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Erasmus School of Economics

Creation of knowledge ANNUAL REPORT 2010


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Creation of Knowledge


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Erasmus School of Economics (ESE) carries out high-quality fundamental and applied research. Examples include research in economic and econometric modelling, marketing, health, behavioural economics, finance, international markets, management science and personnel economics. In focusing on research in these and other areas, the School’s staff contributes significantly to the international knowledge base in the focus disciplines and provides solutions to current problems.

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Top world-leading scientists visit ESE

The pursuit of academic and intellectual excellence is at the heart of all the School’s research programmes. ESE strives to increase the number of excellent research groups that will be recognised by international peers as outstanding in their field. Indications of the vitality of ESE’s activities are the number of publications in first-quartile journals, the citation index, memberships of prestigious organisations, awards and other honours and the number of sponsored projects. In this booklet, we detail the major research accomplishments of our School in 2010. It includes information on prestigious research projects, grants, memberships, PhD completions and research funding.

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A. TOP WORLD-LEADING SCIENTISTS VISIT ESE Exposure to world-leading researchers is very stimulating for all of our Faculty. Moreover, their addition to our existing talent is accelerating the pace of discovery and will definitively lead to new approaches. We have been fortunate to be able to continue attracting an exceptional array of visiting staff, especially in the fields of behavioural economics and marketing. Furthermore, we have welcomed some new academic staff with a strong focus on research and education.

ESE welcomes leading specialists in behavioural economics Four world-class researchers in behavioural economics visited our School in 2010: • Mohammed Abdellaoui of the French National Centre for Scientific Research and, since 2007, Affiliate Professor of Decision Sciences at the HEC-Paris, • Manel Baucells of the Universitat Pompeu Fabra, • Ido Erev of the William Davidson Faculty of Industrial Engineering and Management at the Technion in Haifa, Israel, and • Dražen Prelec of the Massachusetts Institute of Technology. These four researchers have been appointed as visiting professors in the Department of Applied Economics. Their scientific background and original training (in Economics/ Decision Theory, Management, Cognitive/Quantitative Psychology and Experimental Psychology, respectively) combined with their impact in the economic discipline have contributed to raising the international profile of behavioural economics. Their extensive network is very impressive. It was a privilege for our School to host these leading academics. Their visits gave much opportunity for in-depth discussions and were very valuable for all those involved.

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Top world-leading scientists visit ESE

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ESE attracts most senior level of marketing scientists Top world-leading scientists visit ESE

The department of Marketing at ESE - one of its prime research programmes -­ is currently the third best department in Europe, even though it is by far the smallest in the top 3. To preserve and strengthen that position, as well as facilitate future growth, ESE has attracted two visiting professors at the most senior level. They are: • Roland Rust of the University of Maryland, and • Gerard Tellis of the University of Southern California. Professors Rust and Tellis have been appointed as visiting professors in the Department of Business Economics at Erasmus School of Economics. Both professors are amongst the most prominent and productive marketing scholars in the world. Their work is widely known and extensively cited and both have won numerous highly prestigious awards. In 2011, both professors will visit ESE again. Jehoshua Eliashberg, full professor of Marketing, Operations and Information at the Wharton School of the University of Pennsylvania, will also be joining us in 2011. Nobel Prize winner Amartya Sen visits EUR On 30 June and 1 July 2010, Professor Amartya Sen visited Erasmus University Rotterdam. Amartya Sen is Th. W. Lamont University Professor and Professor of Economics and Philosophy at Harvard University. He is an Indian economist who was awarded the 1998 Nobel Prize in Economic Sciences for his contributions to welfare economics and social choice theory and for his interest in the problems of society’s poorest members. Sen is best known for his work on the causes of famine. This led to the development of practical solutions to prevent or reduce the effects of real or perceived shortages of food.

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B. HIGH-QUALITY FACULTY APPOINTED AT ESE Academic excellence is one of our core values. The objective of our employment framework is to proactively attract, retain and develop high-quality staff. This also entails that the academic staff regularly publish their research outcomes in leading international journals, and that each of them is an expert in one or, preferably, several sub-disciplines of economics.

