Tinbergen, Jan 1903–1994
When the Nobel Foundation initiated an award in economic sciences in memory of Alfred Nobel, it was no surprise that the first award in 1969 went jointly to Jan Tinbergen and Ragnar Frisch (1895–1937), two leading figures in the formation of the Econometric Society and the establishment of a new branch of economics early in the twentieth century.
Jan Tinbergen, like other economic scholars, began academic studies in science, but switched to economics and carried the mathematical background that became the hallmark of the new branch of economics. He made numerous original contributions to economic analysis, theory, and practice, but his greatest single contribution was in constructing the first working econometric models of a system as a whole, first for Holland, and later, for the United States. In the latter study, he was searching for a system that would enable economists to find the most satisfactory model of the business cycle. In that respect he tried to find a statistical representation of the ideas expressed by John Maynard Keynes (1883–1946) and his followers at Cambridge University during the years of the Great Depression in the 1930s. Although he did not uncover the secret of the cycle, he did succeed in laying the groundwork for empirical macroeconometric model building, in spite of Keynes’s dislike of Tinbergen’s approach, which Keynes did not fully understand. Tinbergen’s U.S. model prominently displayed the role of income distribution, the wealth effect, and some model specifications that would lead eventually to a well-established relation between wages and unemployment. The wealth effect, which is now investigated on a broad scale, came about through Tinbergen’s idea that price movements on the stock exchange played an important role in explaining the U.S. downturn after 1929.
It is important to note that Tinbergen made his pioneering contribution to macroeconometric model building in a dynamic framework at a time when usable national data were sparse and computational facilities were primitive. His work is being carried on and extended now with unusually better national accounts, frequency of data reporting, improved economic concepts, and enormous computer power with speed, all to make the tasks of econometric model building for the succeeding generation much easier for those who learned basics from Jan Tinbergen.
Tinbergen made early studies of income distribution and elasticity of substitution in international trade. He was dedicated to strong pacifist views. After World War II (1939–1945) he headed the Central Planning Bureau of the Netherlands and devoted his life to many worthy social causes; at the very end of his life he was soliciting help from colleagues and friends worldwide to support efforts against exploitation of children. He had a very systematic mind and conceived principles of economic planning, based on the clever separation, and distinctive properties of economic policy instruments and targets. Many politicians fail to make the appropriate distinction. In his exposition of policy formation in economics and in his work as director of the Central Planning Bureau, he made such distinctions clear.
Throughout his career, he trained many Dutch students in economics and also attracted many from abroad, especially after World War II. He is remembered as a person who led an exemplary life with simple tastes, great generosity, and a deep social conscience. In addition to his activities aimed at protecting children worldwide, Jan Tinbergen was a founding supporter of Economists Against the Arms Race (ECAAR) during the cold war. In line with his charitable instincts, during the immediate post–World War II period he generally carried cigarettes for a supplement to service fees such as taxi fares, even though he was a nonsmoker.
De Wolff, Pieter. 1983. Jan Tinbergen als Modellen Bouwer. Economisch-Statistische Berichten 68: 308–311.
Keynes, John Maynard. 1939. Professor Tinbergen’s Method. The Economic Journal 49: 558–568.
Tinbergen, Jan. 1939. Statistical Testing of Business Cycle Theories II. Business Cycles in the United States of America, 1919–1932.Geneva, Switzerland: League of Nations.
Tinbergen, Jan. On a Method of Statistical Business Cycle Research: A Reply. The Economic Journal 50: 141–154.
Tinbergen, Jan. 1946. Some Measurements of Elasticities of Substitution. Review of Economic Statistics 28 (August):109–116.
Tinbergen, Jan. 1950. Note on the Measurement of Elasticity of Substitution in International Trade. Review of Economics and Statistics 32 (February): 20–21.
Tingbergen, Jan. 1951. Business Cycles in the United Kingdom, 1870–1914. Amsterdam: North-Holland.
Tinbergen, Jan. 1952. On the Theory of Economic Policy. Amsterdam: North-Holland.
Tinbergen, Jan. 1956. Economic Policy: Principles and Design. Amsterdam: North-Holland.
Tinbergen, Jan. 1956. On the Theory of Income Distribution. Weltwirtschaftliches Archiv 77: 10–31.
