For which area of economic theory was Indian economist Amartya Sen awarded the Nobel Prize in Economics?

Introduction / Context:
Amartya Sen is one of India's most famous economists and philosophers. He received the Nobel Prize in Economics for his profound contributions to the understanding of welfare, social choice, and poverty. Many general knowledge and economics examinations include questions about why he was honoured, so it is important to remember the main field of his Nobel winning work rather than only his nationality or association with development issues.

Given Data / Assumptions:
- The question specifies Amartya Sen and the Nobel Prize in Economics.
- We must identify the main area of economic theory for which he was recognised.
- The options mention different branches of economics, including monetary, welfare, environmental, and development economics.
- We assume standard information from the Nobel Prize citation.

Concept / Approach:
The Nobel Prize to Amartya Sen recognised his contributions to welfare economics and social choice theory, including his analysis of the conditions for social welfare, individual rights, and collective decision making. He also did influential work on the measurement of poverty, famines, and human capabilities. Although his research has important implications for development economics and policy, the official Nobel citation emphasised welfare economics and social choice, making that the correct area to select when answering multiple choice questions about his prize.

Step by Step Solution:
Step 1: Recall from standard general knowledge that Amartya Sen won the Nobel Prize for his contributions to welfare economics, social choice, and poverty measurement. Step 2: Read option B, which explicitly mentions welfare economics, social choice theory, and the analysis of poverty, closely matching the Nobel citation. Step 3: Option A refers to monetary economics and central banking, which are associated with other economists, not primarily with Amartya Sen's Nobel winning work. Step 4: Option C refers to environmental economics, which is a different subfield focusing on environmental policy and resource use. Step 5: Option D narrows development economics to project finance, which does not capture the broader theoretical contributions for which Sen was honoured. Step 6: Therefore, option B is the most accurate description and is the correct answer.

Verification / Alternative check:
If you consult standard references on Nobel Prize winners, Amartya Sen's award is described as being "for his contributions to welfare economics" with particular mention of his work on social choice, welfare measurement, and the capability approach. His research on famines showed that they often result from entitlement failures rather than from simple lack of food, which is a welfare economics insight. All these contributions blend ethical considerations with economic analysis, placing his Nobel winning work firmly in welfare economics and social choice theory rather than in monetary or environmental economics.

Why Other Options Are Wrong:
Option A is wrong because monetary economics and central banking policy are not the main focus of Amartya Sen's research and are not the basis for his Nobel Prize.
Option C is wrong because environmental economics deals with pollution control, climate change, and resource management, which, although important, are not the central themes of his prize winning work.
Option D is wrong because reducing his contributions to project finance misrepresents his broad theoretical work on welfare, rights, and poverty; the Nobel recognition was not for narrow development project analysis.

Common Pitfalls:
A common mistake is to remember that Sen is a prominent development thinker and then choose an option that says development economics without noticing whether it mentions welfare economics or social choice. Examinations often test whether you know the specific field named in the Nobel citation. To avoid confusion, always link Amartya Sen with welfare economics, social choice theory, and poverty measurement, which clearly point to option B in this question.

Final Answer:
Welfare economics, social choice theory, and the analysis of poverty.