Letters from Alumni

We have asked TI alumni to describe 'life after the PhD thesis and defense'. If you want to add your own story, please contact us.

Looking back

Otto Swank
Erasmus School of Economics, Rotterdam

On the fourth of October 1990 I received my PhD from Tinbergen Institute. During the last seventeen years, about 400 students have received a PhD from TI, and more than a hundred students are participating in its MPhil program or are writing a PhD dissertation. I doubt whether anybody could have predicted twenty years ago that TI would be so successful.

Let's go back. I started my academic career at TI in March 1987. I vividly remember my first day. Scattered throughout three rooms at Erasmus University, a dozen students were sitting behind desks, reading, writing or gazing out the window. The atmosphere in the rooms varied widely. One room was quiet, almost dull. Another was livelier, with hot debates among students. The latter room boasted three Olivetti computers. Perhaps it is mere nostalgia, but in my memory, these Olivettis had a much more modern and luxurious design than that of the current Dell computers. In those good old days, WordStar and an early version of WordPerfect ruled the world.

It's a huge step from the TI of 1987 to the TI of 2007. Nevertheless, I think that in 1987 the foundation for the institute's current success was laid. From the outset, Tinbergen Institute pursued a clear goal: to facilitate and encourage students to write a PhD dissertation within four years. One of the implications of this goal was that we understood perfectly what we were expected to do: research (that is, writing papers). Perhaps at the beginning the focus on doing research may have been too narrow. The initial education program was not very coherent (and this is an understatement). Highly respected scholars had been invited to give short courses. Although most of the courses were interesting, they did not constitute any sort of unity. As a result, PhD students then had a much more limited background in economics than current PhD students. In any case, TI, with its focus on research, broke with the past. Before 1987, it had been far less clear what a new, young academic was supposed to do. His tasks included teaching, assisting the professor, and perhaps working on a PhD. There was hardly any focus: the completion of a dissertation could easily take ten years.

The people who felt responsible for TI were also a driving force in the initial stage. A couple of professors were determined to improve the academic climate. In their eyes, the institute should become a 'centre of excellence”. I've never felt comfortable with this type of phrase, but I must admit that it created an environment in which ambitious young people wanted to work. Even more important was that the very same professors who wanted to change the system almost always showed up at the PhD seminars. In those days, the speaker was responsible not only for the talk, but also for the catering! The presence of these professors at seminars contributed to the students’ attitude that research, particularly research done by young people, is important.

It is now twenty years later. From a small, local graduate school, Tinbergen Institute has developed into a well-known international graduate school and research institute. The people who have worked together during the last two decades to make TI what it is now have done a wonderful job.

(Otto Swank was the first PhD student who graduated from Tinbergen Institute, in 1990. He is now professor of economics at the Erasmus School of Economics and research fellow of Tinbergen Institute.)

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Combining theory and practice

Ewa Mendys
SEOR bv, Rotterdam

They seemed difficult to combine, the two things that I wanted to pursue when I was putting the finishing touches on my thesis and brooding about my future career. Certainly, I needed a change. I had just spent four years building theoretical models of markets and I was more and more often overwhelmed (as I sat staring at my computer) by doubts about the relevance of my work. I longed to do something of which the relevance would be seen immediately. Yet, I wanted to maintain contact with the academic world and keep the possibility open that one day I might go back to science.

So when my supervisor, Maarten Janssen, asked if I would like to work at SEOR (Sociaal Economisch Onderzoek Rotterdam) and become a fellow of the newly established Erasmus Competition and Regulation Institute (ECRI), I accepted the position with enthusiasm. SEOR is a commercial research institute affiliated with the Faculty of Economics of Erasmus Universiteit, while ECRI is a virtual network of researchers from SEOR and various departments of Erasmus Universiteit doing applied research in the field of competition and regulation. Both institutes aim to make use of scientific insights to solve 'real-life’ problems and to feed this practical experience back into scientific research. Answering a research question presented by a customer thus begins by studying the relevant scientific literature, where my experience as a PhD student has proved invaluable. My colleagues and I also try to select scientifically interesting questions out of consultancy projects and to develop them further, so that they can result in publications. The time that we do not use for commercial research can be used to pursue our own academic interests, not necessarily related to the consultancy work.

