2010 Leontief Prize

2010 Leontief Prize
Awarded to Bina Agarwal and Daniel Kahneman

Agarwal presented a lecture on the potential for the world to feed itself in a sustainable manner.  She presented data on the continued importance of agriculture in developing countries, noting that about 60% of the labor force in Africa and Asia is involved in agricultural production.  The typical farmer in developing countries is poor, small-scale, and increasingly female.  Agarwal mentioned that the negative consequences of climate change on agricultural production will be particularly severe in South Asia and Sub-Saharan Africa, resulting in declines in per capita caloric intake over the coming decades.

Agarwal’s proposed solutions to this crisis focus on the need for cooperation.  Within developing countries she advocates infrastructure investment, soil and water conservation, and a group approach to farming and investment that targets small-scale female farmers. At the international level she supports regional buffer stocks, food aid, funding for infrastructure and agricultural research, and the elimination of distortionary subsidies for biofuels. 

Kahneman presented new research from Gallup polls on the relationship between subjective well-being and GDP levels across countries.  Most previous research has found that a positive relationship between subjective well-being and GDP per capita is evident only up to a certain income level; and beyond that level further increases in GDP produce no gains in average well-being levels.  But the new data show a strong and continuous positive relationship between average well-being and the logarithm of income.

But Kahneman noted that this relationship pertains only to the “evaluating” self, as opposed to the “experiencing” self.  While the evaluating self judges one’s welfare relative to others, the experiencing self considers one’s emotional state during the current moment.  The Gallup polls also collect data on emotional well-being and analysis has found that emotional well-being is positively correlated to income, but only up to a certain level of income – $70,000 household income in the United States.  Kahneman concluded that the most effective way to think about the topic is that we shouldn’t focus on increasing well-being, but on decreasing misery, which will lead to a different set of policy prescriptions.