S AN Indian who takes inspiration from an 18th-
century Scottish economist, a French mathemati-
cian, and a renowned Bengali poet, Amartya Sen
is a rare species. He successfully bridges philoso-
phy, ethics, and economics, in the process tackling some of
the most critical themes of development. An intense, ener-
getic man, equally at home citing Western and Eastern phi-
losophy, he is the first Indian—and the first Asian—to win
the Nobel Prize for economics.But
country leaders are likely to be dis-
appointed if they hope to fly him
in for a consultation. Throughout
his life, he has avoided counseling
governments, preferring to place
his views in the public domain for
discussion. “I like arguing rather
than dispensing privileged advice,
but I also think social change
comes best from public argu-
ment,”Sen tells F&D.
When Sen received the Nobel
Prize in 1998, he was cited by the
Swedish Royal Academy of
Sciences for restoring “an ethical
dimension” to the discussion of
vital economic problems by com-
bining tools from economics and
philosophy. The prize recognized
Sen’s contributions in the fields of social choice theory,
welfare economics, and economic measurement. He is
credited with making inroads into the assessment of
poverty and the evaluation of inequality—making possible
better social welfare comparisons—and changing the way
governments prevent and combat famines.
Amartya Sen was born in November 1933 in Bengal, then
part of British India. His family were residents of Dhaka,
now the capital of Bangladesh. As a child, he studied at
Santiniketan (not far from Calcutta), where he was heavily
influenced by the school’s founder, Rabindranath Tagore,
who had won the Nobel Prize for literature in 1913. It was
during those early years that Sen developed a passionate
interest in the plight of the poor and society’s underdogs. He
has never forgotten an incident during the Hindu-Muslim
riots in the 1940s, when a Muslim laborer, seeking a day’s
work in Sen’s largely Hindu area in Dhaka, was knifed. Sen
has said that watching his father drive the bleeding man to
the hospital made him aware of the “dangers of narrowly
defined identities and also of the divisiveness that can lie
buried in communitarian politics.” The incident also alerted
him to “the remarkable fact that economic unfreedom, in
the form of extreme poverty, can make a person a helpless
prey in the violation of other kinds of freedom.” In 1953, he
moved to England to pursue his studies at Trinity College,
Cambridge. Ever since, his feet have been firmly planted on
academic ground. He has taught at a dozen of the world’s
most prestigious universities, including Cambridge, Oxford,
and Harvard, and the London School of Economics.
The man who flirted with the idea of becoming a
Sanskrit scholar before settling on economics draws both
praise and criticism for his extraordinary range of work.
He moves with ease from highly technical studies filled
with advanced mathematics (he once served as president of
the Econometric Society) to studies filled with morality
and ethics (he is a professor of
both philosophy and economics
at Harvard). Some people worry
that he spreads himself too thin,
thereby lessening his potential
impact. However, Sen is not so
sure—each field offers its own
insights—and he continues to
ignore such career counseling.
Sen’s hero for the past
20–25 years has been a true
Renaissance man, Adam Smith.
And others see a similarity between
the two. Richard Cooper—a
fellow Harvard professor—
wrote in a book review in
Foreign Affairs (January/February
2000): “Most economists these
days eschew moral philosophy—
namely, the consideration of
social justice—because they consider it too ‘soft’ for rigor-
ous analytical treatment. But Amartya Sen harks back to
the older and richer tradition of evaluating the considera-
tions of economic efficiency—which dominate most
modern economic analyses—with respect to their general
social consequences. Such judgments require an ethical
framework.”
Social choice theory
Of all the work he has done, Sen stresses that the most satis-
fying has been his contribution to the field of social choice
theory, which, he tells F&D,“goes to the very foundations of
democracy” (see Box 1). The field goes back to the 18th-
century work of a French mathematician and theorist of the
revolution, the Marquis de Condorcet.But it was in the early
1950s that the theory took its modern form, thanks to
Stanford University’s Kenneth Arrow (who shared the Nobel
Prize for economics with Sir John Hicks in 1972).
For Sen, the beauty of social choice theory was not only
that it was analytically exciting but also that it gave him a
framework for tackling practical political issues—most
notably, the best way to measure social progress.
