Tilburg University magazine 'Get inspired by Economics & Business' English version

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Get inspired by






by the creators of


COLOPHON RESEARCH SPECIAL februari 2020 GET INSPIRED BY ECONOMICS & BUSINESS This research special was created by the editors of New Scientist on behalf of Tilburg University, Tilburg School of Economics and Management (TiSEM). TiSEM is a leading European player in research and education in the field of Business and Economics. Editors-in-chief Jim Jansen (New Scientist) and Annemeike Tan (TiSEM) Senior editor Wim de Jong Picture editor Jaap Augustine Contributors to this issue Pepijn Barnard, Bram Belloni, Josta Bosma, Bob Bronshoff, Irene Faas, Yannick Fritschy, Fenna van der Grient, Ans Hekkenberg, Peter de Jong, Joris Janssen, Jean-Paul Keulen, Maaike Putman, Sebastiaan van de Water Basic design Sanna Terpstra (Twin Media bv) Design Donna van Kessel (Twin Media bv) Translation Bureau Kennedy CONTACT NEW SCIENTIST E-mail redactie@newscientist.nl (for press releases), info@newscientist.nl (for questions to the editors only), klantenservice@ newscientist.nl (for membership questions and changes) Tel +31-(0)85-6202600 Address Oostenburgervoorstraat 166 a-b, 1018 MR Amsterdam Brand manager Thijs van der Post (thijs@newscientist.nl) Marketing Hannah Jansen (hannah.jansen@veenmedia.nl ) Sales Alex Sieval (alex@newscientist.nl) Production manager Sonja Bon CONTACT TISEM Annemeike Tan (A.M.Tan@tilburguniversity.edu) www.tilburguniversity.edu/tisem Printing Habo DaCosta bv ISSN 2214-7403 The publisher is not liable for damages as a result of printing and typesetting errors. COPYRIGHT Absolutely nothing in this publication may be copied or stored in a database or retrieval system in any way without the written permission of the publisher. The publisher has endeavored to fulfil all legal requirements relating to the copyright of the illustrations. Anyone who is of the opinion that other copyright regulations apply, may apply to the publisher.

Fundamental research with impact Research with social impact and fundamental research often seem to be at odds with each other. Various reports even make a distinction between unbound, excellent, curiosity-­driven research and socially ­relevant research. But is this distinction justified? Of course, most social problems are too broad and extensive to be solved by individual disciplines. Collaboration of researchers from various corners of our scientific spectrum is needed to overcome these problems. Multidisciplinary ­issues require multidisciplinary solutions. In fact, true radical scientific and social breakthroughs are often based on new combi­nations of knowledge domains. However, f­ undamental, mono-disciplinary research cannot be dismissed as a main driver of scientific progress. In this magazine, the Tilburg School of Economics and

Interview 06 “TiSEM is a leading European player” A conversation with Vice-Dean Joost Driessen, Professor of Behavioral Economics Sigrid Suetens, and Bart Bronnenberg, ­Professor of Marketing.

14 Fighting poverty

John Einmahl deals with extreme values.

Get inspired by






Focus 04 Insight Reyer by the creators of


Commentary 22 Seduced by a label Arjen van Lin

analyzes the effect of labels, nutritional values, and discounts on what we put in our shopping carts.

28 Data for a good cause How

mountains of data can solve social problems.

30 “IT weakens our cognition” We


Prof Dr Geert Duijsters

Dean of the Tilburg School of Economics and Management, Tilburg University


Patricio Dalton and Elena Cettolin build on research by Nobel laureates to help people escape poverty.

20 Man of extremes

Management demonstrates how excellence in fundamental as well as applied research can contribute to a better world and can be instrumental in the analysis of important trends, applications and social developments. The researchers involved have left the proverbial ivory tower without making concessions to disciplinary insight and scientific quality. The articles in this excellent magazine demonstrate that this can – and should – be done. Happy reading!

shouldn’t rely too much on technology without thoroughly training its users, warns AnneFrançoise Rutkowski.

Spotlight 09 Arjan Lejour “Tax avoidance used to be viewed more laconically”

17 Jasmin Gider

“Sometimes research resembles a thriller”

25 Christoph Sextroh “I don’t have a brush, I have data”

Gerlagh:“The problem with climate change is that people can’t imagine what it really means”

10 Insight Is Bitcoin

the currency of the future?

12 Up close CentERlab: a unique laboratory

18 TiSEM in facts & figures 26 Credit and bubbles Rik Frehen, Fabio Braggion, and Emiel Jerphanion investigate the link between cheap credit and stock market speculation.