The Competition and Regulation section of SEOR consists of only six people, which means that the scope for specialisation is limited, and everyone works on a variety of topics. During the last three years, I have worked on competition and regulation in mobile telephony, bicycle- and notary markets, but also on other topics such as the competitive position of Dutch companies in Europe. Most of us, however, have a field on which we focus most. For me, it is telecommunications– broadly understood– including, for instance, the TV-cable market. We usually work in small teams, writing reports for private companies on regulatory measures proposed, for example, by the Dutch regulator of the telecommunications market (OPTA). I've enjoyed hearing practitioners discuss market developments and seeing how they deal with the eye-opening ideas’ developed by academics. At such a moment you have the feeling that, as a famous psychologist Kurt Lewin once said, nothing is more practical than a good theory.

My office is located in the same building as the Faculty of Economics– just one floor below my old microeconomics group. That makes it easy to contact people from the Faculty, go to seminars and– not unimportant– access the university library. Having close contacts with the Faculty means that I am also regularly asked to teach– on average, one course per year, microeconomics or industrial organisation. In some ways, teaching resembles consultancy; in both you have to explain economic ideas in a way that your audience can understand, and in both your audience wants you to link theory and practice. This combination suits me perfectly.

(Ewa Mendys graduated in 2003 with a thesis entitled Essays on Network Economics)

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Transfer Pricing

Clive Jie-A-Joen
Ernst & Young

One thing I regret about my PhD thesis is that I did not entitle it 'transfer Pricing”. Ever since my thesis defence at Erasmus Universiteit Rotterdam, my work has centred on the area of transfer pricing. I currently work at the transfer pricing / tax effective supply chain management group of Ernst & Young in the Netherlands as a transfer pricing economist.

Transfer pricing is concerned with the determination of arm's length prices for transactions of goods, services and intangible property between associated enterprises. Tax authorities in the various countries in which a multinational enterprise is located are afraid that profits are shifted to low tax countries through manipulation of the transfer price. Essentially, the tax authorities would like to have a fair share of the cake. OECD Member countries have therefore agreed that the arm's length principle is the international transfer pricing standard to be used for tax purposes. A multinational enterprise must therefore set arm's length prices, which would have been agreed upon between unrelated parties engaged in the same or similar transactions under the same or similar conditions.

Transfer pricing is a multidisciplinary subject occupying the time and talents of (tax) lawyers, accountants and economists. You basically provide advice to multinational enterprises in determining arm's length transfer prices from a tax viewpoint, or assist companies in case they face a transfer-pricing audit from a tax inspector. The fun part of this process is that you need to analyse the supply chain structure of a multinational enterprise, which means you speak to the operational people of the company and learn about industries.

At the end of my PhD thesis research, I faced the choice of doing a post doc or going into consultancy. Doing a post doc would have been a 'safe” choice, since I did not see myself as a consultant at the time. I finally decided to leave the university and go forth into the uncertain world. Now, about nine years on, I am still working in transfer pricing tax consultancy— and I enjoy it. Every project is different. Every multinational enterprise is different. And a great advantage of having a PhD is that clients and colleagues somehow respect you more.

Besides working at Ernst & Young, I also teach (together with a tax inspector!) transfer pricing at the LLM programme International Taxation of Leiden University since 1999, and supervise students in writing a thesis on transfer pricing. The experience you gain by working on real-life cases helps you a lot in teaching. It is fun to see students warming to the subject after a couple of lectures. Furthermore, teaching forces you to go back to the basics. Considering the importance of the subject of transfer pricing for multinational enterprises, it is strange, actually, that the subject is dealt with so briefly during your graduate studies. Anyway, there is a life after your PhD thesis defence. The most important aspect is that you can do the thing that you like. In my case, it is working in transfer pricing: consulting, writing articles and lecturing.

