2. WELLBEING

The introduction and first chapter open the book with a discussion of how to define and measure wellbeing, along with an examination of how the global snapshot of inequality and progress changes depending on how we do so. Here, Deaton sets the tone for his careful exploration in Parts I and II, drawing out the interrelations between income, happiness and health. Deaton's approach to wellbeing in this book focuses on wealth (income) and health (life expectancy). The reader should not mistake this for a position that wealth and health are together the only necessary and sufficient conditions for human wellbeing. While he believes that there are many other components to wellbeing, such as political liberty, education, or dignity, Deaton focuses on wealth and health because these components are already so expansive, and are rarely discussed together in tandem with global empirical trends in inequality and progress (9).

Where he draws a principled distinction, however, is on subjective wellbeing measures, which, Deaton argues, are given undue prominence by some of those working in the contemporary field of welfare economics. While Deaton has contributed to the economic literature on income and subjective wellbeing measures, in this book he seeks to focus on income and health and therefore spends several pages arguing against the view that economists should focus on measures such as happiness or life evaluation as a more meaningful metric for understanding how people are faring. Deaton's discussion here is engaging and nuanced, covering the differences between happiness and more objective life evaluation scores as well as different ways of understanding the relationship between increases in income and increases in life evaluation across countries. Throughout this discussion, Deaton acknowledges that ‘many writers, both economists and philosophers, have reservations about the validity and usefulness of self-reported measures of wellbeing’ (47). Rather than argue in detail for the importance of life evaluation measures relative to the income or health measures he focuses on in this book, Deaton simply acknowledges the debate and indicates that an advantage of looking at income and health is that datasets for these are generally more consistent and have been recorded for longer periods of time, supporting a stronger historical analysis.

Turning towards the relationship between wealth and health at the global scale, Deaton uses a series of graphs conveying measures of growth, poverty reduction, and inequality to illustrate one of the primary themes of the book: When we talk about global inequalities, we tend to focus on the differences between countries, in terms of their GDP, their rates of growth, or their average life expectancies. Looking at growth, Deaton nicely illustrates, gives us a pessimistic picture of global inequality, as it shows that poor countries are not growing faster than rich countries, and that differences in GDP remain large, or have increased. But when we look at the number of poor people worldwide, we get a more positive picture: the number of individuals living in poverty has declined from 1.5 billion to 800 million in 30 years (44). Even in Africa, which has made least inroads into reducing poverty, there has been a decline in the number of poor. Here, Deaton highlights the significant importance of China and India, due to their large populations, for the decline in global poverty (though he also cautions against taking these trends to be absolute fact, given the many problems with poverty measurements that he discusses in detail in a later chapter). This sets up Deaton's later and frequent return to these two countries as paradigm cases in his arguments on the role of growth and knowledge transfer in increasing life expectancy and income.

The remainder of the book is split into three sections: the three chapters that comprise Part I look at health, while the two chapters that comprise Part II deal with income and the material component of well-being, looking first in detail at the United States and then addressing various issues in globalization, growth and poverty reduction.

3. HEALTH

In Part I, Deaton uses the dynamic between progress and inequality in health to unpack the relationship between health and money, arguing that wealth, whether defined as personal income or economic growth, facilitates the conditions necessary for, and correlates to, longer life expectancy, but is not the most important causal factor for improved health.

Deaton instead identifies two factors that he argues are crucial to understanding how large gains in health have been achieved before, and how they can be achieved in countries that are currently lagging behind. These two factors are knowledge and public health measures. To illustrate the importance of both, Deaton refers to historical life expectancy records in England. Life expectancy of the English aristocracy and the general population remained similar until 1750, when new knowledge about disease prevention became available to the wealthy. The gap in life expectancy that this created between the upper and lower classes later closed, Deaton explains, as this knowledge spread to the general population, primarily through public health initiatives. Knowledge is therefore important for improvements in health (the progress side of the coin), but society-wide initiatives are necessary for ensuring that innovations and advances in medical knowledge have the widest impact (the equality side of the coin). These are achievements that, Deaton argues, cannot be provided by the market alone, but instead require a coordinated approach delivered through a public agent.

