Tinbergen, Koopmans, Rotterdam, and Erasmus University

 

Jan Tinbergen, our illustrious colleague at Erasmus University, was the first economist to use Isaac Newton’s gravitational formula to explain trade between two nations. Simply, the gravitational force between two planets, in other words the force that keeps the earth rotating around the sun (or the Andromeda Galaxy approaching our Milky Way at a speed of 100 km/s), depends directly on the mass of the two planets (translated into the size of the two economies in trade models), and is inversely related to the distance between them.  Thirty years later, I showed that, in trade models, and due to competition and economies of scale in shipping, the ‘physical distance’ in Tinbergen’s model is not appropriate anymore and needs to be replaced with ‘economic distance’ as this is proxied by ocean freight rates.

 Most people know that Jan Tinbergen shared the first Nobel Prize in Economics (1969) with the Norwegian Ragnar Frisch. Not many maritime economists, however, know that Tinbergen’s favorite student, Tjalling Koopmans, also shared the 1975 Nobel Prize in Economics with Leonid Kantorovich, for their work on activity analysis; the precursor of operations research.

Before moving to the United States, at the beginning of WW2, to eventually take over the Cowles Commission, Koopmans was also teaching at Erasmus, filling in for the classes in Mathematical Economics of Jan Tinbergen who had (temporarily) moved to Geneva. Koopmans’ book «Tanker freight rates and tankship building» is standard reading in every advanced class in Maritime Economics.

But what I have always considered much more important is Koopmans’ 1947 paper « Measurement without Theory», sent to me by a very smart student of mine, Armando Veras Sepúlveda, who reminded me of the things I was teaching them back in 2006: «Data ought not create theory; data should only validate theory». I have since lovingly dedicated this to all my econometrician friends and colleagues (particularly time-series econometrics).

It was therefore the obvious thing to do to name our landmark campus building (photo) the ‘Tinbergen Building’.

When I moved to Rotterdam in 1992, the 17-storey Tinbergen Building was being renovated. Our offices were temporarily housed across the street, in Brainpark (something like the Silicon Valley of Rotterdam) but the classrooms could not of course move too. Thus, my first lectures, in the harsh winter of 1992-3, were given in a container! Probably, my future love for the ‘box’ since, was not totally unrelated to that winter… A lot of prominent ‘Rotterdammers’ came out of that box, however; and of course, a lot of colleagues too.

Eventually, the renovation finished and we moved back in. Rotterdam was very different then. From my room on the 12^th floor, I could muse over cows on the open fields of Capelle aan den Ijssel. On campus, whenever we heard a language other than Dutch we would turn our heads in surprise. In downtown Rotterdam, there was only one tourist information office in Coolsingel, and you would be lucky if you could find it manned. But look at Rotterdam today; look at the ‘Manhattan of Europe’! 

Rotterdam was granted its City Rights on 7 June 1340; almost seven  centuries ago. At that time, the city was a modest settlement of some 2,000 souls. How this little, muddy outpost of the River Rotte evolved into the “Manhattan” of Europe, and Europe’s largest port, is a compelling story. It is a story of relentless hard work, respect for one’s fellow citizen, adherence to the rule of law, and a deep sense of shared heritage and shared values.

HH