(Clive Jie-A-Joen graduated in 1997 from TI with a thesis entitled Strategic trade policy, multinational firms, and vertically related industries)

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Tell a story

Marcel Canoy
European Commission

Tell a story: my leitmotif for many years. During my years as a PhD student at UvA, I wondered what the fun was in writing stuff that nobody reads. So I tried a few dialogues between a fox and an owl, illustrated by my sister (bertrand meets the fox and the owl”). I've never regretted this creative detour– there's nothing wrong with science, but there is a world out there.

This world was opened for me after a few post docs in Leuven, Paris and Maastricht. Until recently I worked at CPB Netherlands Bureau for Economic Policy Analysis, which has an excellent mix of scientifically and analytically based economics and the policy world. I was lucky enough to work in a field that has become increasingly important (competition and regulation). The knowledge in the Netherlands of this field was (and to a certain extent still is) rather poor. Recently, I joined the European Commission, replacing André Sapir as the chief economist of the Bureau of European Policy Advisers (BEPA), the think tank of President Barroso. How does BEPA compare with CPB? Well, both think tanks rely on the quality of their work as the principal source of their reputation. BEPA is paradoxically both more influential and less influential than CPB.

It is less influential than CPB, since it has less tradition and (much) less outside exposure. It is more influential, since it works directly for the President and is therefore closer to the political heat’. I experienced both aspects recently. I worked the entire summer on the so-called European Social Model’, which was discussed on October 26 at an informal Summit in Hampton Court between Barroso and the Heads of State (the heat’). At the same time, I also saw the other side of the coin, however, since nobody realised the work that BEPA did (and probably nobody has ever heard of BEPA to start with!).

Getting back to storytelling... Within the Social Model discussion a story needed to be told, too. The political debate is dominated by vested interests preaching fear that their social model will be destroyed by neo-liberals. The real story is that appropriate economic modernisation yields both social and economic benefits– albeit at the expense of (some) vested interests (think of early retirements), but ultimately to the benefit of many.

(Marcel Canoy graduated in 1993 with a thesis entitled, Bertrand meets the fox and the owl: essays in the theory of price competition)

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A tale from Down Under

Paul Frijters
Australian National University

I've been working in Canberra for the last two years on a research-only position, with five more years to go. It's the kind of deal whereby there are no explicit pressures to achieve anything, but given the limited time horizon of the contracts one nevertheless has full incentives to publish and be academically active.

My research here consists of various tracks. One track is an extension of my PhD work with Bernard van Praag and concerns itself with measuring utility. The bad old days” in economics, when we just assumed we knew what the utility function looked like, but refused to empirically measure it, are ending. We're starting to use self-reported happiness measures and measures specific to domains of life as additional sources of information to cheap introspection. Much of my research fits into that vein: finding out how responsive happiness is to income; exploring to what extent tastes concerning the ethnicity of co-workers is reflected in job-satisfaction and wages; using health satisfaction to determine the health effects of various life shocks; etc.

Another track of my research is a continuation of the work I started just after my PhD at the VU, where Gerard vd Berg gave me a job. This track includes structural labour-supply models (with Bas vd Klaauw, who is a TI fellow!); duration analyses of the transitions of UK nurses and teachers; reduced-form models of the various search channels used by ethnic minorities in the UK; etc.

A third track, an offshoot of activities started during my PhD, concerns economic development and individual psychology issues using dynamic models. These issues are less suitable for academic papers, but are more the sort of thing you shove in books— so that's what I'm doing in my spare time.

All in all, hence, everything I'm currently researching is related in some way to what I was busy with as a PhD student at Tinbergen Institute. All that's been added to my activities in the meantime is more money and more co-authors. During my PhD studies, I found the institute to be full of people interested in issues and willing to cooperate on zany projects that had low expected pay-offs, but were fun to pursue— even if they failed. I found Dutch academia to be full of professors willing to subsidise such activities on the off chance that long shots might actually be successful. I hope they haven't scared the new generation of TI students into doing only safe projects….

