FINANCE AND ECONOMICS
Sen-sational
The Nobel prizes
Search archive
In his 1981 book “Poverty and Famines: An Essay on Entitlement and Deprivation”, Mr Sen challenged the prevailing wisdom that declining food supply is the most important cause of famine. Why, Mr Sen asked, has famine often occurred in countries where the supply of food per head is no lower than in previous years? He concluded that there are social and economic factors at work that limit the economic opportunities of certain groups and so cause starvation.
In addition to his work in development economics, Mr Sen earned a reputation in the 1970s for significantly advancing the field of social-choice theory. Building on work done previously by another economist, Kenneth Arrow (who won the Nobel Prize in 1972), Mr Sen argued that inequality ought to be a fundamental consideration in collective action. To this end, he developed several indices with which to measure the welfare of individuals in society. His “poverty index” took into account not only the proportion of a society living below the poverty line, but also the degree of poverty among the most destitute. Mr Sen’s work has been used by other economists not only to compare the welfare of individuals across society, but also of countries around the world.
The choice of Mr Sen is ironic. Last year’s laureates, Myron Scholes and Robert Merton, won their prize for work on the pricing of risk. As partners in Long-Term Capital Management, a hedge fund that nearly collapsed, their work has recently made a lot of rich people poorer—themselves included. Mr Sen’s work, in contrast, was aimed at making the poor better off. And Mr Sen himself is now $1m the richer.
