Articles from October 2015



British academic Angus Deaton awarded Nobel economics prize

British academic Angus Deaton has been awarded the Nobel economics prize for 2015 for his analysis of consumption, poverty, and welfare.

British academic Angus Deaton has been awarded the Nobel economics prize for 2015 for his analysis of consumption, poverty, and welfareThe 69 year old professor of economics and international affairs at Princeton University was previously at Cambridge and Bristol universities.

His research focused on health, wellbeing, and economic development.

Professor Deaton had been in the running for the prize several times in past years.

The Nobel economic sciences committee said that individuals’ consumption choices must be understood before economic policy promoting welfare and reducing poverty could be formulated.

“More than anyone else, Angus Deaton has enhanced this understanding. By linking detailed individual choices and aggregate outcomes, his research has helped transform the fields of microeconomics, macroeconomics, and development economics,” the committee members said.

The work for which Edinburgh-born Professor Deaton has been honoured revolves around three questions:

How do consumers distribute their spending among different goods?
How much of society’s income is spent and how much is saved?
How do we best measure and analyse welfare and poverty?

The secretary of the award committee, Torsten Persson, said Deaton’s research has “shown other researchers and international organizations like the World Bank how to go about understanding poverty at the very basic level.”

Persson praised Deaton’s work for illustrating how individual behavior affects a broader economy and demonstrating that “we cannot understand the whole without understanding what is happening in the miniature economy of our daily choices.”

Deaton, who was born in Edinburgh, and holds U.S. and British dual citizenship, said he was delighted to have won the prize and was pleased that the committee had awarded research that concerns the world’s poor.

“His research has uncovered important pitfalls when comparing the extent of poverty across time and place,” the committee said.

In his 2013 book, “The Great Escape,” Deaton expressed skepticism about the effectiveness of international aid.

He noted, for example, that China and India have lifted tens of millions of people out of poverty despite receiving relatively little aid money. At the same time, many African countries have remained mired in poverty despite receiving substantial aid.

“His view is that we don’t have these ready-made solutions, and money is not going to be the answer to many things,” Rodrik said.

The award includes prize money of 8m Swedish kroner (£637,000).

The economics award was not created by Alfred Nobel in 1895, but was added by Sweden’s central bank in 1968 as a memorial to the Swedish industrialist. The Nobel prizes will be given to winners on 10 December at ceremonies in Stockholm and Oslo.

PPI payout deadline finally considered by regulator

The Financial Conduct Authority (FCA) is finally considering a deadline for claims over mis-sold payment protection insurance (PPI).

The Financial Conduct Authority (FCA) is finally considering a deadline for claims over mis-sold payment protection insurance (PPI)The FCA anticipates that PPI customers would still though have at least until 2018 to claim compensation.

So far more than £20 billion has been paid out for PPI mis-selling to more than 10 million consumers. The policies were supposed to protect people against loss of income or sickness, but were often inappropriate.

The regulator will now launch a consultation, on whether there should be a deadline on compensation claims. It said there should be a window of at least two years after the deadline is set.

This would not be before the Spring of 2016 – meaning that consumers would have until the Spring of 2018 to make a claim through their bank or the Financial Ombudsman.

Shares in Lloyds, the bank most exposed to PPI, jumped by nearly 3% in early trading as it has set aside £13.5 billion to cover claims.

The banking industry welcomed the announcement, saying it provided further clarity for consumers.

Banks such as Lloyds have long argued privately that there should be a cut off point. They are convinced that many of the claims are bogus and are driven by claims management firms rather than by irritated customers.

Of course, many say that the banks are rightly reaping the effects of their appalling past behaviour.

The FCA move today is all about the “normalisation” of relations between regulators and the City.

As George Osborne signalled in his Mansion House speech earlier this year, the government is keen to see a new “settlement” with the financial services sector.

The former, combative head of the FCA, Martin Wheatley, was removed by the Treasury and the PPI deadline means another thorny legacy issue looks close to being dealt with.

The number of complaints about PPI is falling, but still runs in to hundreds of thousands every month.

In the first half of 2015 more than 883,000 customers complained about mis-selling, a fall of 16.6% on the same period in 2014.

The FCA said a deadline would “bring the PPI issue to an orderly conclusion, reducing uncertainty for firms about long-term PPI liabilities and helping rebuild public trust in the retail financial sector.”

The watchdog said too many people were taking too long to bring their claims, and that a deadline – along with an advertising campaign promoting any potential deadlines – would spur any outstanding claims to be brought.

Consumers who want to complain about PII should do so as soon as possible

In the first instance, complaints should be directed to the bank that sold the policy.

If customers do not receive a satisfactory response from their bank, they should take it up with the Financial Ombudsman Service.

Consumers do not need to use a claims management company to help them, advises the FCA, as such complaints are free.