Vital additional expertise for market research and sales predictions By appointing Dr Peter Goos as a part-time professor, the Department of Business Economics (Marketing) has gained additional expertise in the use of statistics in marketing research. This chair allows ESE to focus more on quantitative marketing. Goos’ aim is to apply statistical expertise in the development of new methods of market research, the development of online shopping sites and the prediction of sales following the market launch of new products and services. His main research area is the optimal design of industrial experiments and discretechoice experiments (also known as stated preference studies or conjoint-choice experiments). However, he is also interested in vehicle-routing problems. Peter Goos combines this part-time professorship with a position as full professor at the University of Antwerp. For his work, Professor Goos has received the Shewell Award and the Lloyd S. Nelson Award of the American Society for Quality, and the Young Statistician Award of the European Network for Business and Industrial Statistics.

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High-quality faculty appointed at ESE

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Extra high-quality experience in policy-evaluation for ECSP High-quality faculty appointed at ESE

ESE is delighted that Dr Dinand Webbink has joined the academic staff of the Erasmus Centre for Strategic Philanthropy (ECSP) as an endowed professor. ESE expects him primarily to initiate and conduct high-quality research in policy evaluation, with a specific focus on philanthropy, health and education. In addition to Lucas Meijs, Professor Dinand Webbink is now the second Professor affiliated with ECSP. The foundation’s objective is to improve quality, effectiveness and transparency in the philanthropic sector in Europe, and in particular the Netherlands. Dinand Webbink has extensive experience as a researcher at CPB (Netherlands Bureau for Economic Policy Analysis). He is programme manager for Education & Science at CPB and programme manager for Evaluation Studies at Top Institute for Education Research (TIER). Furthermore, Webbink holds an advisory position on the "Labour Market and Education Matters" committee of the Social and Economic Council of the Netherlands. Great role model for educational leadership Professor Ivo Arnold has been appointed part-time professor of Economic Education at ESE. This chair focuses on improving education at ESE in terms of content, processes and teaching skills, and also ties in with Erasmus University Rotterdam’s continuous efforts to develop and optimise educational leadership. "Educational leadership is essential for a school such as ours", says professor Philip Hans Franses, Dean of ESE. "The stream of new students brings a multitude of different skills to the university, the field of study is expanding rapidly and the constant increase in demand from employers shows no signs of abating. This necessitates a continuous development process, an area in which Ivo Arnold is an absolute master". Ivo Arnold, Professor of Monetary Economics at Nyenrode Business University since 2001, has over twenty years of experience in higher education. Since April 2006, Arnold has been the programme director at the Erasmus School of Economics, responsible for designing, implementing and evaluating major educational reforms. Since September 2009, he has also serves as Vice Dean of Erasmus School of Economics.

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With the appointment of Dr Philipp Hartmann as part-time Professor of Macro/ Financial Economics, ESE aims to contribute to understanding the role of financial systems in modern economies and how the risk of widespread instability can be contained. Dr Hartmann will also stimulate new research that benefits from a close alignment between the methodologies developed in the academic sector and the interests and needs of policy authorities. This chair is a combined initiative of ESE and the Duisenberg School of Finance (DSF). Dr Hartmann has a long record of service as a researcher for the European Central Bank (ECB), as head of the Financial Research Division, and as vice-chairman of SUERF, the European Money and Finance Forum. Furthermore, he has published a large number of scientific articles, made significant contributions to policy development and has been honoured with many awards. Dr Hartmann will work in the Economics Department, reinforcing the financial stability expertise of the research group. Appreciation for the international atmosphere at ESE Dr Jan Peter Balkenende will hold the new Governance, Institutions and Internationalisation chair. The chair is shared by Erasmus School of Law (ESL) and Erasmus School of Economics. ESE believes that Jan Peter Balkenende will bring a unique combination of political-administrative and academic knowledge. Dr Balkenende was the prime minister of the Netherlands from 2002 to 2010, and during the four preceding years he served as chairman of the CDA (Christian Democratic Alliance) parliamentary party in the Dutch House of Representatives. He has been awarded honorary doctorates from universities in Budapest, Tokyo and Seoul.

