside unless the desire to escape poverty comes from within the country.
The book is well researched and the arguments are supported by hard evidence, interesting anecdotes, unique data and illustrative graphs. It logically attempts to convince the reader that the escape from deprivation is not easy. Sometimes the evidence is thin, especially when it involves survey-based and historical data; but Mr Deaton exquisitely weaves a story, acknowledging the limitations. Some of the technical concepts, such as gross national product, purchasing power parity, and measures of poverty, are explained in a simple manner. The rich experience Mr Deaton gathered in India, especially Rajasthan, is reflected in extensive examples in every chapter. In India, the release of the book is timely, because it helps the reader understand the challenges of malnourishment. It would make for delightful reading for economists, donors and policy makers.
The reviewer is RBI chair professor of economics at IIM, Bangalore