Tinbergen, Jan. 1959. An Economic Policy for 1936. In Jan Tinbergen Selected Papers, eds. L. H. Klassen, Leen M. Koyck, and H. Johannes Witteveen, 37–84. Amsterdam: North-Holland.
Lawrence R. Klein
The Dutch economist Jan Tinbergen (1903-1994) was a pioneer in the development of econometrics, linking statistics and mathematics to economic theory. He shared the Nobel Prize in 1969.
Jan Tinbergen was born in The Hague on April 12, 1903. He was educated at the University of Leiden, where he earned a doctoral degree in physics. In 1929 he joined the staff of the Central Bureau of Statistics, the economic planning unit of the Dutch government, where he remained until 1945, except for 1936-1938, when he served as a business-cycle research expert for the League of Nations. Beginning in 1933, he accepted a position as professor of development planning at the Netherlands School of Economics, Rotterdam, an institution he served for his entire academic career.
He became director of the Central Planning Bureau of the Dutch government, serving from 1945 to 1955. After that time, he became an advisor to various governments and international organizations, showing particular concern for the problems of underdeveloped countries.
Econometrics, where Tinbergen made his greatest contributions, consists of the application of statistical data and techniques to mathematical formulations of economic theory. It serves to test the hypotheses of economic theory and to estimate the implied interrelationships.
Tinbergen's early work reflects rather clearly the influence of his training in the physical sciences. As early as the 1930s he was publishing papers dealing with the construction of aggregative models of the economy in the form of systems of simultaneous dynamic equations. These were followed by studies of the measurement of the parameters of such models using statistical data. His first complete model was of the economy of the Netherlands. This model was followed by a similar study of the economy of the United States done for the League of Nations. Having constructed the model and statistically estimated the appropriate coefficients, he analyzed its cyclical properties through the solution to the corresponding system of difference equations. His work has served as the principal stimulus for the extensive model-building that has taken place throughout the world in recent years.
Following World War II, Tinbergen's work served as the basis for the use of model projections in the economic planning of the Dutch government. This occurred while he was director of the Central Planning Bureau. The Dutch government has led the world in the systematic use of econometric models in its planning, budgeting, and policy formulation. Many new contributions to the field of econometrics grew out of this activity, and many of the world's leading econometricians cut their professional teeth on the construction and maintenance of the Dutch models.
Among the more prominent of Tinbergen's contributions to econometrics are the introductions of the concepts of "targets" and "instruments." The "targets" are defined in terms of the policy maker's goals. For example, a given level of aggregate output might be a target. With the help of the model, this in turn would show what values of the "instruments" would lead to the achievement of that goal.
The process introduced by Tinbergen is virtually the inverse of the usual procedure in forecasting in which, for given values of the independent variables, the corresponding values of dependent variables are computed. He later extended these same concepts to secular growth models for underdeveloped countries. It might be noted that all of the major econometric models of the United States are in the tradition that began with Tinbergen's work.
Tinbergen wrote extensively on such important topics as the mathematical analysis of the business cycle, the theory of income distribution, the theory of economic growth, the measurement of elasticities of substitution, and the theory of economic development.
Tinbergen served as chairman of the United Nations Committee for Development Planning from 1965 to 1972, as he helped set up more than 20 economic institutes in many parts of the world, including Turkey, India and Chile. In 1969 he shared the Nobel Prize in economic science with Ragnar Frisch of Norway. They received the honor for their work in the development of mathematical models used in econometrics. Tinbergen retired from the Netherlands School of Economics in 1973, having served there for 40 years.
After that, he infrequently published new works on economic theory, including Income Distribution (1975), Warfare and Welfare (with others, 1987), and World Security and Equity (1990). During the 1980s, he urged the world's strong nations to do more for developing countries, saying in an interview, "Individual countries, with their limited resources, cannot stimulate the economy, but together they may succeed." He encouraged a stronger relationship between Europe and Japan, and criticized the U.S. for "standing pat, " rather than increasing aid to countries. In 1992, he received the Four Freedoms Award.
During his lifetime, Tinbergen received 20 honorary degrees from institutions worldwide. He died in The Netherlands on June 9, 1994. The Tinbergen Institute has been established in Rotterdam in his honor.
Tinbergen's work receives some mention in Edmund Whittaker, Schools and Streams of Economic Thought (1960), and in G. L. S. Shackle, The Years of High Theory: Invention and Tradition in Economic Thought, 1926-1939 (1967). □