Let me end by advertising the place I work at now. The main advantage of working at the Australian National University is the work environment. There is a laid-back Australian atmosphere in this place: morning coffee; long lunches; afternoon tea; and a beer in the Fellow's garden when it is warm (which is about six months a year). This easy-going mentality is coupled, however, with a brutally competitive undertone in which the fellows’ have to maintain their worthiness. The old idea of Academia is thus alive and well here. We have plenty of guests with which to work and to exchange information about the real world. Plenty of seminars and conferences keep us up-to-date with the world. Come and visit us one day, but bring your own research money if possible!

(Paul Frijters graduated in 1999 from TI with a thesis entitled, Explorations of Welfare and Well-being)

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My Life at the IMF in Washington DC

Harm Zebregs
IMF

When I was asked to write a letter about my working experience after finishing my PhD, my mind went back to my first two years at the International Monetary Fund. During those years, I was in the Economist Program working first in the African and later in the Research Department. I started in a group of eighteen young economists, most of them with fresh PhDs. Every Thursday evening at 6:30 we would meet a few blocks from the Fund to share a beer and some pizza. We would talk about our new employer and the idiosyncrasies of living in Washington DC. Sometimes you could find us lamenting about how much time we spent doing such mundane things as fiddling with Excel spreadsheets and writing minutes, and about the many papers we had to review while being under continuous time pressure. By 8 o'clock, after a few too many beers, we would be betting who would be the first of our group to leave the Fund. Now, several years later, I can safely say that those bets were widely off the mark-perhaps no wonder, given the reputation of economists in this area.

I don't think our misgivings were specific to our group or the institution we worked for. Rather, I believe it was part of a natural process we went through. After many years in university, where you can let your mind roam and are encouraged to question everything, it requires some adjustment to be suddenly transposed to an environment with short deadlines, where questioning everything all the time is simply not practical.

Seven years ago, I came to the Fund expecting to be exposed to the realities of economic policymaking in countries across the world, and to have some time to write an occasional research paper. Looking back, I think my assignments have largely lived up to that expectation. I have worked on about eight different countries, each with a unique set of economic problems, and I have dealt with a broad range of topics from fiscal policy to bank restructuring, and from monetary policy to issues in foreign trade. I must say, however, that I have had less time for research than I expected, and most of the papers I have written are more applied than academic. That is a pity, because operational work often yields interesting ideas for research, and the Fund has a very active seminar and workshop program that allows you to exchange ideas with leading economists from all over the world. Nevertheless, I consider myself fortunate to work with very bright people from many different countries in an organization that brings together virtually all economies in the world.

Our group of eighteen’ has not been disbanded, but we no longer meet on Thursday evenings. We've all become busier and, perhaps more importantly, over time most of us have adjusted to our new environment. Several members, often not the ones we predicted, have left the Fund. Most have returned to academia or have joined think-tanks. Where will I be seven years from now? The best prediction is probably that I will still be at the Fund, but don't bet your money on it.

(Harm Zebregs graduated in 1998 from TI with a thesis on International Capital Movements and Technology in Economic Development)

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You can't fool all of the people all of the time

Wilko Bolt
De Nederlansche Bank

Time flies. It is now more than ten years ago that I defended my PhD thesis in Amsterdam. The thesis focused on game theory— bargaining theory, in particular, and had an easy research question: How to divide a cake among two players before it gets stale? As it turned out, the answer to this easy’ question could get really complicated — but that was nothing compared with the difficulty in explaining to your family and friends why you spent five years working that out. Yet, if I had to, I would do it all over again.

