NYU Stern's "In Conversation with Lord Mervyn King" Series Presents Sir Angus Deaton

you hello good evening and welcome everyone to another in conversation weird event 50 years ago this week I met a young Scottish economist from Cambridge England who was unknown to the profession at all but obviously brilliant later he immigrated to teach at Princeton four years ago he was awarded the Nobel Memorial Prize in Economic Sciences for his work on linking individual choices with aggregate outcomes which in the words of the Nobel Committee transformed microeconomics macroeconomics and development economics quite an achievement but unlike some Nobel laureate and one a scientist we won't mention any names who explained that he given up research having won the Nobel Prize because he wanted to pursue and I quote fast women and beautiful cars input my friend carried on working and not long ago with an case his wife they discovered the so-called deaths of despair rising mortality in parts of the American community so it's with very great pleasure that I welcome my old friend and someone who is now not unknown but known to presidents and prime ministers around the world please give a very warm Stern welcome to Professor Sir Angus Deaton [Applause] first [Applause] and yes thank you for coming to to stern and talking with us and later on asking answering some questions from students I bet 50 years ago you've never imagined that the two of us would finish up on a stage in New York I don't know what I thought we'd do the Beatles of economics well I actually rather thought that I was rather jealous of folks like you who'd been sort of properly educated in economics because I was sort of a failed mathematician who fell into economics and I never really you know I came to Cambridge because my girlfriend was there so you know I was pursuing the beautiful woman in fast cars late in life and I really thought it was just you know we were essentially research assistants yeah that point Graham and I just thought of it as a sort of temporary job for the time being it never really occurred to me that we go on doing this thing I'm certainly led to something no I I mentioned the work you did with uncase who is with us here tonight and and you an undiscovered this phenomenon the rising mortality which is partly the opioid epidemic but not exclusively so includes alcohol related diseases and suicides but how did you discover this well I'm really like most of the best things I've discovered by and total accident you know we're looking for something else and then you fall across something and I think that's a very important lesson for research actually but and I don't know who said it but you know when you see something strange like that the skill comes and even if you're not looking for it you know what you're looking at and some set you know so it's you know otherwise you might just pass it by and so I tell you what happened I'd agree to write a paper for a National Bureau of Economic Research Conference on suicide and happiness which may seem odd topics together date but for many years I'd read some of the happiness literature and I it occurred to me that you know there were high suicide rates in sub Canada maybe this was just casual sort of what I read so I read to two of the great experts in happiness economics who were Danny Blanchflower and Andrew Oswald right I wrote to me to them separately and said you know is suicide correlated with happiness or is it the reverse and they both wrote to me back with complete and utter certainty but gave completely different answers right once then it's negatively correlated us and it was positively totally so I'd said it would be good thing for this conference to look at the relationship between happiness and suicide and we were pretty far along on that but I was thought it would be good for this conference one of the things we discovered was that in midlife you know in sort of 45 to 55 age range suicides have been rising quite rapidly in the US and this is still true and it's very much in contrast with what's happening anywhere else in the world where suicide rates are typically falling quite rapidly so that was interesting but we thought it would be good to have a slide in which we put this increase in suicides together with what was happening to all deaths together you know because this a small part you know was this one by other things what were you gonna see and then that was when we saw this thing we couldn't believe which was that all deaths we're going up you know so total mortality in this age group around 50 was actually rising and that's just you know something that should not happen yeah you know in midlife as in other parts in life mortality rates have been falling for a hundred years maybe longer 100 150 years or so and we thought you know we gotta have done something wrong and if we haven't done something if it true then someone else must know this and so you know we then went into this search you know had we press the wrong button you know had we really used the data wrongly and so on and then just did this enormous amount of search trying to find out whether this was right or not and it was right I mean you know maybe we overstated a bit or but it's right and it's still there and you know you've got these curves which have been going down like this for a very long time and then all of a sudden they stop and they're either flat or rising and you know we submitted this to one of the leading medical journals and I thought I'd sent it the wrong email address because it came up immediately and I thought oh I got the email address wrong but I looked at it and said your paper has been rejected this is of no interest the Journal of the American Medical Association the editor of JAMA that's become sort of a friend has been Bullis a very very expensive lunch one day but you know they get a number of submissions that would make any economic journal look puny you know and so they have layers and presumably one of these layers doesn't work very well but then we started the New England Journal Medicine and that's sort of interesting too because that took a lot longer like four days to be rejected right and they're faster than we are a good thing so actually I wrote to a moment had written to us and I said um you know we're low puzzled by this and she said you're clearly fascinated with this increase in deaths but you do not have a cause and therefore it's of no interest to us and this is what I think is the causal fetish has taken over our profession you know it's just absolutely ridiculous it's sort of