Nobel Prize for a great economist

Amartya Sen receives a Nobel Prize that is long overdue - for his contributions to welfare economics and, among other things, for restoring "an ethical dimension to the discussion of vital economic problems". (Published in the issue dated November 6, 1998.)

Published : May 28, 2021 00:00 IST

Amartya Sen, winner of the 1998 Nobel Prize in Economics.-SANDEEP SAXENA

Amartya Sen, winner of the 1998 Nobel Prize in Economics.-SANDEEP SAXENA

ON October 14 at about 5-15 a.m., the telephone rang in Amartya Sen's hotel room in New York. Sen, who was in New York to speak at the United Nations at a memorial meeting for his classmate and old friend Mahbub ul Haq of Pakistan, was initially worried that there may be some bad news. "It turned out, however," he told Frontline , "to be reasonably good news." The Secretary of the Royal Swedish Academy of Sciences was on the line; he was followed by the Chairman and another member of the Nobel Prize Committee. "By the time I had woken up properly, the penny had dropped - and I had seized the fact that they were giving me rather a nice piece of news."

They told him that the Royal Swedish Academy of Sciences had decided to award the 1998 Bank of Sweden Prize in Economic Sciences in memory of Alfred Nobel to him for his contributions to welfare economics and, among other things, for restoring "an ethical dimension to the discussion of vital economic problems".

AMARTYA SEN has had one of the most distinguished academic careers in the economics profession today. Born in Santiniketan on November 3, 1933, Sen was educated at Santiniketan, Presidency College, Calcutta, and Trinity College, Cambridge. He became a full Professor at Jadavpur University at the age of 23, has held professorships at Jadavpur University, the University of Delhi, the London School of Economics and the University of Oxford and was a University Professor at Harvard before being nominated Master of Trinity College earlier this year. The position of Master of Trinity College in Cambridge is a Royal appointment and is considered the highest academic appointment in the United Kingdom.

Sen has published 20 books and more than 225 research papers. Two books are in press. No other economist has been, as Sen has, President of the International Economic Association, the Econometric Society, the Development Studies Association, the American Economic Association and his own national association, in Sen's case, the Indian Economic Association.

Trinity College has something of a record in Nobel Prizes. Three of the last four Masters (including Sen) and four of the last six have been Prize winners; in all, 31 Nobel Prizes have been won by persons connected with the college.

Sen is married to Emma Rothschild, who is an economic historian and Fellow of King's College. She is also Director of Cambridge University's Centre for History and Economics. Sen has three daughters and a son.

THE statement - or citation - of the Royal Swedish Academy on Amartya Sen's contribution to welfare economics is a detailed and remarkable document. Its first main feature is that it covers the sweep of Sen's extensive contributions to academic economics in the fields of social choice, welfare distributions and poverty. It deals separately with his work on individual values and collective decisions (making special mention of his work on majority rule, individual rights and information about the welfare of individuals), on indices of welfare and poverty and on the welfare of the poorest (here it refers specifically to his work on famine, hunger and poverty). Secondly, it seeks to identify the interconnections in the body of work that Sen has produced.

It is, of course, impossible to summarise the very large corpus of Sen's work in the space of a few columns. His published work includes contributions to economic methodology; social choice theory; welfare economics in general; economic measurement; axiomatic choice theory; food, famines and hunger; family economics and gender discrimination; capital, growth and distribution; economic development; project evaluation and cost-benefit analysis; education and manpower planning; employment; Indian economy and society, and moral philosophy.

Sen's doctoral research in Cambridge in 1950s was supervised by Joan Robinson and greatly influenced by his teachers there, particularly Maurice Dobb ("the closest to a guru that I've ever had"). His doctoral work on the choice of techniques was summarised in an article in Frontline 's cover feature (November 29-December 12, 1986) on Sen's contributions to economics.