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High-quality faculty appointed at ESE

First-class mixture of analytical insight and practical issues for financial stability


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Focus on research excellence

C. FOCUS ON RESEARCH EXCELLENCE ESE aims to be ranked within the top three universities in the Netherlands by any indicator of research performance, to have the majority of ESE’s disciplines ranked within the top 10 in Europe, and to be among the top 30 educational institutions worldwide in at least two scientific fields. ESE focuses on creating, disseminating and applying scientific knowledge, all from an economic perspective. Each year, our researchers set the bar higher, placing them among the most celebrated scholars in the world. In this section, we present some of the most prestigious awards received by ESE’s academic staff.

Extraordinary achievement for Aurélien Baillon and Peter Wakker A dream came true for the young economist Dr Aurélien Baillon (b. 1980): two of his papers were accepted by the American Economic Review (AA-journal) within two months. That is an extraordinary achievement for an academic of his age. It is quite remarkable that his mentor, Professor Peter Wakker - co-author of one of Baillon’s papers - also had another AA-article published in 2010. Baillon and Wakker both perform research in the field of risk behaviour. The article they wrote together focuses on our inability to know the probabilities of uncertain events that are relevant to the outcomes of our decisions. Wakker and Baillon’s paper introduces the source method: a tractable method for quantitatively and empirically analysing uncertainty, capable of capturing the richness of ambiguity attitudes. Dennis Fok likely leader of the next generation of marketing academics Every two years, the Marketing Science Institute (one of the main US organisations dedicated to integrating marketing academia and practice) selects around 20 people worldwide for their Young Scholars Programme. Invitees are selected based on their recognition as potential leaders of the next generation of marketing academics. Dr Dennis Fok, Associate Professor at the Econometric Institute, was selected as "2011 Young Scholar", a very prestigious honour. His research interests include modelling unobserved heterogeneity, panel models, marketing econometrics, and non-linear models.

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During a special awards ceremony at the Faculty Club held on 1 February 2010, the management team of Erasmus School of Economics expressed its appreciation for its academic staff by rewarding five Top Talent Researchers: Dr Teresa Bago d’Uva, Professor Elbert Dijkgraaf, Dr Dennis Fok, Dr Aurelie Lemmens and Dr Tom van Ourti. The Top Researcher programme was created to encourage young, gifted ESE researchers to submit top publications. For their high-quality research performance, Professors Han Bleichrodt, Eddy van Doorslaer, Philip Hans Franses, Stefan Stremersch and Peter Wakker were awarded the title of Top Senior Researcher. ERIM Awards Presentation Ceremony rewards top services On 9 December 2010, the 8th annual ERIM Awards Presentation Ceremony took place. At this Ceremony, the Erasmus Research Institute of Management presents ERIM Awards to honour institute members who stand out by their excellent performance. The prizes are categorised by academic discipline, such as the Impact Award, the Book Award, the Dissertation Award and the Service Award. The staff at ESE received three awards. Reino de Boer (controller and head of IT department) was presented with the ERIM Service Award. With this award, ERIM aims to recognise the important role of high-quality services in facilitating top research. The ERIM Top Article Award went to Dr Dennis Fok, Associate Professor at the Econometric Institute, Stefan Stremersch, Professor of Marketing at ESE and Yvonne van Everdingen, Associate Professor of Marketing at RSM, for their article: "Modeling Global Spillover of New Product Takeoff", published in the Journal of Marketing Research. Frank Neffke: a double winner in 2010 Dr Frank Neffke won the first "Van der Knaap Prijs" for his PhD thesis "Productive Places, the influence of technological change and relatedness on agglomeration externalities". This incentive prize is given to young researchers who conduct ground-breaking research in Economic and Social Geography and/or in Urban and Regional Economics. In 2010, Frank Neffke (together with Martin Henning of Lund University, Sweden) obtained the CBS Presidential Award for Most Imaginative Paper for their paper "Skill-relatedness and firm diversification". In this paper, the researchers developed a method to measure skill-relatedness between industries using detailed information on cross-industry labour flows. This allowed them to conceptualise the entire economy as a network of industries connected to one another in terms of similarities in the human capital they use.