like you call the fire brigade and say my house is burning down and they say well what caused the fire and you say well I don't know his burning comedy's no we can't cut until you tell us what the causes so you know we eventually thought well we could publish it in the National Bureau working paper but we actually wanted to read a wider audience then you get in just that so you know I'm it follow the National Academy of Sciences which has it allows you basically self publish and the Proceedings of National Academy Sciences there's a lot of hoops you have to jump through and it's actually quite a good process I think well I would wouldn't I and so it came out and then there was just a huge first one prompted that explosion of interest well it was in an election year and essentially every presidential candidate both parties talked talked about the work and of course you know Trump's American carnage yeah it's sort of part of that but then other people of course put their own spin on it and everybody had a different story about it and then it was from that on that we said well if this is going up was driving this Manu suicides it was part of it and then we looked for the other things that were very rapidly growing and the two other things that were rapidly growing were alcoholic liver disease and opioids or at least drug overdoses and there doggie overdose is the biggest of the three but the and you know we didn't discover the opioid crisis I mean lots of people knew about that before but it didn't have the attention then that has even five years later so politicians have been talking about this but they don't really seem to have an understanding of why this has happened why the deaths of despair of suddenly appeared and reversed the downward trend in mortality you thought a lot about this yeah what what what's your view as to why this is happening and what would be the right directions in which to try to change it okay well the answers are in our book this book is available yet it'll be available on the 17th of March and yeah after extensive review on the title because this title guarantees it'll be a best-seller it's called dusts of despair and the future of capitalism boys that are pretentious titled it's a great time hybrid advise everyone to rush on tonight preorder it you can pre-order the pre-ordered copies are flying off the shelf you can't even see the cupboard yet because it's very early days and we're copy-editing the manuscript but you know there are various levels of that story as to what's going on and there's no agreement right so one part of it that's not very controversial is the opioid epidemic and there's been huge misbehavior by pharmaceutical companies have been pushing this eye and also the FDA in approving this stuff I mean they basically legalized heroin right and it never seemed to occur to them that this stuff would get diverted right okay so they assumed it would be used only in specific medically controlled circumstances that's right and you know it's it's very interesting that you know the FDA requires people to do randomized control trials they did randomized control trials they're not very impressive randomized control trials but there's a lot of pressure but they they're not allowed to actually consider the effects on other people of approving a drug all right no I mean we're nice in Britain nice is the National Institute of clinical education which excellent which evaluates drugs and the very first drug they turned down which is something now turned into Tamiflu and they turn it down because people going to doctors office with the flu to get drugs would spread the flu to other people and the doctor's office and so they disproved it on that on those grounds not because it didn't work but because it would make things worse in the aggregate right the FDA never considered that and it's not allowed to consider that even though there's now a National Academy panel recommending that they do that but you know for those of your interest in randomized control trials this is what they call the sued by assumption the I don't know what that stands for but it's su TVA and it's the it means it basically rules that interactions between people you know which if you're taking aspirin I take an aspirin probably doesn't do much to you but if you start allowing doctors with pharma companies you know pushing them to get rid of this stuff like crazy and it's heroin which is basically what it has and also here is it turns out J&J this big family friendly company is growing opium poppies and Tasmania at the same which are supplying almost all of the opioids in the United States at the same time as the US is bombing Afghanistan and Colombia and places to try and keep drugs out that's extraordinary I had no idea well it's very important when people say these things actually these guys are completely out of control so you know but opioids is not ever I mean some people would say it's just a drug epidemic but why are suicides rising in America and not anywhere else and then what we discovered fairly early on but it's really really a big deal is this only happening people who don't have a BA before year ba so if you split people along this thing between people who have a four-year bi people have done it before year bi there's almost no change for people of a college degree right and then for people who don't have a four-year BA all the bad stuff is happening now in some you know we took mice to the suicide division of NIH in whichever part of Maryland ago and the director said he'd never seen or ever expected to see anything like this which is ever since Durkheim and actually before Turkana they said it was more educated people that kill themselves and four people are you and me who came from very modest backgrounds the Gulf that existed you know when you moved to Cambridge from Wolverhampton or from Scotland or something you know this huge moat that was driven between you and your parents life sort of idea then you could see why people would become unmoored and why would be a risk of suicide and that's wintertimes said and now it's reversed probably for the first time in history the less educated people are more likely to kill themselves than more educated people so something has really gone wrong in working-class lives now then the disagreement sort of starts and you know if you go to the right you talked to charles murray he'll say it's because people have lost virtue and they're doing this to themselves for us the market has really turned against working-class people and you know there's automation and globalization