STOCKHOLM (CBSNewYork/AP)Princeton University‘s Angus Deaton won the Nobel prize in economics Monday for his wide-ranging work on consumption that’s helped redefine the way poverty is measured around the world, notably in India.

Deaton, 69, won the $975,000 prize from the Royal Swedish Academy of Sciences for work that the award committee says has had “immense importance for human welfare, not least in poor countries.”

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The secretary of the award committee, Torsten Persson, said Deaton’s research has “really shown other researchers and international organizations like the World Bank how to go about understanding poverty at the very basic level so that’s perhaps the finest and most important contribution he has made.”

Persson singled out Deaton’s work in showing how individual behavior affects the wider economy and 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, Scotland and holds U.S. and British dual citizenship, said he was delighted to have won the prize and was pleased that the committee decided to award work that concerns the poor people of the world.

In a news conference following the announcement, Deaton said he expects extreme poverty in the world to continue decreasing but that he isn’t “blindly optimistic.”

He said there are “tremendous health problems among adults and children in India, where there has been a lot of progress.” He noted that half of the children in the country are “still malnourished” and “for many people in the world, things are very bad indeed.”

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The prize committee said Deaton’s work revolves around three central questions: How do consumers distribute their spending among different goods; how much of society’s income is spent and how much is saved; and how do we best measure and analyze welfare and poverty?

Committee member Jakob Svensson said Deaton introduced the “Almost Ideal Demand System,” which has become a standard tool used by governments to study what effect a change in economic policy — such as an increase in sales taxes on food — will have on different social groups and how large the subsequent gains or losses will be.

The Royal Swedish Academy of Sciences also highlighted the model that has become known as the Deaton Paradox, in which he laid bare a contradiction between earlier theory and data on consumer behavior.

Deaton said he learned he won the award in a phone call from the Nobel committee just after 6 a.m.

“If you’re my age and you’ve been working for a long time, you know this is a possibility,” Deaton said, according to a Princeton news release. “But you also know there are a huge number of people out there who deserve this. That lightning would strike me seemed like a very small probability event. It was sort of like, ‘Oh my goodness, it’s really happening.'”

Deaton is the eighth Princeton faculty member to win a Nobel prize in economics since 1979.

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