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Focus on research excellence

ESE’s Award Ceremony honours researchers


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Interview Media

"I aim to be a reliable source of information" Fieke van der Lecq www.ese.eur.nl/annual_report


Interview Media

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"Spreading the truth is a key mission of the scientific community" Bas Jacobs www.ese.eur.nl/annual_report


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Interview Media

ESE Endowed Professor, Cordares Academic chair in Pension Markets

Media exposure helps me to inform

As for the impact of my media

the public at large. I want to

appearances, I have noticed that

encourage people to take an active

people contact me about things I

approach to money and pensions. It is

said on the radio or in print media

better to get involved than to remain

interviews. I also receive invitations

passive. In other words: educate

to speak at meetings or chair sessions

yourself rather than relying on blind

and debates.

trust. Whether I have achieved this purpose is rather difficult to say,

One of my main objectives is to

as there are other people who are

promote research on pension

communicating the same message. I

markets. I am convinced that

think I can safely say that the message

there are many opportunities for

is getting across and that people are

improvement, but a lot of work

gaining pension awareness.

needs to be accomplished first. I look forward to contributing.

Media exposure also draws attention to my field, which is entirely new. It helps that there aren’t many pension professors, let alone female ones.

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ESE Endowed Professor, chair in Public Finance and Economic Policy

My media appearances allow me

sense some degree of influence, like

to be an intermediary between the

specific words and phrases that

scientific community and the public,

have found their way into common

which I feel is important. Since society

use. I have introduced terms such as

is footing the bill for the research, it’s

houdbaarheidstekort (“sustainability

up to scientists to inform the public

deficit”) and uitvretergedrag

about the results.

(”freeloader behaviour”), which policymakers have since adopted.

Whether my message gets across

But like I said, you cannot control

depends very much on the journalist

how the media interpret your

and the medium: if the interview is

message, and therefore you can’t

taped, you can’t control the message,

control its impact either.

unlike with live television and radio. With taped performances, the

Nevertheless, I remain committed

journalist can edit the interview in a

to the cause: more than ever, public

way that suits his or her purposes.

debate needs to be based on facts. At the moment, this debate is being

The impact of my media appearances

dominated by a bunch of blathering

is indirect; scientists have no direct

talking heads - their discussions are

control over society. Also, it often

based on assumptions, suspicions and

takes a long time for new ideas to

sometimes outright lies. That’s why

gain traction. Having said that, I do

one of the key duties of the scientific community is to spread the truth.

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Interview Media

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Interview Alumni

"Rotterdam is unique in that economics is taught in all its aspects" Niels de Uil www.ese.eur.nl/annual_report


Interview Alumni

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"Alumni are one of university's most valuable marketing resources" Peer Swinkels www.ese.eur.nl/annual_report


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Interview Alumni

ESE alumnus, Management Trainee at PwC

I believe that the added value of

other alumni every now and then;

ESE absolutely goes beyond my

it is a good opportunity to catch up

degree and academic title - the many

and do some networking over a few

opportunities for self-development

beers.

have helped me to become an independent, analytical person with

You can tell that ESE is an up-and-

critical thinking skills. I am benefitting

coming School that is really improving

from this in my job: for example, in

its standing. This is confirmed by

addition to my studies, I also served

the international rankings and the

as an ambassador for ESE, which I

popularity of its programmes. That

really enjoyed. I gave information to

doesn’t really surprise me, as ESE is

secondary school students and their

the only institution in the Netherlands

parents and helped them choose the

that teaches economic sciences in

right course of study.

all its aspects. Also, many of the academic staff here are at the very

I feel ESE does a great deal for its

top of their field.

alumni, which includes providing career guidance and training and

So, as far as I’m concerned, there’s

education in conjunction with

only one place to study economics:

some of the best companies in the

at ESE in Rotterdam.