and the bank run but you know there's automation and globalization all over Europe and people are killing themselves in droves beginning to happen in England yes and in Scotland where I come from is really bad so there's a real risk there and a lot of what we write about in the book is the extent to which what's happening in the u.s. is a foretaste of what's going to happen in Europe or whether it's to do with American exceptionalism tell us what you think ought to be on the agenda of the presidential candidate care for all Medicare medical care for all yeah I mean how would this affect suicide rates and because what's happening is we're spending 18% of GDP on health care and it's nothing to do with health care preventing deaths directly it's that health care I think Warren Buffett called it a tapeworm in the economy we call it a cancer at the center of the economy that is meta sized now I'm not in favor of socialized medicine particularly they'll be all sorts of problems with Medicare for all but you could bring costs under control yeah and stop you know if you if you got the 18% of GDP down to 12% which is what can it with Switzerland spent and Switzerland's the second highest that would save 8,000 dollars a year for every family in the United States right if you take people without a BA that are real wages have fallen for no one told me to turn my phone off the real wages we used to the idea of these modern contraption yeah exactly the real wages are being falling since 1990 and been falling since 1970 you give them that $1500 back and it's not happening anymore so you know and this is man who don't have good wages or not good marriage partners the marriage behavior of whites without a BA looks like african-americans in the 60s and 70s you know in the Moynihan report and all that stuff but and what William Julius Wilson has written about most point moms without a BA I have their children out of wedlock I mean it's just astonishing they don't get a church anymore which in America is is really a big thing I know in Britain none of its good at church but here people go to church and they stomp and the fall is much larger for people who thought it'd be a social capital as fallen you know if you talked about Putnam that's the sort of center of the thing so it's like their marriages labor force participation has fallen it's been falling for men without a BA for a very long time and since 2000 been falling for women without a BA - and you know this labor force participation is going down at a time when wages are falling so for those of us who did the supply and demand curve didn't econ 101 that suggests it's not that people are withdrawing their labour from the labor force it's just that these jobs are turning into bad jobs and companies are outsourcing jobs and so on and part of the reason that companies are shedding you know low-skilled workers it's not just because of globalization automation it's because they might have to spend 30 or 40 percent of their salaries on healthcare and other things so it's just this enormous burden and because it's diffused people don't really understand the extent to which this cancer is spreading everywhere local governments are cutting back on not local government state government cutting back on funding state education and universities because Medicaid is putting them out of business and one of the reasons apart from all the other dysfunctions in Washington that we never had infrastructure repairs is because the deficit is being pressed by all this Medicare Medicaid all the time so if we don't get this under control there's gonna be nothing wrong now in your Nobel lecture you you talked about a theme which brings your which unites your research and it seems to me very close to what you've just been discussing in that lecture you use the phrase well-being what do you mean by well-being and how is it linked your research together well you know we used to call it welfare we were young but welfare has come to mean something else and David so it was a branch of economics called welfare economic yes and it died you know it doesn't exist anymore and we read some wonderful stuff yeah you remember yonder villi on a day off and the fabulous so I forget an economist that came to do a PhD at Cambridge and wrote this fabulous book called theoretical welfare economics lobe-finned book and it's just a truly wonderful book of course they tried to fail his PhD at Cambridge because you're not supposed to to things but yeah he then went back to run a farm in South Africa yeah well it wasn't exactly a farm it's in Constantia which is you know the oldest and most beautiful part of South Africa and I once met him and he said well if you if I said we were gonna be in South Africa he said well you should go there so I'm great I'm coming but he said well we won't be there but I'll ask the servants to open the house for antastic anyway there was this welfare economics and well-being is now the subject and you know it covers happiness it covers a lot of different ways but you know I do think of it as going back to where we started which is thinking about consumer behavior and savings and utility functions and all that sort of stuff that you used to learn in microeconomics in which we tried to bring to the data I mean you were sort of doing for firms and I was doing it for postal so to go back to what you were the work you've done on this extraordinarily topical issue of deaths of despair more generally what what you see is the role of the social scientist in public policy I've been thinking about that worrying about that you know I just read Benjamin Applebaum book called The Economist tower which basically condemns economics for what it's done for the last 50 years and you know he wrote an op-ed piece in New York time so he summarized that which I thought was awful because I thought you know was all it's like all economists are like Milton Friedman you know which is just not true but the book is much much better than that and actually does build a case to be answered and I mean the question is has economics really contributed much to the public wall beating over the last half-century and I think yes and some things but I think it has a lot of sense to be a kind of for to so I I think you know I thought we were sort of irie to our people and we'd sit and think about things and then that stuff would leak out I think central banking is something that's much better than it was 50 years ago right you don't have inflation rates around the world bill easterly sitting over the resistor in a very nice paper is showing