Tr aditionally, the economic community relied on national
income statistics, such as GNP and GDP, which measure the
total income or output of a society. However, Sen dismissed
these figures as totally insufficient for two reasons: first, they
failed to capture income distribution issues; and, second, a
Finance & Development September 2004
4
PEOPLE
IN ECONOMICS
Freedom
as
Progress
Laura Wallace interviews
Nobel Prize–winner Amartya Sen
A
Finance & Development September 2004
5
person’s well-being and freedom depend on many nonincome
influences, such as disability, propensity toward and exposure
to diseases, and the absence of schools. He also took strong
issue with the head-count method of measuring poverty. Do
you count only the heads of people who fall below the poverty
line, or do you take a more sophisticated view that looks at
how far below or above the line they are and how much
inequality there is, including among the poor?
In 1976, Sen proposed a new measure of poverty that would
take into account the “relative deprivation” of individuals; it
has been widely used in academic circles (if not by many poli-
cymakers) and reignited interest in this issue. In 1989, he was
asked by his good friend Mahbub ul Haq to help develop a
measure of social welfare for the newly planned Human
Development Report, published by the United Nations
Development Program. Sen says that Haq wanted just one
number, as opposed to a vector or set of numbers, that would
go beyond GNP and take account of the different influences
on human well-being and opportunity. Recalling the
exchange, Sen says with a smile,“I told him that this would be
very vulgar. And he replied, ‘Yes, I want a measure that is just
as vulgar as GNP except it is better.’” In the end, Sen helped
develop the Human Development Index, which draws on
observed features of living conditions. Over time, this index
has become the most widely accepted measure of comparative
international welfare. “If you see the Human Development
Index as asking a question about GNP, but if you don’t stop
there,”he says,“the index has done its work.”
Sen also broke new ground in the study of famines, a sub-
ject that had long interested him after he witnessed the 1943
Bengal famine as a child. His work focused on the under-
standing that people starve when they do not have money to
buy food—a seemingly obvious point, except that most com-
mentators and policymakers were convinced that the prob-
lem had to be related to a decline in food supply. In his 1981
book Poverty and Famines,which examined famines in India,
Bangladesh, and sub-Saharan African countries, he proved
that there had been many famines in which the food supply
had not declined—such as the one in Bangladesh in 1974, a
peak year of food production. He also showed that the peo-
ple who suffered were not only those on the lowest rung of
the economic ladder but also those whose economic means
had suddenly declined for one reason or another. As a result,
governments have since concentrated their famine interven-
tions on replacing the poor’s lost income rather than on sim-
ply distributing food. Another famous finding was that no
famine had ever occurred in a democracy. For example, com-
munist China succumbed to a disastrous famine between
1958 and 1961 in which some 30 million people starved to
death. However, postindependent India, although poorer,
has never again had a famine. Sen argued that, in a democ-
racy, information spreads more quickly and public criticism
comes more easily, making a quick response by the govern-
ment to extreme events essential.
Sen’s intensive and prolonged study of inequality, espe-
cially gender inequality, led to his analysis of the “missing
women”: the millions of women in China, India, North
Africa, and West Asia who die prematurely every year as a
result of inequality of health care, domestic neglect, or social
negligence. “While the excess female mortality has been
moderated or reversed in many countries of the world,” he
says, “there is a new and powerful contributor to ‘missing
women’ through selective abortion of female fetuses.”
Understanding democracy
Does social choice theory have any practical use today?
Absolutely, Sen says. First, it helps us think more clearly
about the meaning of democracy. “I don’t take the view of
my [Harvard] colleague Samuel Huntington that democracy
is just about elections. Of course, elections matter, but so do
public discussions.” Take India’s recent election, when India
surprised the world—and itself—by voting out the incum-
bent coalition, led by the Hindu nationalist Bharatiya Janata
Party (BJP), and voting in a coalition led by the former main
opposition party, the secular Congress Party. “The fact that
the former political coalition led by the BJP emerged as being
rather divisive, economically and politically (especially along
religious divisions), was a big factor in public discussion,” he
tells F&D.“However, people didn’t see how powerful the
opposition to this divisiveness would be in terms of voting.”