Sen's work on choice of techniques constitutes an important contribution to the analytical underpinnings of development planning and cost-benefit analysis. Sen explicitly considers a balance between employing many people today and employment tomorrow, a problem concerned with the welfare of the present generation and its labour force as well as that of future generations. This and the related question of the shadow price of labour was a question that had concerned Dobb and one that had generated a considerable literature during the early debates on economic planning in the 1930s and 1940s, a literature that continued into the 1950s. Sen refined the concept of the shadow price of labour in a way that sharply distinguished between proponents of alternative notions of the shadow price, and showed that the differences derived from their authors' specific formulation of welfare over time. Sen's contribution to the field of choice of techniques was particularly relevant to developing countries that had high levels of unemployment and underemployment when they attempted to strike a balance between alternative techniques, between capital-intensiveness and employment.

Sen has described economics as having "two rather distinct origins": there is "a kind of engineering origin of economics and a philosophical origin." It was in Cambridge in the 1950s that Sen began intensive study in philosophy, particularly ethics and moral philosophy. His subsequent work was to bear the stamp of his scholarship in these fields and his early work on social choice theory was marked by this influence. The basic features of his work on social choice have been described in the following way:

Sen's contribution to welfare economics and social choice theory is fundamental, particularly in expanding their informational bases, incorporating considerations of liberty and rights and exploring problems of collective rationality. Social choice theory, broadly speaking, deals with the interrelationships between the choices of individuals and collective decisions. In a seminal contribution to the field published in 1951, Kenneth Arrow put forward a mathematical result that suggested that under a certain (not intrinsically unreasonable) set of conditions, democratic choice is impossible - there will always be a dictator whose choice determines social choice.

Sen's critique, which builds on an acceptance of the significance of Arrow's "Impossibility Theorem", was, in effect, to say that the existing framework of welfare economics did not put in enough information to stop that happening. Sen's critique of Arrow's result marked the beginning of an important new trend in welfare economics and social choice theory, characterised, for instance, by a recognition of a need to explore more carefully the analytic foundations of rational choice and the behavioural bases of economic theory. ( Frontline , ibid.)

Sen has been a prominent critic of utilitarianism and its dominance in standard economic theory; his contribution to the critique of utilitarianism has shown, for example, that utilitarian concepts of social welfare conflict with rights-based concepts of social welfare. His work on economic measurement includes contributions to the literature on the measurement of national income, employment, poverty and inequality and to the literature on investment appraisal.

In the 1980s, Sen wrote a book that attracted wide attention within the discipline, in policy-making forums and among the wider public. In Poverty and Famines , Sen challenged the view that related the occurrence of famines to sudden declines in aggregate food availability. The book, which begins with a series of lucid analyses of specific famines in the modern world, argued that food availability did not necessarily decline in situations where famine occurred; what invariably occurred was that the entitlements of people to command food, whether through the market or other mechanisms, broke down. The application of what may be called "entitlement theory" goes beyond the study of famines, just as Sen's study of famines went beyond the narrow study of food availability and drew in factors such as the influence and role of the political Opposition and independent mass media in situations of famine and persistent hunger.

In 1989, Sen and his close colleague Jean Dreze published Hunger and Public Action , a study of world-wide hunger and its prevention. This was followed by a series of books of research papers on the political economy of hunger written by scholars in different fields and edited by Dreze and Sen. Taken together, this body of work constitutes the most important contribution in the economics and public policy literature today to our understanding of the terrible problem of hunger.

In the late 1980s and 1990s, much of Sen's work was within the general framework of "capabilities" theory. In Sen's lexicon, a person's "capability" is a set of "functionings" bundles, representing the various beings and doings that a person can achieve with his or her economic, social and personal characteristics. "Functionings", in turn, are defined by Sen as the ability to do certain things and achieve certain types of beings (such as being well-nourished, being free from avoidable disease, being able to read and write or being able to move about as desired).

Sen's work on capabilities and on public action as the basic means of enhancing human development played a foundational role in the formulation of the Human Development Index, which is computed every year by the United Nations Development Programme (UNDP) and published in its annual Human Development Report. The index reflects the view that poverty and human development cannot be measured in terms of incomes alone; any measure of development requires that poverty and deprivation be measured in terms of a range of variables, including, for instance, the educational and health achievements of individuals in a society.