Netherlands. I also enjoy meeting

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ESE alumnus and Member of the Board of Bavaria

I learned a great deal while studying

more practically oriented courses for

Econometrics at Erasmus University

alumni, allowing them to continue

Rotterdam - like coming up with

expanding their knowledge. In many

solutions to simplify highly complex

other countries, alumni maintain

issues. The university also helped me

life-long relationships with their alma

build a very valuable network.

maters. As an alumnus, you can also help promote and improve ESE’s

Student life in Rotterdam is also great

reputation in the market. I would

- there are so many opportunities to

even say that alumni are a university’s

grow and develop. Taking advantage

most valuable marketing resource.

of those opportunities is an excellent

I would absolutely recommend

way to prepare for your future career.

the ESE to all prospective students.

During my studies, I was involved in

Especially when they want to pursue

a number of fun and educational

studies in economics, because

extracurricular activities, both within

Rotterdam has a strong tradition

the university and as a member of a

in that field. Another advantage is

student union.

that it’s not a typical student town at all, but a regular, cosmopolitan city

I am more than satisfied with what

with a vibrant student life. That’s

the university has done for me,

what makes Rotterdam unique in the

although I feel they should offer

Netherlands.

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Interview Alumni

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Interview Exchange programme ESE

"One of the best decisions of my life" George Kalbin www.ese.eur.nl/annual_report


Interview Exchange programme ESE

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"An opportunity too good to be true" Stephen Verheul www.ese.eur.nl/annual_report


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Interview Exchange programme ESE

International Exchange Student ESE from abroad

Going on an exchange was a great

was really interested in. Without this

challenge for me. It was something

exchange programme, I doubt that

different and new; something I’d

would have happened.

never done before. I chose Erasmus School of Economics because it was

What I did not expect was that I

the best university in terms of ranking

would enjoy my stay so much. To

and reputation.

other students I can only say that they shouldn’t miss out on a great

What surprised me the most was

opportunity and unforgettable

the educational system. In Sweden,

experience. They will remember

universities generally don’t distinguish

it all their lives. Together with the

between business administration

outstanding quality of education

and economics. At ESE, students can

provided by ESE, it’s a pretty unique

choose to study economics or Business

combination. Coming to Rotterdam

Administration from the first year,

was one of the best decisions of

which I feel is a huge advantage.

my life!

A valuable part of my experience was actually my newfound interest in­academics and economics in general. I was able to do something I

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International Exchange Student ESE from the Netherlands

My main objective was to

There was almost nothing that

experience and enjoy living in an

disappointed me, but if I have to

environment with people from

name something, it’s the dinners.

different cultures. This would help

Meat is very expensive over there

me to get to know other cultures,

and so is alcohol. Also, the people

but would also teach me about

whom I shared a kitchen with were

myself. Having this chance through

not very sociable. Since I love

the exchange programme seemed

having steak and wine with friends,

to me an opportunity too good

that was a bit disappointing.

to be true.

Fortunately I had regular dinners

I chose the University of Gothenburg

at other friends’ apartments to make

for several reasons. First of all I

up for that.

wanted to visit a country where people speak proper English, which

The entire period was a key

can be helpful while doing your

experience. I would advise any

grocery shopping. Secondly, the

student who gets this opportunity to

city of Gothenburg seemed such a

take it.

beautiful mixture of a metropolis and a small town. And last but not least, there are many students living there. I can now say that my expectations were met.

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Interview Exchange programme ESE

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Boosting grand incomes

D. BOOSTING GRANT INCOMES Due to unsteady research-funding prospects, it is vital that ESE continues to increase the research grant income per staff member. In accordance with our strong cross-disciplinary approach, collaborations across a multitude of fields of study have taken place. Rather than applying for every grant available, we focus on areas in which our competitive advantage makes us among the best in the world. ESE’s funding team shares the knowledge of the use of grant instruments and calls for proposals, the use of established networks, the review of draft proposals, support in the negotiation process and the use of project management tools.