Second, social choice theory helps us measure social
progress. For years there has been a heated debate in India
over whether poverty has fallen over the past decade and, if so,
by how much. It is clear, Sen says,that poverty has come down,
but it’s unclear to what extent the decline has involved only
people already close to the poverty line. He still believes that it
is vital to come up with overall welfare measures that take into
account what is happening with income inequality. In fact, it is
especially important for India to do so, as it takes a bigger role
in the globalized world—and yes, Sen is proglobalization (see
Box 2). India’s policymakers, he insists, will have to be able to
demonstrate that the benefits of globalization are being far
more widely shared. And for that to happen, India will need
much deeper health and education reforms.
Sen has been trying to help advance basic education, basic
health care, and gender equity by using his Nobel Prize win-
nings to establish two trusts, one in India and one in
Bangladesh. The Pratichi India Trust recently probed why
schools were so poorly governed and absenteeism was so
high among students and teachers. One finding that emerged
was a lack of parental influence in running the schools, espe-
cially when the parents came from the lower classes. As
aresult, the report recommended that there be a
parent/teacher committee with effective power at every
school—a proposal that he immediately put in the public
domain, as he intends to do with all of the Trusts’ proposals.
In fact, Sen is actively involved in the work of both Trusts,
often visiting India and Bangladesh to help guide the work.
The more participation, the better
Can there be too much public discussion, in the end holding
economic reforms hostage? Doesn’t development mean
tough choices about trade-offs, raising the danger that small
but vocal groups will override the silent majority? Sen isn’t
worried. To begin with, he is asking for greater participation
by the people who are excluded from the market because of
illiteracy, poor health, lack of credit, or immobility. He is also
asking for more public discussion of issues, such as educa-
tion, health, or even military expenditures, that require a
participatory process.“I don’t see participation holding any-
thing hostage,” he exclaims.
Sen readily admits that there are tough trade-offs but dis-
putes the blood,sweat, and tears imagery of economic develop-
ment.“That has never been my vision,” he says.“Development
is a much more participatory and pleasant process that could
be made even more pleasant by allowing everyone to come in.”
Finance & Development September 2004
6
Box 1
What is social choice theory?
As the Nobel Prize citation for Amartya Sen in 1998
explains, when there is general agreement, the choices made
by society are uncontroversial. When opinions differ, the
problem is to find methods for bringing together different
opinions in decisions that concern everyone. The theory of
social choice is preoccupied with this link between individ-
ual values and collective choice. The fundamental question
is whether—and, if so, in what way—preferences for society
as a whole can consistently be derived from the preferences
of its members. The answer is crucial for the feasibility of
ranking, or otherwise evaluating, different social states and
thereby constructing meaningful measures of social welfare
or helping public decision making.
Sen used social choice theory to answer questions such as
the following: When would majority rule yield unambigu-
ous and consistent decisions? How can we judge how well a
society as a whole is doing in the light of the disparate inter-
ests of its members? How do we measure overall poverty in
view of the varying predicaments and miseries of the diverse
people that make up the society? And how can we accom-
modate individuals’ rights and liberties while giving ade-
quate recognition to their preferences?
“In a democracy, information spreads
more quickly and public criticism
comes more easily, making a quick
response by the government to
extreme events essential.”
Finance & Development September 2004
7
Among the hundreds of things he admires Adam Smith
for, he notes, is that Smith was very concerned about dis-
tribution issues and felt there wasn’t any reason why devel-
opment had to be “a nasty, bloody process rather than a
happy, joyous one.”
For Sen, the key is to let people make decisions about their
own lives so they can choose the kind of life they value. In his
1999 book Development as Freedom,he writes that develop-
ment should be seen “as a process of expanding the real free-
doms that people enjoy.” Hence, “development requires the
removal of major sources of unfreedom: poverty as well as
tyranny, poor economic opportunities as well as systematic
social deprivation, neglect of public facilities as well as intol-
erance or overactivity of repressive states.”
A very full plate
What’s next? At 70, Sen has no intention of slowing down.
Perhaps it helps that, when he won the Nobel Prize, he was
awarded lifetime passes on Air India and the Indian railroad.
In early 2004, he resumed teaching at Harvard, leaving his
post of Master of Trinity College in Cambridge, England.