But let me step back for just a moment. After graduating in econometrics, I started my PhD track in March 1992 at Vrije Universiteit Amsterdam, where Gerard van der Laan and Harold Houba were my local’ supervisors. At that time, Tinbergen Institute had just moved to the Keizersgracht in Amsterdam, reviving its ambitions to become a strong graduate school and research institute in economics and econometrics. Correct me if I am wrong, but I still like to believe that those days were the heyday of TI at the Keizersgracht! Chaos, anarchy, research and drinks. A pretty good atmosphere in which to produce successful PhDs…<
In August 1996, while still a PhD student, I started working in the research department of De Nederlandsche Bank (DNB). DNB is at the heart of financial and monetary policy and academic research. And I was lucky. I could nicely apply my game-theoretic background to various economic issues. After all, a central bank is continuously playing games with the public to shape expectations. While she may fool you once, though, she can't do it all of the time! History has taught us the hard way.

In the beginning of my DNB career, I tried to capitalize on my thesis. Every new’ doctor does. I tried to sell some chapters to journals. I think this worked out quite well. Jointly with Harold Houba, I was invited to write a manuscript on non-cooperative bargaining theory. The book Credible Threats in Negotiations: A Game-theoretic Approach was published in 2002 by Kluwer Academic Press. Well certainly never get rich from it! This marked for me a farewell to the complex theory of extensive bargaining.
During the last five years I've been involved in the industrial organisation of payment systems. Payment systems worldwide have recently attracted a lot of antitrust scrutiny with regard to pricing and governance. Fundamental research is strongly needed here. Payment economics has taken me far, you could say — even to the Big Apple. For the fi rst seven months of 2007 I visited the research department of the Federal Reserve Bank in New York doing payment stuff ’. As New Yorkers like to say, what's going on?” I asked myself that same question every day, over and over again.

Back in the Netherlands now... And, I've got to admit that Amsterdam is charming, too. I bought a house there a couple of years ago, close to the canals and the Jordaan district. Taking the bike everyday from the Prinsenstraat to Frederiksplein — well, I still love it!

(Wilko Bolt graduated in 1997 from TI with a thesis called Theory of negotiation: a gametheorethic approach)

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At home in the investment industry

Bart Oldenkamp
Cardano

During my PhD research at Tinbergen Institute, I developed a keen interest in both the theory of derivatives and its applicability. I was fortunate that during the last period of my research, my adviser, Ton Vorst, encouraged me to team up with two leading practitioners in my area, visionaries who were equipped with a solid academic background.

Upon graduation, I realized that the ultimate test of my research would be to apply it to real money. So I accepted a position at ABN AMRO Asset Management, within a group that had recently been launched to deliver precisely the solutions that were the subject of my thesis— products intended to manage (downside) risks of client portfolios. I stayed with ABN AMRO for the next nine years and enjoyed every minute of it— from getting to know all of the nitty-gritty details of using options in real life and setting up a research group, to helping develop products and find distributors in the US market, to eventually heading up this group of 35 professionals.

Not too long ago, I realized that large organizations like ABN AMRO have, in the long run, a difficult time keeping specialists happy, as they often implicitly expect their staff to climb the corporate ladder. So I started to look for opportunities elsewhere. This eventually led me to accept the position of managing director at Cardano, a small, entrepreneurial firm based in Rotterdam. Cardano advises large clients on derivatives and risk management solutions, and then supports them in the implementation. We seek to reduce funding risks (for e.g. pension plans) by applying the body of academic research on hedging and pricing derivatives that has been developed in the last 30 years. Using derivatives has become much more common now that pension plans and insurers have to value their assets and liabilities on a market-value basis, rather than against a fixed discount rate.

With hindsight, I can see that I have been fortunate: my research area was embraced fully by the investment industry within quite a brief period. In the years since my graduation I have remained close to my original thesis research, and my current job is in many ways even closer to my thesis than the work I did during the nine years in between— not in the least since my wife Emoke (who graduated from TI in 2002) and I are both working again for the same employer, based in Rotterdam!

(Bart Oldenkamp graduated in 1999 from TI with a thesis called Derivatives in Portfolio Management)

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