Deaton's first work to become widely known was the Almost Ideal Demand System, which he developed with John Muellbauer. The Almost Ideal Demand System represents an elegant treatment of consumer demand. It provides an arbitrary first order approximation to any demand system, one which satisfies the axioms of choice while avoiding unattractive features of other models. In 1978, Deaton became the first recipient of the Frisch Medal, an award given by the Econometric Society every two years to an applied paper published within the past 5 years in Econometrica. Deaton is a Fellow of the Econometric Society, a Corresponding Fellow of the British Academy, and a Fellow of the American Academy of Arts and Sciences. He holds honorary degrees from the University of Rome,Tor Vergata, University College London, and the University of St. Andrews. In 2007, he was elected President of the American Economic Association.

He formulated what is known as the "Deaton Paradox" based on the observation of excess smoothness of consumption in the face of unanticipated permanent income shocks. In addition to analysis of household behavior at the microeconomic level, Deaton's research areas include the measurement of global poverty, health economics and economic development.

Deaton is also the author of a popular feature in the Royal Economic Society Newsletter...a bi-annual Letters from America.

Economics and Consumer Behavior, New York: Cambridge University Press. (450 pp.) (with J.Muellbauer).

Understanding Consumption, Oxford. Clarendon Press, 242 pp. (The 1991 Clarendon Lectures in Economics.) Spanish translation, El Consumo, Madrid, 1995. Chinese Translation, 2003.

The Analysis of Household Surveys: A Microeconometric Approach to Development Policy, Baltimore, Johns Hopkins University Press for the World Bank, 1997. (479 pp.)