that you know in most of the poor countries in the world policy is really much better than it used to be and I think we could take some credit for that one of the things that if you talk to non-economists they often think or economics is about forecasting where interest rates going to be six months from now and on that basis economics is a disaster because it can't forecast at all in that area how do you go about persuading non economists at economics it can actually contribute something really valuable well you know I think it was Charlie Schultz who said once the economists are much better at getting rid of bad ideas than they are at coming up with good ones and I think that's often true I mean you can show that something is internally inconsistent and you know some chance of persuading people if they're thinking about it wrong and that does seem to me sort of valuable but you know when you see what's going on in DC now and you know mercantilist protectionism with one-on-one trade deficits is carrying the day you know do we bear some responsibility for not having killed at all I don't know should the American Economic Association say that if you say things like that you should be drummed out of the Association no cuz I think if you get a professional association writing a manifesto it just triggers godess these experts again and they're always claiming to know more than in fact they do it's it's a much more general thing of helping people understand how to think about an argument at a frame an argument not to bamboozle people with what I call bogus quantification but if you look at say the stuff that Raj Chetty has been doing recently yeah which is is basically you know that seems a real step forward and you know the administrative data is enormous you can see patterns that we didn't know we're there it's sort of like having the National Accounts in 20 dimensions or something but you know even there I've noticed that people say things like you know they will study a period in the past which is all you could do base record and they'll say blackheads are much less likely to rise to the top than white kids all right but they don't use the word was or were yeah they use the word is and you know what was true in the last 25 years has become an eternal Verity and we know that some of the patterns in there like marriage patterns incarceration patterns a lot of stuff that's happened you know these marriage patterns of less educated whites that I was talking about those change dramatically and those help control those things which is why I liked it I mean I I remember was pushing back on this idea that the main role of an economist is to explain why ideas of politicians are bad ones if that's all you're gonna do doesn't sound very exciting well you must have tried right well but I think what we tried to do was come up with something positive it's just a way to think about and that's what your work has been about I mean your work on deaths of despair hasn't been telling people that their proposed policies are wrong it's been saying this is something you didn't know was happening and look at the numbers that's true so it's clear that people do radically change their mind about things faced with data that they did not expect right and I think of that as a causal statement it wouldn't pass because the altie police in genomics but you know if people think there's certain mechanism going on and you show them some data which shows that mechanism is not a work that is a very strong causal statement you know even if there's no whatever so I agree with that but then they say the question that you were gonna ask you asked me before I mean what do you tell politicians to do well it may be a mistake to say that there is one simple answer or even a complicated answer but said this is how you ought to think about the problem and that may change the way they think about the problem and lead them themselves to come up with with different ideas well that's true or you can be much more militant than I think you or I would be you know if you look at what I'm a Piketty and when you'll Saez zucman who are advising elizabeth warren and coming up with very precise plans which are plans and they would take you all the way back to the utility functions and behavior underneath it and be very certain after its own I mean I envy them their certainty I don't think you really everything I mean so you've done pioneering work in theory consumer demand theory in econometrics econometrics techniques and applications to real data and I sense that over half a century that you've just had this enormous attachment and intellectual base in terms of done numbers there are measurement issues where did that come from why do you think it's so important I don't know I think it was there very early on I you know I could talk about Richard stone who was yeah our mentor both of our mentor and he was certainly really enter measurement and certainly encouraged that in everybody around him but I suspect you know it was there before you know my father escaped from the coal mines by learning how to use it the auto light you know and he was into measurement measurement and he wanted to survey and you know calculate things so I think that was probably in me very I mean I'll tell you one story that I have my PhD thesis not on my shelf if I don't have you stopped here I never completed one fun you are the book you say instead I was in those days you didn't have to have to bother with a degree I say you did if you were me not if you were you right this was we were on the hinge generation where they're really really smart kids got college fellowships and didn't have to get a PhD worse if you weren't a really smart kid like me you know if you'd failed your math exams over and over again then you had to go and get a PhD assistance as a way of getting out of this well I did a PhD anyway so I have a PhD thesis on my shelf and occasionally I take it down and I'm very careful with it because if you're not careful the Greek letters all full right and that's because you're laughing because you loved at this time yeah you know the typewriters didn't have it I think on it there were no word processors yeah so the assistant who is typing it for you had to use a stencil which in Greek letters on them and they went and after time they dry out and fall off so if you were to take my thesis and really shake it there would be a ring of Greek letters which is something you guys will never see anyway but I occasionally read a few pages and I think I've learned a lot in the last 50 years but I read this