However, the self-described peripatetic is constantly criss-
crossing the globe to give lectures, speak to nongovern-
mental organizations, stay connected with his homeland,
and spend time with his wife—Emma Rothschild, Director
of the Centre for History and Economics at King’s College,
Cambridge, who will be teaching history at Harvard for
the next few years—and four children (from two previous
marriages).
An extraordinarily prolific man—author of some 25 books
and more than 250 journal articles—he has four books in the
works. One of them, The Argumentative Indian,due out in
early 2005, explores the long-held tradition of argument in
India and how it affects everything, including democracy and
secularism. Another is a collection of essays on freedom and
justice—some already published, others now being penned,
such as the one that will more fully elaborate his own theory
of justice. A third book explores democracy, looking at how
public discussion operates, why it is so effective, and how it
relates to such issues as human rights.
More immediately, Sen is working on a book that focuses
on the concept of identity. In it, he harks back to his favorite
theme of tolerance—the loss of which he witnessed as a child
when preindependence India degenerated into religious vio-
lence. He explains that we see ourselves as members of differ-
ent groups and thus as having plural identities.“A person can
be a U.S. citizen, of Malaysian origin, of Chinese racial roots,
a Christian, a vegetarian, a tennis player, a good cook, a het-
erosexual but supportive of gay rights, a lover of classical
music, a hater of opera, and a believer in creatures from
outer space with whom it is ‘extremely urgent’ to talk—
preferably in English!” Each of these identities might be very
important to an individual, he says, but a problem can arise
when others use these identities to typecast the individual or
to persuade or pressure him or her into being recruited into
sectarian groups that are belligerent toward other groups.
Identity-based thinking might seem innocent, he argues, but
repercussions can be tremendously harmful.
What we need, Sen counsels, is “clarity of thought” to
make the world a better place. It is particularly important to
emphasize the role of choice in deciding what relative impor-
tance we would like to attach—“have reason to attach”—to
our competing multiple identities. A Hutu who is being
recruited to a group that torments Tutsis can try to see that
he is also a Rwandan, an African, a human being. He can
resist, Sen insists,“smallness being thrust upon him.” ■
Laura Wallace is Editor-in-Chief of Finance & Development.
Box 2
Setting the record straight!
Some critics, especially in India, complain that Sen lets
himself be used by antiglobalizers and antireformists by not
forcefully stating his positions on some of today’s hottest
issues. What follows are his clarifications, forcefully stated.
Globalization: “I am often misquoted, but I am not anti-
globalization. I am very proglobalization! I believe that glob-
alization is such a good thing that it would be awfully bad if
only some people benefited from it and not others. We need
to improve the distribution of benefits between and within
countries, between classes, and between urban and rural
areas—and that can be done by expanding opportunities.”
Domestic reforms: “I have never been antireform. In
1995, I wrote a book with Jean Drèze calling for more radi-
cal reforms to meet India’s radical needs.Again, in 2002, we
called for far-reaching changes—not just along the line of
more marketization but also rapid expansion of the educa-
tion and health sectors, a speedy implementation of land
reforms, general availability of microcredit, and other
socially enabling changes.”
Privatization: “To the best of my knowledge, I have
never written on privatization. It isn’t a principle on its
own—such as equity, liberty, and democracy—it’s a purely
instrumental issue. We have to determine when it is useful
and when it is not.”
Markets: “Markets give people the freedom to exchange
goods. There is no particular reason for prohibiting market
transactions in general any more than there is for prohibit-
ing conversations. This freedom is one justification for mar-
kets. But perhaps more important, much of the world’s
prosperity is directly linked to the good results of economic
exchange and economic interrelations (such as technology
transfers). However, the market is just one institution
among many. It needs to be accompanied by democracy, a
free press,and social opportunities that give people the free-
dom to read and write, lead reasonably healthy lives, and
have access to credit. If you’re sick half the time and illiter-
ate, you can’t participate in the economy, and, if you can’t
obtain credit, you’ll never be the great entrepreneur you
might have been. Moreover, the market economy is closely
linked with a business ethic. As Adam Smith discussed, self-
interest gives people the reason to enter the market, but,
without trust, the market won’t function properly.”