Sen's work on issues of gender has also been the subject of wide interest. His work on the theory of the household represents the household not as an undifferentiated unit, but as a unit of cooperation as well as of inequality and internal discrimination. He has worked on problems of discrimination against women in the development process, on survivorship differentials between men and women under conditions of social discrimination against women and on women's agency in the process of social development as a whole.

In his Inequality Re-Examined (1992) Sen puts forward a case for examining inequality in social arrangements from a capabilities perspective, and in recent work in the area of the theory of knowledge, he has worked on problems of objectivity and observational position.

SEN has taken an active research interest in the Indian economy and Indian society since the 1950s. In an article on India's achievements over 50 years of Independence (Frontline, August 22, 1997), he expressed the view that perhaps the biggest achievement of independent India was the maintenance - despite threats - of political democracy in the country, and urges that this be seen not only as an achievement in itself but be used as an instrument of political struggle for social and economic progress. Sen goes on to say that, by contrast, what has happened in respect of social inequality and backwardness is very nearly a disaster - a disaster not in the sense of something going suddenly very bad but something remaining extremely bad without there being any change in it.

The "biggest failure" in India, Sen says, is social inequality:

It takes its toll both directly - in terms of the quality of life - and indirectly - in terms of reducing the economic opportunities that people have. I think it is illiteracy, the lack of health care, the absence of land reforms, the difficulty in getting micro-credit if you belong to the rural poor, and, of course, the pervasive gender bias between men and women that make the problem of social inequality so large in India.

With regard to recent policies of economic "reform" in India, while Sen has supported certain features of the policies of liberalisation and globalisation initiated during the period when Manmohan Singh was Finance Minister, he has continued to be critical of the absence of resolute public action for the poor and for the expansion of social opportunity in India. His views on liberalisation and globalisation in India have been the subject of criticism by economists and others on the Left in India, who have otherwise supported and learned from his analyses of deprivation and the need for public action. The main feature of this criticism is that Sen's comments on contemporary liberalisation and globalisation do not sufficiently take into consideration the context of the capitalist-landlord state within which these reforms are being implemented or the recent economic history of the implementation of such policies in the less-developed world. At the same time, Sen's views on India's economic reforms have been the target of criticism from the Right: indeed, the economist Jagdish Bhagwati has been reported in Rediff on the Net as having said that he hoped that the Indian Government would not use the Nobel win as an excuse to go slow on the reforms.

Consistent with Sen's views on Indian democracy and the need to expand social opportunity is his advocacy of social, cultural and political pluralism in India and his consistent, outspoken opposition to communalism as a political mobilisation strategy and Hindutva as a divisive political force. He has taken a public position against the nuclear explosions of May 1998. When he has had the opportunity to vote in elections in India, Sen has always voted for the Left in his home constituency in Bolpur.

SEN is well-known as a warm and considerate colleague and as one who values friendships. Soon after the announcement of the award, when asked by a journalist whether "the news had sunk in", Sen replied, with the eloquence that those who know him have come to expect, that "news of such matters as reward or criticism sinks in very easily; it is an understanding of really important matters, such as the death of a friend or loved one, that is very difficult to accomplish."

The choice of Amartya Sen for this year's Nobel has been a very popular one. Hours after the announcement was made, more than 400 calls came into the hotel, which finally had to close calls to Sen because its lines were jammed. By the time he reached Trinity the next morning, hundreds of messages of greetings had arrived, and more than 1,200 e-mails and faxes had been received by the Economics Department at Harvard.

This Nobel Prize recognises work whose nature and depth usually goes unrecognised by the Nobel Committee. Last year's winners Robert Merton and Myron Scholes, for instance, won the Prize for a particularly narrow "contribution", if it can be called that at all. Their work on valuing risky "derivatives" got them the Prize; last month the hedge fund in which they were partners and to which they applied their Nobel Prize-winning work collapsed, necessitating a $3.6-billion bailout ( Frontline , October 23).

Many economists in different parts of the world working on the problems of deprivation and human development have found inspiration in Sen's writings and have received encouragement from him in person. At his first press conference after the award, Sen referred to the large body of work in welfare economics and the economics of deprivation and development, and said - it came naturally to him - that he considered it "a tragedy that we can't all share the award."

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