and I think you haven't learned very much you knew all this stuff already interesting and it's not that I'm selling this as a great thesis I don't think it's such a great thesis but it was like I knew how to do my work yeah yeah do you feel that way too I think so yeah partly went this part of the illusion of age that although fifty years has gone by still feel on the same person yeah though but in addition to having a work process of whether Greek letters didn't fall out what was it that made you decide to come and live in America well it's a good question I'd visited Princeton for a year in 1979 when I was at Bristol and I certainly could not believe the resources that were available at Princeton and of course Princeton is not typical but it wouldn't be that different from other top places and also when I went back to Bristol it was at a time when mrs. Thatcher was cutting back on the universities and the universities at that point had absolutely nowhere to deal with it I mean you know Bristol where I was had a budget there was more or less balanced every year and had no endowment so when it lost 15 or 20 percent of its budget which it did it at the far tenured faculty and we were spending every Monday afternoon sitting around in heating's deciding who to fire which was a very unpleasant thing that I and it just made it sort of impossible to work so when you know I'd had various letters that would come and say come to mark and I never really paid any attention to them but then then I got one you got one and you said well maybe we should think about this yeah years later when you won the Nobel Prize did you have any idea that you might win it do they tell you your shortlist how does it work they don't tell you nothing well that's that's a little bit of an exaggeration I mean you know the profession speculates endlessly about who's going to get a Nobel Prize and Thompson's organization or whatever it is comes out with a list of predictions every year based on citations and people read those and talk about them but you know the noble thing first of all you do not get any advance notice of any sort of toll and they're very very careful or they try to be and I'm pretty sure they are yeah so I don't think you know when it's a nice next week that anyone knows the person knows who that's gonna be but just to make the point I think you know obviously I known for some years that it was a possibility but if I had been asked to write down all the names of other possibility there would be a hundred people on that list and also they have a habit of giving it to people you've never heard of or you thought were dead and who said I mean you know when Alamo got the Nobel Prize I had no idea that however what was for life right and for those of us who lured okay I remember you know and when we were young in Cambridge we thought Keynes had killed Hayek in single combat he couldn't possibly still be alive right there he loved but there he was you know so so I knew it was a possibility but it's just like you know and it always was a small problem so where were you when you heard I was lying in bed thinking oh god nothing no and I was sort of wandering around naked when the phone rang so luckily we don't have video phones in the house and you believe them when they how do they convince you it was really then well it was only when Torsten Torsten personnel who was is now the secretary of the command but was then just a member of it I think when he said to me Angus this is not a hoax and I thought that's the first I thought I thought that you introduced that worm into my head actually be hoaxes it not really occurred to me until that moment so has it changed your life yes I mean it certainly changes your life there's no and actually for me and for Anna and I the paper but the dust of despair appeared ten days after the Nobel Prize came out and when you Nobel Prize you have some inkling that weird things are gonna happen and you're gonna be swamped by the press as I was but it was nothing compared with the reaction to that paper so it was like having two tsunamis right sort of immediately after one another so it was a very weird very weird experience how did you decide to when did you decide and why to become an economist because I kept failing math exams you know well it's it's not it's sort of a funny story because you know I'd been at Cambridge for two years and I lost interest in mathematics long before I got to Cambridge and it was also incredibly badly taught at that time I remember actually comparing much more recently notes with all of our heart at Harvard who I think was one year behind me in the math of course he was my roommate he was my roommate and he was doing maths and I was doing economics and I persuaded Oliver that we should both go to Warwick to do a masters in economics then I got the job offer from Richard stone and I stayed in Cambridge he went to Warwick and then to Princeton I was that right people mostly you know six anyway whatever he had to work for one year and went to Princeton right okay oh because he went to work and then he was a graduate student right yeah he came yeah but Oliver it persuaded me it wasn't all me you know that there were these decrepit old professors and green gowns with holes in them you know who reading the same yellowing lecture notes that they'd read for forty years you know that was truly terrible stuff but I I'd lost interest before that anyway so at the end of my second year I went to my tutor in fitzwilliam college and said well what am I gonna do now and he said well you you could leave and I said well that's what I'd like to do but you know my father would have been really really upset given where it come from and and where he'd come from so I felt like I couldn't really do that to him and I said what was he'll tarnished there's only one thing for people are you I said what say he said it's called economics well you've talked a lot about the influence of background and what it was like to be a student in the fifty years ago and you know in a way we both grew up in a society that was gradually becoming a meritocracy we thought this was a great idea meritocracy clearly better than an aristocracy and we thought this is a wonderful idea but somehow where we are today the the meritocrat claim to know more than they really do we'll be really right in thinking that a meritocracy was so much better than what went before I don't know it certainly opened up opportunities for people like you and me who would not have had them I mean I would never go to Cambridge I doubt you would either it's