The winner's research has focused on creating tools to measure poverty in the developing world. Deaton has also looked in detail at the impact of health and well-being on economic development.
"To design economic policy that promotes welfare and reduces poverty, we must first understand individual consumption choices. More than anyone else, Angus Deaton has enhanced this understanding," said a press release from the the Nobel Committee at the Royal Swedish Academy of Sciences on Monday.
"By linking detailed individual choices and aggregate outcomes, his research has helped transform the fields of microeconomics, macroeconomics, and development economics."
Deaton, 69, is a UK and US citizen. The son of a miner in Yorkshire in northern England, he studied at the prestigious Fettes College in Edinburgh before securing a place at the University of Cambridge.
He has been working at Princeton University in the US since 1983, having previously taught students at Bristol University.
Asked by media in Stockholm how he felt when he was first told he had won the prize, he joked: "I was pretty sleepy".
The professor admitted that he knew it was a possibility that his work could be recognized by the committee but said he was still shocked and "delighted" to get told he would receive a Nobel award.
He described himself as "someone who is concerned with the poor of the world" and said he was very pleased that his particular field had been recognized in 2015.
"My current research focuses on the determinants of health in rich and poor countries, as well as on the measurement of poverty in India and around the world," reads his profile on Princeton University's website.
"I also maintain a long-standing interest in the analysis of household surveys."
The professor will receive a cash prize of eight million Swedish kronor ($978,541).
Other economists have rushed to congratulate Deaton, with one Harvard researcher even comparing him to Star Wars character Obi-Wan Kenobi.
Per Strömberg, a member of the Nobel committee and professor of finance and private equity at the Stockholm School of Economics, told The Local that he was pleased he and his colleagues had picked Angus Deaton as the 2015 Nobel laureate.
He said Deaton stood out as a giant in his field.
“He argues that to do good policy we need good measurement. It sounds trivial, but a lot of his research looks at individual households and he shows why that is important. (…) He argues that economic theory is not much use if you don't look at data, and it can't be crappy data, you really have to look at the nitty-gritty. To understand the big picture you need to look at the little picture.”
He agreed that while much remains to be done, Deaton's research takes the world another step towards eradicating poverty, which he admitted to economists is a crunch issue similar to curing cancer in the field of medicine.
“When you look at what the big economic changes are, the ones that affect a lot of people, it's not making sure that Swedes can buy more iPads, it's all these hundreds of thousands of people who can't get enough calories to survive. As economists we feel a lot more happy when we manage to do something about that.”
Strömberg added that he had met Deaton on a number of occasions, describing him as "funny, witty and sometimes provocative".
"He speaks his opinion, he is very outspoken on foreign aid. He is not afraid of speaking his mind, but he doesn't just speak without being able to back it up with good data.”
Formally known as the Swedish Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2015, the economics prize is one of the more modern awards. It was not part of Nobel's original will and was only created in 1968, sponsored by Sweden's Central Bank (the Riksbank).
Last year the prize was awarded to French economist Jean Tirole
for his analysis of the power and regulation of the free market.