Jan Tinbergen: Nobel Prize Economist and Pioneer of Econometrics

Jan Tinbergen, a pioneering Dutch economist, was instrumental in the development of econometrics and dynamic macroeconomic models, which earned him the Nobel Memorial Prize in Economics in 1969. He is best known for integrating mathematics into economics, setting the stage for modern economic forecasting and policy-making.

Tinbergen's work on economic modeling and policy instruments, like the 'Tinbergen Rule' and 'Tinbergen Norm,' has had a profound impact on how governments approach economic targets and income distribution.

Jan Tinbergen: Early Life and Education

Born in The Hague in the Netherlands in 1903, Tinbergen attended the University of Leyden and defended his Ph.D. thesis in 1929 on "Minimum 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 joined the Netherlands Central Bureau of Statistics, performing research on new business cycles; 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 to 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 Central Planning Bureau. 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.

Jan Tinbergen died where he was born, The Hague, in 1994.

Notable Accomplishments

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

Tinbergen's Innovations in Macroeconometric Analysis

Tinbergen helped develop the theory of underlying econometrics and the use of statistics to test economic theories. An innovator in macro-econometric 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 macro-econometric models, originally for the Netherlands and then for the United Kingdom and the United States. His macro-econometric models focused on business cycles and economic development. 

Tinbergen's Impact on Macroeconomic Policy Development

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 policymaking. Understanding these types of models can help policymakers 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 policymakers 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.

The Bottom Line

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. He developed various economic tools, such as the "Tinbergen Norm," which warns of social conflict from income inequality.