also true that some jobs are better done by people who are more capable of doing those jobs and otherwise so you know maybe one other reason central banking has gotten better is because you know technique rats like you who were well educated could do it instead of you know people who dropped off a family tree somewhere I let you come as well I think that's that that's true there's obviously you want jobs to be done by people who have better equipped at doing it but somehow what we've seen in the last few years is almost the rise of those Marist meritocratic we we are fortunate to have these jobs because we are better at doing it we are superior to other peo because we are more talented and that switch that flip to a sense of superiority is extremely dangerous I think so and it's very bad for the people who left behind because the people who succeeded in the mara took meritocracy can despise the people beneath them or disrespect them and say well you had your chance to and you didn't make it yeah it's not and then they get very smug about their own self-satisfaction they minimize the role of luck but the other thing you know that Michael Young who invented the term in 1958 predicted and I think it's been very deleterious is that if you take all the smart kids out of those communities and promote them to the upper classes those communities have no one left to really represent them all right so if you think of Clement at least cabinet in 1945 there were seven members of that cabinet who'd started life at the coalface right that are now no well there's hardly any even labor members of parliament and Britain who've done a day's work with our hands yes and their lives so there are still want to be lower than their hands but they're not represented anymore so and I think it's communities that are coming apart - so you've got these communities that used to have a wide range of talented people and all those talented people have been sucked up on upstairs sort of idea and that does bad things to social capital to the education and everything in those kids so I think there's a lot of things to worry about the one mistake I think we made is we thought it was just and just this based on birth I don't think is any worse than just this based on the ability to pass exams I mean I think a lot of people find that idea hard yeah this we it's a foundational value in America that everybody has equal opportunity but you don't have equal opportunity you only have opportunities if you can pass exams and what's so great about that yeah that's the challenging answer I think this is now time to open the questioning up to our audience who were obviously good at passing exams I'm sorry I didn't mean to inspire you all now who we'd like to ask Angus a question over here there's a mic we have microphones that will be passed round so roid-boy please wait and could you possibly give your name and explain you know who you are thank you so much for coming my name is Afshin my alumni of the school graduate about five years ago the shifting towards development and the emerging markets you know if you look at a high populated rapidly growing countries like Bangladesh Indonesia India that have traditionally been agrarian and that are now trying to move to a more digital age is there any such a high populations any chance for these countries to to come out of an agrarian society or will you always have to be agrarian with 1.2 billion people they can come out of it I mean you know China was an agrarian society according to my calculations which are being very heavily disputed the poverty rate in China is not lower than the poverty rate in the United States and we've been very bad at leaving some people behind so there's real irreducible very bad poverty in some places in the US but in China I don't think it's there anymore and you know India still has 120 percent poverty by world bank numbers but it's come down very rapidly so I mean I I worry less about the you know the the the ability to make that transformation that I worry about a talker see another country and that's economic growth in China that's done that yes so when young Greta complains that we're destroying her future by pursuing economic growth that's only part of the picture you mean it well and the I mean the people who are auntie Greta yeah are the people who say that you know global warming is a small price to pay for the elimination of poverty in the world I don't buy that argument not boats were through it's like okay good other quick mom over there I'm mark Gertler I was wondering if you and Ann thought about sort of the trends that you document and in your book is being part of a broader phenomenon part of a perfect storm and what I have in mind is the great financial crisis that is are these trends going on and then the financial crisis hits it creates hardship it creates disrupts Jim that gives rise to the Tea Party general dysfunction and if we sort of hadn't gone that course maybe things might have been a bit more manageable and also just the general demise of expertise you know after the Great Recession right I agree with that I mean and in fact in the book we write it in writing the book I think we both come to understand that we probably professionally have understated the bad consequences of a Great Recession you know because I think for many ordinary people you know they were sold those high salaries for bankers the high salaries for the meritocratic that it was in the public interest and not everybody bought that but it was a sort of plausible I'm story and lots of economists including economists on the lap bought that story you know and it was ok and deregulation was ok taking away regulations on banks was ok and then when people lost their houses and they lost their jobs and the bankers went unpunished I think it just you know it exposed the whole thing as being a scam yeah and [Music] yeah right it's I mean the world really didn't subside change out to 1970 a pretty fundamental way and Bob Putnam has a new book coming out in which he has this everything is this big u-shape with good things you know everything getting better up until about 1970 and then things coming apart after that even has done one of these Google Graham kinds of the words I and we write and the word we which the use of the word we which went steadily up until 1970 was replaced by the use of the word I after sure 1917 I mean my sort of upsurge in selfishness yes just coming with a microphone here thank you hi thank you so much for coming so there's several prominent economists including fellow Nobel laureate