Development of a set of methods to take ambiguity into account in policy decisions In mid-2010 Aurélien Baillon received a Veni Grant from the Netherlands Organisation for Scientific Research (NWO) for his research project entitled "(Un)healthy ambiguity". When a new disease appears (e.g. swine flu), we are uncertain as to the likelihood of the threats we are facing, unlike with known diseases (e.g. regular flu). A situation in which probabilities are unknown is referred to as ‘ambiguous’. Ambiguity is not only common in medical decisions, but also, for example, in financial and environmental decisions. Many people are averse to ambiguity, i.e. they are more careful when faced with ambiguity than when faced with risk. This behaviour might seem reasonable, but ambiguity aversion may lead to decisions that are not in the decision makers’ best interests. Ambiguity aversion has hardly been studied in medical decisions and it is unclear what policy makers should do about it. This research project aims to develop a set of methods to take ambiguity into account in policy decisions, with a special focus on health policy. Four remarkable talents awarded with the Marie Curie Individual Fellowship Grant In 2010, four young ESE researchers received the Marie Curie Individual Fellowship Grant belonging to the European Commission’s European FP 7 project. Each researcher receives the fellowship for a period of two years in order to carry out its own research and further develop his/her ideas. They are honoured for the remarkable originality and talent displayed in their research. Dr Pilar Garcia Gómez received the award for her research proposal about "Understanding the health and labour relationship". Dr Sarah Gelper received the grant for the ambition to understand the role of indirect networks in relation to the international adoption of high-technology products. Dr Isabel Verniers’ research focuses on the role of international ties in the launch and adoption of new www.ese.eur.nl/annual_report


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Tham, who specialises in quantitative finance, was honoured for his research proposal entitled ‘Sovereign Wealth Funds, Internationalization and Political Connection’. Encouragement for five innovative and high-quality scientific research projects In June 2010 NWO announced that five projects from ESE received grants in the free competition (four in de division for Social Sciences and one in the division for Physical Science). The total amount of subsidies granted from these projects is more than one million euro. This amount is received to subsidize one three year post-doc position, one three year PhD position and three four year PhD positions. The free competition is a subsidy programme which encourages innovative and high quality scientific research in the field of Social Sciences. EUR fellow provides policy advice for maintaining financial stability With the collapse of the investment bank Lehman Brothers in 2008, the financial system in the USA and the EU came close to a complete meltdown. Because the stability of the banking industry is of importance to the entire economy, society, policy makers and central bankers, bank supervisors and regulators are all very concerned about the systemic risk in the banking industry. With his research proposal "Systemic risk in the financial system: defined, measured and assessed", Dr Chen Zhou, PhD at ESE and researcher at De Nederlandsche Bank (DNB), received an EUR fellowship. Given policy needs on the one hand and the lack of empirical methodologies on the other, his research will design various systemic risk measures and indicators. Subsequently, these measures will also be used to determine the contribution of individual financial institutions or macroeconomic shocks to systemic risk. Consequently, his research can provide policy advice for maintaining financial stability. Ambitious young scientist investigates efficient web product search Online product searches allow users to discover their desired products. This is currently a laborious, time-intensive process. Damir Vandic, Economics & Informatics honours MSc at ESE, obtained a four-year PhD scholarship through the Mozaïek programme (funded by the Netherlands Organisation for Scientific Research/NWO) to investigate the use of Semantic Web Vocabularies in efficient product discovery and presentation on the Internet. NWO launched the Mozaïek programme in order to attract more graduates from minority groups to the sciences. NWO hopes that the successful candidates will remain involved in Dutch science in the long term and that they will serve as role models for others.

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Boosting grand incomes

products, with a focus on new pharmaceutical drugs, and finally, Dr Wing Wah


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Impact through research schools and research training

E. IMPACT THROUGH RESEARCH SCHOOLS AND RESEARCH TRAINING ESE aims to attract the best research students, to rank high with its research schools among international graduate schools and to educate graduates in such a way that they are highly sought after as academic staff and leaders in business and government. The accreditation of our research schools, the Tinbergen Institute and the Erasmus Research Institute of Management (ERIM) is therefore of great importance.

