Definition of Jan Tinbergen
Who was Jan Tinbergen?
Jan Tinbergen was a Dutch economist who won the first Nobel Prize in economics in 1969, which he shared with Ragnar Frisch for his work on the development and application of dynamic models for the analysis of economic processes. Tinbergen was one of the first economists to apply mathematics to economics and is considered a pioneer in the field of economics, as well as econometrics.
Key points to remember
- Jan Tinbergen was a Dutch economist, who received the Nobel Prize in 1969 for his work on economic modeling.
- Tinbergen is notable for his contributions to econometrics and the development of applied macroeconomic policies.
- Tinbergen is known for his rules regarding macroeconomic policy instruments and objectives and the degree of income inequality.
Understanding Jan Tinbergen
Born in The Hague in the Netherlands in 1903, Tinbergen attended the University of Leiden and defended his doctoral thesis in 1929 on “the problems of minimization in physics and economics”, a thesis which enabled him to undertake an interdisciplinary approach to his subsequent research in mathematics, physics, economics and politics.
He was then approached by the Netherlands Central Bureau of Statistics to become chairman of a new department of business surveys and mathematical statistics, a position he held until 1945. During this period , he also became professor of mathematics and statistics at the University of Amsterdam and at the Netherlands School of Economics. During this time, from 1936 to 1938, Tinbergen was also a consultant to the League of Nations, simultaneously holding positions in government and education.
In 1945 he became the first director of the Dutch Bureau of Economic Policy Analysis, leaving this post in 1955 to focus on education and spent a year at Harvard University. He has also served as an economic consultant to many developing countries, including the United Arab Republic, Turkey and Venezuela.
Tinbergen is best known for his contributions to econometrics and macroeconomic modeling.
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 computerized economic forecasting. He produced the first full macroeconometric models, originally for the Netherlands, then for the UK and the US. His macroeconometric models have focused on business cycles and economic development.
Tinbergen considered the objective of macroeconomic policy to be to maximize social welfare subject to constraints of technology, resources and political feasibility. From his models, he also developed guidelines and recommendations for the application of econometrics to policy making. Understanding these types of models can help policymakers aim for economic goals related to the policy instruments they control.
This includes the identification of targets and instruments, known as Tinbergen’s rule. It is the idea that governments must use multiple policy instruments if they are to have an impact on multiple policy objectives. If decision-makers have certain objectives they wish to achieve, they must have an equal number of instruments under their control in order to effectively orient policy towards the objectives.
Throughout his career, Tinbergen was also interested in questions of income distribution in an economy, and the phrase “Tinbergen Standard” arose from a theory he pursued, according to which a gap greater than five against one between the lowest income and the highest income lead to serious social conflicts.