Amartya Sen who've documented that when we talk about things like happiness and living standards and life satisfaction there's a huge gulf between several European countries and Scandinavian countries and the United States and that gap has only widened since the early 1990s do you think a possible explanation for that widening is the rise of technocratic technocracy in economics well we certainly haven't done very much to stop it I hadn't really heard that I mean and the market doesn't like these happiness measures by and large so I wasn't familiar that he was arguing that but it's certainly true that if you compare not just with Scandinavia but with other European countries and you sort of plot the average level of self-reported happiness against GDP or the logarithm GDP the u.s. is way low on its life evaluation if you ask people of happy they were that they have a lot of happiness yesterday the u.s. is way up there because it's in the Declaration of Independence we have to do that we have to pursue happiness but people don't think of themselves as very satisfied with their life and there's too many explanations for me to pen one but it's clear that you know what's happening to these less educated Americans it's really bad so once all is prompted by what you said earlier is that it is very striking that economics treats everyone as an individual we have our own utility function we're rather happy or not whereas I think most people think of happiness or other aspects of life in terms of groups of people particularly the family as you experience happiness with other people not on your own and that is missing from a lot of the of the discussion it's very strong and their happiness literature you know because if you talk to people especially if you ask the happy question as opposed to the life evaluation question you say did you experience a lot of happiness he has to do and then you debrief them and say well why what were you doing we were with friends yes you know we were watching a soccer match with friends and Spain won the World Cup or something you know that sort of thing and they get ecstatic during these so but it's with friends and I say I think one of the things when Danny Kahneman and I looked at some of these emotions if you get below about seventy thousand dollars a year in the US the happiness really begins to suffer and I think it's because you don't have money to do things oils yeah to go out with your pals to go to a soccer match meal and Applebee's or something you know yes hi Lawrence Kalman a stern alum you earlier admitted the medicare-for-all as a sort of big picture or how do we put money back in people's wallets right we when you mentioned that real wages have been stagnant not even stagnant or falling is there a big picture that would maybe result in real wage growth sorry I'm not a big picture that would do that might where the the Medicare for all would say put money in people's pockets yeah but a big part of on the happiness scale as we were just talking about people who fall below $70,000 in earnings any thoughts to how to generate wage increases who were wealth increases well I think yes because I think that you know if you're a corporation I mean one of the things that's happened within corporations is they don't employ their own janitors anymore they don't employ their own transport they don't employ their own restaurant staff they do it from outside firms those outside firms pay a lot less you don't belong anymore you have very little chance of being promoted in the company because you're working for the Maverick cleaning company and not for General Motors or something and so if I didn't have to pay the the numbers came out just the other day at no the average employer cost for a family health plan is twenty thousand dollars over twenty thousand dollars a year if you got an employee who's worth maybe thirty thousand dollars for the company it's crazy you just have no right now many people on the right would argue that a lot of those supply companies are using you know undocumented immigrants we get told that over time and I don't think there's much evidence for that but they're certainly not paying benefits and they're not so you can basically shed the benefits and you know I think it's that's one of the reasons why you're not getting these dusts of despair in Europe because they have you know national health systems and employees Don employers and employees don't have to bear those cops so I think it's a just a huge number I mean if they're having to pay twenty thousand dollars for someone who's worth about $30,000 to the company it's it's a no-brainer to get rid of them Stephen Graham adjunct faculty that 70,000 number is that household income or is that and well it's household income as reported by individuals it's a pretty noisy number but that's where I kept my you know the curve stops going up then I would say to that for something like just to come back to this I don't think you can get the numbers but they're very few of the people who work in Amazon warehouses who actually work for Amazon they're nearly all working for supply company hi I'm an undergrad undergrad student here and my question was so you talked a lot about how there's a correlation between education levels and mortality here in America so what concrete changes do you think should be made in order to alleviate this problem you know I've not written or half written I wrote a book before called the Great Escape and and I written this book and I finished both of them thinking I should know a lot more about education that I do but one of the things that is true about our educational system is the educational system here and I think in Britain too today is entirely driven by getting people to go to college but two-thirds of them don't get there and so that money is just like wasted and it's a terrible injustice to you know lavish all this public money on these schools so we got to do something about that I don't know whether the German system would work better or but we've got to have more ways for people to go and you know it's the same thing we were talking about the meritocracy I mean other people have proposed that for instance top schools should lose their tax breaks unless they do much better than they're doing opening up the Gateway to much more many more students and a much broader swath of students for instance and not just select them on exam results room any more questions yes sir one here and one over there so my name is David Gottfried I'm a pediatric surgeon and going back to get my executive mba hopefully