Very positive evaluation for Tinbergen Institute and ERIM In the Netherlands, the Royal Netherlands Academy of Arts and Sciences (KNAW) is responsible for accrediting research schools. In addition to the KNAW accreditation of research schools, Dutch universities maintain a quality assessment system for research. Based on a self-assessment report, an external evaluation committee of international experts assesses publicly funded research over a six-year cycle. For the accreditation of both the Tinbergen Institute and ERIM, International Peer Review Committees were appointed, that were charged with assessing ERIM respectively the Tinbergen Institute in its entirety, covering the periods 2004-2009 and 2005-2010, respectively. Overall assessment based on the self-assessment report and the site visit resulted in a very positive evaluation for both institutes. In ten years (from its first accreditation in 1999), ERIM has risen from nothing to achieve a top-three position in Europe with regard to research productivity, especially in terms of publications in the leading journals. The research at the Tinbergen Institute is rated by the IPRC as being of "an internationally outstanding quality", with "a clear vision" and "highly relevant to the needs of society". The graduate programmes were judged to be excellent. Research Traineeship for students from different cultural backgrounds As part of Erasmus University Rotterdam’s Diversity programme, the Ministry of Education, Culture and Science has awarded a substantial grant to the Erasmus School of Economics for its ‘Research Trainee Programme’. The aim of this programme is to interest excellent students from different cultural backgrounds in pursuing an academic career. During an academic year, participants in this programme receive the opportunity to become acquainted with conducting academic research. As part of the programme, they are offered a job as a student assistant. Each individual is paired with one of the School’s top researchers, and all participants attend a monthly seminar.

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The Duisenberg School of Finance (DSF) and the Tinbergen Institute have joined forces. The objective of the two institutions is to strengthen the financial research capacity in the Netherlands, link theory and practice, and attract top international researchers to the Netherlands. Together with (DSF), the Tinbergen Institute will offer eight students a PhD or research master position every year. By working together, leading global financial researchers along with high-profile speakers from renowned universities (such as Harvard, Wharton School of Finance and Columbia University) as well as from organisations such as IMF, ECB and the Federal Reserve Board in Washington, can be invited to hold lectures on key policy issues. Conference on the nature of preferences and decision-making The 5th Tinbergen Institute Conference brought together the world’s best researchers from a variety of fields where the nature of preferences and decisionmaking is a main area of research. These researchers included economists with an interest in evolution and experiments, as well as evolutionary biologists and psychologists. Individual preferences are at the foundation of the economic theory of behaviour. They are the cornerstones that determine individual decision-making. More recently, the study of preferences has gained momentum. In addition, the relationship between preferences and the decisions agents make, has come under much closer scrutiny than before. Two strands of literature where these developments are visible are evolutionary game theory and experimental economics. The former focuses on theories about the origin of preferences and behaviour, and how they develop under selective pressures. A better understanding of these processes can increase our understanding of how economic decisions are made. Experimental economics aims to detect the preferences and valuations of humans in economic environments and analyse how they affect decision-making in interactive environments or in isolation.

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Impact through research schools and research training

Partnership between Duisenberg School of Finance and Tinbergen Institute


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Impact with publications

F. IMPACT WITH PUBLICATIONS The impact of the research output of ESE’s staff can be appreciated through the work itself. In this paragraph we show some representative examples of ESE’s researchers and the far-reaching influence of their work, an effect that can be measured on a regional, national, and universal scale.

Does education have an effect on the health-level of people? In Social Science & Medicine Hans van Kippersluis, Owen O’Donnell, Eddy van Doorslaer and Tom Van Ourti have published their research this year about the relationship between health and the socioeconomic status of people. This paper adopts a life cycle perspective to investigate whether the socioeconomically disadvantaged, on top of a lower health level, experience a sharper deterioration of health over time. They find that in the Netherlands, as in the US, the socioeconomic gradient in health widens until late-middle age and narrows thereafter. The analysis and the available evidence suggests that the widening gradient is attributable both to health-related withdrawal from the labour force, resulting in lower incomes, and the cumulative protective effect of education on health outcomes. The less educated appear to suffer a double health penalty: they begin adult life with a slightly lower health level, which subsequently declines at a faster rate. What are obstacles to become an entrepreneur? In 2010 Peter van der Zwan, Roy Thurik and Isabel Grilo show in Applied Economics that the decision to become an entrepreneur is not a ‘go or no-go’ moment but a five step process, what they call the entrepreneurial ladder. They also analyse the critical factors for moving from one step on the ladder to another higher one. The most surprising effect they find is that the perception of lack of financial support is no obstacle for moving to a higher entrepreneurial engagement level, whereas perceived administrative complexity is a significant obstacle. They also show that the effect of age on the probability of moving forward in the entrepreneurial process becomes negative after a certain age, implying that if entrepreneurial engagements are not taken early enough in life they may well never be taken.