Deaton further explores this line of thinking in his discussion of health in the contemporary world. Currently, there are developing countries in which people, primarily children, continue to die at high rates from causes that have been nearly eradicated in wealthier parts of the world. When we try to answer why this is the case, Deaton says, we are initially drawn to the answer that it must be about money: developing countries are poorer, and therefore they do not have access to the same medicines, or are somehow financially incapacitated from capitalizing on medical innovation. Deaton uses the examples of China and India to demonstrate how this simple view is incorrect: that growth is neither necessary nor sufficient for gains in health. Growth is not sufficient if a government chooses to focus on priorities other than health care (China), and growth is not necessary if targeted health initiatives are treated as top priorities (India). The fundamental factor, Deaton argues, is the approach undertaken by governments to address public health issues. While money helps governments in achieving this task, more money will not contribute to health outcomes if government policies for health are inadequate, or if governments choose to spend money on other things.

Deaton is correct to point out the importance of public health systems in developing countries and the need for better governance of these systems. Yet in his discussion there is a noticeable absence of other factors that arguably play a large role in holding back developing countries as they attempt to close the health gap between themselves and the developed world, much in the same way the English general population did with their aristocratic class. The Trade-Related aspects of Intellectual Property Rights (TRIPS) Agreement, used to prevent cheaper versions of medications from being manufactured and sold in developing countries, is one example – one which Deaton only mentions in brief at the very end of his book. The ‘brain drain’ brought about by strong financial incentives – put in place by developed countries – for the best doctors and nurses in developing countries to move abroad, is another.

4. WEALTH

In the chapters on wealth, Deaton looks closely at the United States to understand the negative impacts of material inequality before developing a rich and careful empirical analysis of the evolution of global material inequality over the past few decades. The United States offers an excellent example of the ways in which those who benefit from progress can stymie the attempts of others to follow the same route, thus preventing the great escape for others and turning what might only be temporary gaps in well-being into much larger and longer-running inequalities. After reviewing the data that shows how top earners in the United States have sharply increased their share of total wealth in the United States over the past two decades, Deaton argues that we ought to care about material inequalities because of the ways in which they can spill over into other components of well-being, with democratic liberty and equality being Deaton's primary examples. Across both chapters, Deaton refers to relevant concepts and arguments in political philosophy, however refrains from exploring these in greater detail. Allocating more space to these arguments, and perhaps less to his detailed discussion of domestic economics in the United States, might have enabled Deaton to draw more meaningful connections here across his core themes of progress, inequality and globalization.

5. AID

One expects Deaton to reconnect these strands on health and wealth to address what he says in the introduction is his book's core questions: the dynamic between inequality and progress in shaping well-being, whether and when we should care about inequalities, and what we can do to ensure that, in the spirit of Deaton's book title, ‘the great escape’ occurs for those who are currently lagging behind.

It is therefore puzzling that Deaton instead dedicates the last, and longest, chapter of his book detailing his opposition to foreign aid. While the role of foreign aid certainly is relevant to the ways in which developing countries progress, or fail to progress, there are several problems with the way this chapter sits in relation to the rest of the book. Since the aid sceptic/supporter debate is so wide ranging, I will focus on two issues that seem most significant.