can be involved in healthcare changes so one of the questions I have is you pointed out or we've discussed how many companies are shedding low low income workers do you see as time goes on a possibility for that to expand into higher wage or workers that have attended four years of college well I think the you know the robots and things are sort of coming for us all so it probably even surgeons right yeah their hands don't shake is that right so that's me but I think the these costs of health care that employers and not - not just that but you know the ERISA has stuff and the safety stuff and all the rest of it and the 401k hit much more less well paid workers because basically the cost of health care is not that different if you're a low paid worker than if you're a high paid worker and so paying twenty thousand dollars for health care for someone who earns one hundred fifty thousand dollars a year is not such a big deal but for someone who you would like to pay thirty thousand dollars it's a huge deal and so I think I would take a lot of the pressure and and it acts more at the bottom but you know if our health care costs go up to fifty thousand dollars or whatever it is then it's gonna move up the scale because you know it's just this huge cancer on the body economic or the tapeworm as Warren Buffett likes to call the will then the taper but the tapeworm sort of you swallow it it's just tiny or you swallows an egg right that it's or no castle hill start will use the cancer thing that we're so revising the copy-editing let's have a question that doesn't involve quite so much medical knowledge there's someone over there yes more chiller ik amok mentioned the perfect political storm or a economic and political Strom be the crisis so having both of you up there I can't resist after asking what do you think about brexit and the implications of them that's one for you between 6:00 p.m. and 7:00 p.m. tonight is an opportunity for me never to think about briggsie and I'll have absolutely no intention of changing that conviction so we're here to listen to Angus and none of us are kind of mentioned the word Briggs it until after 7:00 p.m. so I am okay one more question I was just gonna say that I think the stresses in Britain have been handled a little better than the stresses here would you agree with that well in terms of health care and some of these longer run issues that is true but what has become apparent during the discussions after the referendum we have in 2016 not to mention the magic word is that the whole political process has sort of broken down because those people who feel they've risen to the top as part of the meritocracy and as you pointed out earlier on many of them have moved from different parts of the country to work in London so in London is top-heavy with meritocratic and they feel superior yes and they make that absolutely apparent to everyone else only the inferior people would have voted for this outcome yeah and people feel utterly frustrated by it they played by the rules of the Democratic game and they've just been ignored and no one seems to worry about the fact that they're ignoring this it is that kind of attitude becomes I think difficult and it's linked to something that you talked about outsourcing I think outsourcing is a major issue here not just because of the effect on wages but because of the effect of people not belonging I joined the crisis at the Bank of England we only had about 1800 people working in the bank so I talked to the whole of the staff the organisation was under some criticism and attack from outside and it was absolutely vital to better say to people you know when you go to the pub on a Friday night and people say maybe you work and you say Bank you've been you know what do you do there I said we all give the same answer I would say all started with we we all get the same answer our job is to try to ensure sufficient stability in the banking system and in the economy as a whole and my part in it is where and it might be cleaning the floors it might be making the computers work making the microphones work for the meetings and that and you could tell that the fact that they all felt they belonged and their job was a vital cog unit was crucial to their sense of not only belonging but actually performing well and once you outsource all that it will go it's gone so I think that's a terrible cause of despair yeah there's a very nice quote there's a book by someone called Bloodworth and journalist in Britain who's written who did one of these undercover and worked in an Amazon warehouse and those Amazon warehouses or is there called fulfillment centers those of fulfillment is the customer not the people right right and they're situated in old mining areas in Britain like in Yorkshire where there are a lot of motorways so they can take this stuff and someone who worked there said when you ask someone now they say I'm with Amazon and the old days no one would ever say I'm with the coal board they say I am a Collier and I am proud of being a Collier and no one dies in an Amazon warehouse and people died in the mines all the time my grandfather was killed by runaway truck and Yorkshire coal mines and it's much safer and it's much cleaner and it's probably better paid but this thing belonging is and coal-mining no one should ever have been a coal miner in history of the world but there was a society around that and you know you've seen these movies with brass bands and yeah this all that sort of stuff and some of that society was pretty awful there was a lot of violence against women there was a lot of drinking and you know it's no accident that the Methodists started in those areas and so on but you know there was a real society there and we're losing it and we seem to have lost a lot of it for people who are not very well-educated and that's we think the roots of despair so this I agree with you a hundred percent this outsourcing is really central and we've largely inflicted it on our soul yeah I think this is a wonderful moment to as we have to since time has run out draw this to a close my you as a community where we all belong I hope you'll feel that tonight has been an opportunity for everyone to listen to a truly remarkable economists who was helped to change the world so let's give a very big thank you someone to [Applause] you [Music]

Channel: NYU Stern

Views: 1,264

Keywords: new york university, nyu stern, stern school, Angus Deaton, Mervyn King, Nobel, In Conversation with Mervyn King

Id: 2admDsrSP-I

Length: 62min 11sec (3731 seconds)

Published: Thu Oct 17 2019