Jan Tinbergen (1903–94)

Jan Tinbergen was born in The Hague, Netherlands in 1903. He
studied physics at the University of Leiden from 1922 to 1926 and obtained his doctorate in 1929 from the university with his thesis,
‘Minimum Problems in Physics and Economics’. From 1929 to 1945 he worked as a statistician, studying business cycles, at the Dutch Central Bureau of Statistics, apart from a short spell from 1936 to 1938 working as an economist at the League of Nations in Geneva. As a part-time lecturer he taught statistics at the University of Amsterdam from 1931 and was a part-time Professor of Economic Science at the Netherlands School of Economics in Rotterdam (now the Erasmus University) from 1933 to 1955. In 1945 he was appointed director of the newly established Central Planning Bureau of the Dutch government in The Hague where he served until 1955. After a one-year teaching position as a visiting professor at Harvard University (1956–57), he held the post of Professor of Development Planning at the Netherlands School of Economics from 1957 to 1973 and subsequently became Professor of International Cooperation at the University of Leiden from 1973 to his retirement in 1975.

Tinbergen’s many offices and honours included acting as a consultant and adviser to numerous governments of developing countries, the Organisation for Economic Cooperation and Development (OECD), the World Bank and various United Nations agencies. From 1966 to 1975 he chaired the United Nations Committee for Development Planning. In 1969 he was awarded, jointly with the Norwegian economist Ragnar Frisch, the first Nobel Memorial Prize in Economics ‘for having developed and applied dynamic models for the analysis of economic processes’ (Nobel Foundation, 2004).

Tinbergen’s principal contributions to economics roughly coincide with the focus of his work in the three main phases of his career. While working at the Dutch Central Bureau of Statistics and the League of Nations (1929–45), he contributed to the creation and development of econometrics as a science. In 1930 he participated with Irving Fisher and Ragnar Frisch in the creation of the Econometric Society (and served as its president in 1947), the main purpose of which is ‘to promote studies that aim at a unification of the theoretical–quantitative and empirical–quantitative approach to economic problems and that are penetrated by constructive and rigorous thinking similar to that which has come to dominate in the natural sciences’. He constructed the first macroeconometric model of the Dutch economy, a model which contained 24 equations describing such key macroeconomic relationships as consumption and investment spending. This pioneering work on macroeconometric model building, initially published in Dutch in 1936, was subsequently translated into English (see Tinbergen, 1959, pp. 37–84). Tinbergen’s approach to business cycle problems (Tinbergen, 1937) involved dynamic economic theory based on the cobweb theorem, which he discovered in 1930. In the latter case, Tinbergen was able to explain why prices and quantities often move in opposite directions in agricultural markets if output responds to prices with a time lag. While at the League of Nations, Tinbergen was asked to test the prevailing theories of the business cycle reviewed in Gottfried Haberler’s (1937) book, Prosperity and Depression. His pioneering work resulted in the publication of a two-volume book (Tinbergen, 1939). The first volume was A Method and Its Applications to Investment Activity. In the second volume, Business Cycles in the United States of America, 1919–1932, he developed a 48-equation model of the US economy. Undaunted by criticism of his methods (see, for example, Keynes, 1939 and Tinbergen, 1940) and widespread scepticism of such model building at the time, he went on to build a similar model for the UK economy (Tinbergen, 1951).

On his appointment as director of the Central Planning Bureau at the end of the Second World War the main focus of Tinbergen’s work shifted to the problem of economic policy making. At the Bureau he helped develop a model of the Dutch economy which provided the basis for economic forecasting and advice to the government as to how policy instruments should be set to achieve the chosen targets of economic policy in the Netherlands. In addition, his work on the theoretical problems of policy making resulted in the publication of three important books (Tinbergen, 1952; 1954; 1956), the most influential of which is his 1952 work On the Theory of Economic Policy. The central message of Tinbergen’s approach to the formulation of macroeconomic policy is that to simultaneously achieve a given number of independent policy objectives (such as full employment and a stable price level) policy makers need at least the same number of independent (effective) policy instruments (such as government expenditure and the money supply). This insight is popularly known as ‘Tinbergen’s rule’. Overall, this work undertaken in the second phase (1945–55) of his career provided the foundation for what became the conventional approach to economic policy in the 1950s and 1960s.

In the final phase of his career, from the mid-1950s to his retirement in 1975, he once again shifted the focus of his work, this time to the problems of development planning, particularly in underdeveloped countries and international economic cooperation. Tinbergen’s work on planning for long-term development is documented in a series of books which include The Design of Development (1958) and Development Planning (1967). He sought to find solutions to the policy problems of poor countries and called for a reshaping of the international order (Tinbergen, 1962a; Tinbergen et al. 1976). His retirement coincided with the publication of a book (Tinbergen, 1975) seeking to analyse the causes of changes in the distribution of income over time and policies to reduce income inequality.

In addition to his pioneering work on econometric modelling, in particular the macroeconomic modelling of business cycles, the theory of economic policy and development planning, Tinbergen also made important contributions to a number of other fields of economics including economic growth (Tinbergen and Bos, 1962b) and education (Tinbergen and Bos, 1965), to name but two. He continued to write long after his retirement and had books published when he was in his 80s (see for example, Tinbergen, 1985; 1990).

Main Published Works
(1937), An Econometric Approach to Business Cycle Problems, Paris: Hermann & Compagnie.
(1939), Statistical Testing of Business Cycle Theories, 2 vols, Geneva: League of Nations.
(1940), ‘On a Method of Statistical Business Cycle Research: A Reply’, Economic Journal, 50, March, pp. 141 54.
(1951), Business Cycles in the United Kingdom, 1870–1914, Amsterdam: North-Holland.
(1952), On the Theory of Economic Policy, Amsterdam: North-Holland.
(1954), Centralization and Decentralization in Economic Policy, Amsterdam: North-Holland.
(1956), Economic Policy: Principles and Design, Amsterdam: North-Holland.
(1958), The Design of Development, Baltimore, MD: Johns Hopkins University Press.
(1959), Selected Papers (eds L.H. Klaassen, L.M. Koyck and H.J. Witteveen), Amsterdam: North-Holland.
(1962a), Shaping the World Economy: Suggestions for an International Economic Policy, New York: Twentieth Century Fund.
(1962b), Mathematical Models of Economic Growth (with H.C. Bos), New York: McGraw-Hill.
(1965), Econometric Models of Education (with H.C. Bos), Paris: OECD.
(1967), Development Planning, New York: McGraw-Hill.
(1975), Income Distribution: Analysis and Policies, Amsterdam: North-Holland.
(1976), Reshaping the International Order: A Report to the Club of Rome (ed. with A.J. Dolman
and J.V. Ettinger), New York: E.P. Dutton. (1985), Production, Income and Welfare: The Search for an Optimal Social Order, Lincoln, NB: University of Nebraska Press.
(1990), World Security and Equity, Aldershot: Edward Elgar.