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The quality of public management is a recurrent concern in many countries. Calls to attract the economy’s best and brightest managers to the public sector abound. But can the government attract these managers? Josse Delfgaauw and Robert Dur analyse this problem in their 2010 article in Public Economics. In their research they use a model in which people can differ in their ability to manage and in their intrinsic motivation to work in the public service. They show that if demand for public sector output is not too high, relatively many of the more able managers will choose to work in the private sector and the lesser able agents predominantly will end up into the public sector. This may sound bad for the public sector, though this is the most cost efficient method of working for the government and will results in maximum social welfare. This also implies that attracting a more able managerial workforce to the public sector by increasing the wages to private-sector levels is not cost-efficient. What are the most important predictors of surgical procedure times? Accurate prediction of medical operation times is of crucial importance for cost-efficient operation room planning in hospitals. In 2010 Pieter Stepaniak, Christiaan Heij and Guus de Vries show in Statistica Neerlandica a way to predict the length of a medical operation. They analyse this by investigating the possible dependence of procedure times on surgeon factors like age, experience, gender and team composition. The effect of these factors is estimated for over 30 different types of medical operations in two hospitals for over three years. They find that the factors found most often to be significant are team composition, experience and time of the day. They also show that contrary to widespread opinions among surgeons, gender has nearly never a significant effect on the length of a surgical procedure. By incorporating surgeon factors, the accuracy of the prediction of case durations in 2009 is improved by up to more than 15% compared with current planning procedures.

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Impact with publications

Is it cost-efficient to increase wages in public management?


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Can the efficiency in container stacking be increased? Impact with publications

In the competitive world of large container terminals, like the terminals in Rotterdam, it is of vital interest to be as efficient as possible. Container stacking rules are an important factor hereby. Bram Borgman, Eelco van Asperen and Rommert Dekker, investigate two concepts to increase efficiency in container stacking and compare them to several benchmark algorithms in their 2010 article in the OR Spectrum in 2010. The first concept is to use knowledge about container departure times, in order to limit the number of reshuffles. They stack containers leaving shortly before each other, on top of each other. The second concept is the trade-off between stacking further away in the terminal versus stacking close to the exit points and accepting more reshuffles. They find that even when imperfect or imprecise departure time information is used, this will lead to significant improvements in efficiency over the benchmarks. Is it useful for a firm to have a banker on the firm’s board of directors? In the 14th volume of the Review of Finance Ingolf Dittmann, Ernst Maug and Christoph Schneider analyse the role of bankers on the boards of directors of German non-financial companies for the period from 1994 to 2005. They find that bankers who are represented on a firm’s board, foremost promote their own bank’s business as lenders and as merger and acquisition advisors. They only find little evidence that bankers who are on the boards of non-financial firms as capital market experts, help these firms to overcome financial constraints. They however didn’t find evidence for the proposition that bankers are on a firm’s board just to monitor the banks interest in the firm. Consistent with these findings, they find evidence that suggests a negative causal effect of the presence of a banker on the firm’s board on firm performance. Do experts’ comments improve the quality of model-based forecasts? Forecasts based on models (model-based SKU-level forecasts) are often adjusted by experts to make the forecast according to them more precise. Philip Hans Franses and Rianne Legerstee propose in their article in the Journal of Forecasting in 2010 a statistical methodology to test whether these experts really improve the forecasts with their comments. They analyse this question using data from a very large database concerning monthly sales of pharmaceutical products in 35 countries and the forecasts of these sales by the model and by the experts. They find that in seven categories the adjustments of the expert forecasts are at best equally as good as the model, but are more often even worse than model-based forecasts. They also find that this is because experts put too much emphasis on their own judgement and too little on the model.

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Annual report 2010 The digital version of our annual report can be found on our website: www.ese.eur.nl/annual_report. Here you can find more information on several subjects as well as photo impressions and film clips. Additional information, photo impressions and film clips are indicated by

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