Princeton University professor Angus Deaton has been awarded The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel for 2015 "for his analysis of consumption, poverty, and welfare".
The Edinburgh-born microeconomist had enhanced understanding of how individual consumption choices affected welfare and poverty "more than anyone else", the prize organisers said.
"By linking detailed individual choices and aggregate outcomes, his research has helped transform the fields of microeconomics, macroeconomics, and development economics."
In particular, Deaton was honoured for his work on three main areas, the first of which is considering how consumers distribute their spending across different goods, which can help governments to evaluate the impact of tax changes, among other things.
In his early work around 1980, Deaton developed the Almost Ideal Demand System, which allows researchers to estimate how the demand for each good depends on the prices of all goods and on individual incomes.
The second key area of Deaton's work concerns how much of society's income is spent and how much is saved. His thinking helps to explain the relationship between income and consumption over time.
Thirdly, he has carried out work to establish the best measure and analyse welfare and poverty, uncovering "important pitfalls when comparing the extent of poverty across time and place".
He has also shown how household data can throw light on issues such as the relationships between income and calorie intake, and the extent of gender discrimination within the family.