Jan Tinbergen

Who was Jan Tinbergen?

Jan Tinbergen was a Dutch economist who won the first Nobel Memorial Prize in Economics in 1969, which he shared with Ragnar Frisch for their work in the development and application of dynamic models for analyzing economic processes. Tinbergen was one of the first economists to apply math to economics and is considered a pioneer in the economics field, as well as in econometrics.

Understanding Jan Tinbergen

Born in The Hague in the Netherlands in 1903, Tinbergen attended the University of Leiden and defended his PhD thesis in 1929 on "Minimization problems in Physics and Economics," a thesis that allowed him to engage a cross-disciplinary approach to his further research in mathematics, physics, economics, and politics.

He was then tapped by the Netherlands Central Bureau of Statistics to become the chair of a new department of business surveys and mathematical statistics, a position in government that he held until 1945. During that period, he also became a professor of mathematics and statistics at the University of Amsterdam and at the Netherlands School of Economics. During that time, from 1936–1938, Tinbergen was also a consultant to the League of Nations, filling positions in government and education simultaneously.

In 1945, he became the first director of The Netherlands Bureau for Economic Policy Analysis, he left this position in 1955 to focus on education and spent a year at Harvard University. He also served as an economic consultant to a host of developing nations, including the United Arab Republic, Turkey, and Venezuela.

Contributions

Tinbergen is most noted for his contributions to econometrics and macroeconomic modeling.

Macroeconometrics

Tibergen helped develop the theory of underlying econometrics and the use of statistics to test economic theories. An innovator in macroeconometric modeling, Tinbergen developed multi-equation models of national economies that were a precursor to today's computer-driven economic forecasts. He produced the first comprehensive macroeconometric models, originally for the Netherlands and then for the United Kingdom and the United States. His macroeconometric models focused on business cycles and economic development. 

Macroeconomic Policy

Tinbergen viewed the goal of macroeconomic policy as maximizing social welfare subject to the constraints of technology, resources, and political feasibility. From his models, he also developed guidelines and recommendations for applying econometrics to policy making. Understanding these types of models can help policy makers aim for economic targets that are related to the policy instruments they control. 

This includes the identification of targets and instruments, known as the Tinbergen rule. This is the idea that governments must use multiple policy instruments if they want to impact multiple policy targets. If policy makers have certain targets they wish to reach, they must have an equal number of instruments that they control in order to effectively direct policy towards the targets. 

Throughout his career, Tinbergen was also interested in the issues of income distribution in an economy, and the phrase "Tinbergen Norm" arose from a theory he pursued, in which a larger than five to one gap between the lowest income and the highest income will lead to serious social conflict.