Addressing the relationship between foreign aid and growth, Deaton presents two graphs, one showing median per capita GDP growth in Africa from 1960–2010, the other depicting median per capita aid to Africa over the same time period. Based on these graphs, Deaton argues that we should conclude that ‘things look bad for aid’ because GDP grew slowly, or at some points shrank, in the period when foreign aid increased, from 1975–1990. But it is impossible to draw any causal relationship between aid and growth from these two graphs. Correlation, too, is difficult to establish, once we consider the socio-political context in Africa in the 1970s and 1980s that complicated the relationship between aid and growth during that period. Deaton attempts to draw conclusions about the relationship between aid and growth based on the amount of aid given, ignoring the very different ways in which foreign aid has been delivered over the past 60 years which may reduce our ability to compare its impacts on growth in a meaningful way across decades. As a catch-all phrase, ‘foreign aid’ refers to any transfer of money from one government to another under the auspices of what the former defines to be an aid payment; therefore, foreign aid in the 1950s looked very different from foreign aid in the 1970s, which in turn looked very different from foreign aid in 2010.Footnote ¹ This more recent change (the focus in the early 21st century on good governance reforms and health) might help explain why the increase in aid in 2005–2010 is matched with a large increase in growth in Africa. Deaton considers this point briefly but does not engage with it (286).

Furthermore, Deaton is sufficiently aware of the aid literature to know that the relationship between economic growth and foreign aid remains contentious. For example, a recent metastudy of the three most widely cited pieces of work on the growth-aid relationship demonstrated how slight adjustments to the assumptions used in these studies yielded very different results, including a systematic correlation between aid and ‘modest’ increases in growth (Clemens et al. Reference Clemens, Radelet, Bhavnani and Bazzi2012). While not a defence of foreign aid, this study is but one illustration of how methodological nuances prevent us from drawing definitive, sweeping conclusions about the relationship between aid and growth. Elsewhere in the book, Deaton spends many pages discussing similar methodological challenges on a number of key economic concepts. It is noticeable that he does not apply the same critical perspective here.

A broader problem with this chapter is that Deaton, like many aid sceptics, fails to appropriately contextualize aid in relation to other aspects of international politics and trade that shape global inequalities. As Deaton highlights, foreign aid can fail when it is appropriated as a political tool to serve the interests of high-income countries. Yet because this is the case, it seems naïve to believe that, if foreign aid were ended, wealthy countries would not find other means by which to promote their interests; indeed, such practices are already employed to great effect today. There is evidence that, for many developing countries, the amount of foreign aid entering the country is dwarfed by the amount of wealth being extracted from it through, for example, debt repayments or profits extracted by multinational companies (Sharples et al. Reference Sharples, Jones and Martin2014).

While this supports Deaton's view that foreign aid leads us to think we are doing more good for low- and middle-income countries than is the reality, these practices also point to the many other harmful ways in which high-income countries interact with low- and middle-income countries that perhaps demand our attention more than the misfires of foreign aid. Deaton mentions these other practices only briefly and at the end of the chapter, arguing that we could seek to tackle them as a replacement for providing foreign aid. But this implies that ending foreign aid is the priority goal, which seems to put the cart before the horse. While even supporters of foreign aid will acknowledge its shortcomings, there are also many success stories. Deaton mentions these, but seems to think we should hold foreign aid to higher standards and dismiss it if it does not singlehandedly pull poor countries out of poverty. The problem is that the factors that undermine poverty reduction are not going to go away if we end aid – local elites will remain incentivized to avoid accountability to their citizens through other influences. Surely, then, we should seek to cease many other international practices that harm low- and middle-income countries first, such as the illegitimate appropriation of natural resources, TRIPS, and the various avenues through which the governments of high-income countries use their power to protect the interests of multinational corporations against the governments or citizens of poorer countries when they seek to institute higher taxes or more competitive commodities prices.

In sum, Deaton is correct to criticize the ‘hydraulic’ approach to aid, in which poverty is conveyed as ‘an engineering problem’ and a handful of dollars is simplistically presented as producing specific, reliable and tangible results such as the saving of a child's life (272). But Deaton's critique of aid is similarly hydraulic: if we eliminate aid, we cannot expect the factors that contribute to aid's abuse in certain countries to disappear as well. It seems wiser to address those first before pulling the plug on those aid successes (such as primary education for girls, or HIV/AIDS treatment, which Deaton acknowledges) which have produced tangible benefits.