Tilburg University Economics and Management | Research Special | New Scientist | 3


“It’s quite bizarre when you look at the graphs,” says Reyer Gerlagh, Professor of Economics at the Tilburg School of Econo­mics and Management. “In 1990, we already knew that our CO2 emissions were a problem, but since then we have continued to increase them.” “The problem with tackling climate change is that people find it hard to imagine something they cannot see. Only now that the forests in ­Australia are on fire, they say: ‘Ah, that’s the climate change that scientists have been talking about for so long!’” “In the past, that’s the way it’s always been. Thirty, forty years ago we saw forests die and statues ­dissolve because of the acid rain. Then we took measures and that ­problem was solved. I expect that to happen with climate change. The annoying thing is that, whereas forests were able to ­recover fairly quickly after the acid rain ­stopped, the climate system will take ­hundreds or thousands of years to do the same.” “And to think that the solution is basically simple: we have to move away from fossil fuels. It really won’t destroy our economy, as naysayers claim. Over the past decades, we have learned that economic growth stems from the human need to develop new things. And we don’t need fossil fuels for that.” “One thing you shouldn’t do is make consumers ­responsible for their own emissions. That’s a spurious solution. I don’t want to have to think about the CO2 emissions of every product. I want the government to make sure that when I buy something, I can trust that it is not very bad for the environment.” “What can work, for example, is a meat tax. But the population first has to understand that this is a good measure. And it takes a very long time before we realize something like that. People just want a piece of meat on their plate without thinking about it. We’re not going to change our minds until we are confronted with so much misery that we just have to face it.” –JPK


“The solution is basically simple”


“We want to remain among the global top�

Tilburg School of Economics and Management (TiSEM) is doing well, say Vice-Dean Joost Driessen, Professor of Behavioral Economics Sigrid Suetens, and Bart Bronnenberg, Professor of Marketing. “TiSEM is the leading European player in research and education in the field of Business and ­Economics.”

Text: Jim Jansen Image: Bob Bronshoff


iSEM is in good shape and our ­research performance is excellent,” says Sigrid Suetens. “Our econo­ mics programs are the best in the Netherlands. And we’re among the top in Europe and the rest of the world as well.” Bart Bronnenberg adds: “Two of our main tasks are education and research. Our ranking on both fronts is excellent. According to the NSE and Elsevier, our educational programs are highly rated. In the field of research, we are among the international top, according to the ShanghaiRanking (fifth place) and U.S. News & World Report Ranking (seventeenth place). This is something we can be very proud of.” Joost Driessen: “Walk into MIT or Harvard and ask an economist there about Tilburg. They will know us and recog­ nize us as a major player in the research areas of Business and Economics.” How is the research climate developing in ­Tilburg?

Suetens: “The university and TiSEM are internatio­ nally renowned for their research climate and PhD


“Even more than before, we want to ­conduct research that has a real impact, both scientifically and socially.”


Joost Driessen (1974) is ­Professor of Finance at Tilburg University and Vice-Dean of Research at the Tilburg School of Economics and Management. His research focuses on ­finan­cial markets, in particular bond markets and the financial derivatives market.

programs. This is the main reason why top researchers from abroad want to come to Tilburg.” Bronnenberg: “I am very proud of our ­graduate school, CentER, where young ­researchers are trained in a small-scale ­setting for a career in academia. A unique program. And I’m very happy with how our graduates are developing in the national and international university world.” Driessen: “We’re growing. In quantity – with more students and more scientists – but also in quality. Even more than before, we want to conduct research that has real scientific impact, and ultimately has social impact. So, we are not concerned with numbers of publications: good research takes time and, therefore, takes longer, but ultimately yields more.” What is the biggest challenge for the future?

Suetens: “We must continue to focus suffi­ ciently on high-quality research, including fundamental research, which is not necessa­

rily carried out because of a specific appli­ cation but because it has many possible ­applications.” Bronnenberg: “A university is as good as its best academics. It is our ambition to remain among the global top and, if possible, to im­ prove. That’s why we need to attract, train, and retain very good people.” Driessen: “News and information seem to be increasingly transitory in today’s society, while science is developing gradually and slowly. Demonstrating the value and impor­ tance of good research is, therefore, a major

“I want to ­understand how people behave in social dilemmas.”


Bart Bronnenberg (1963) is Professor of Marketing at Tilburg University. He researches how consumers make choices and how brand loyalty is created. He is also a research fellow at the Centre for ­Economic Policy Research (CEPR) in London.

8 | New Scientist | Tilburg University Economics and Management | Research Special


Sigrid Suetens (1977) is Professor of Behavioral ­Economics at Tilburg ­University. Her research ­focuses, among other things, on understanding trust and reciprocity.

challenge. This issue of New Scientist is an example of the way in which we want to do this.” One last personal question: why is it so much fun to work at the Tilburg School of Economics and Management?

Suetens: “I enjoy working in a climate where there is a lot of room for discussion. Working with inspiring and critical colleagues from various backgrounds and from different countries gives you energy. TiSEM gives me every freedom to conduct research. Trying to understand the behavior of people in ­social dilemmas and what the consequences are for some social problems motivates me in my research.” Bronnenberg: “Our faculty is a place where many young people come together, that ­radiates energy, and where students are educated to a high standard. That alone ­makes it fun to work here and to walk across campus. As a researcher, I can work on ­subjects of my own choosing almost without restriction. This offers a high degree of intel­ lectual freedom. Finally, it is pleasant and exciting to work in an ambitious organi­ zation, with people who always want to ­improve.” Driessen: “The combination of ambition and a good and collegial working atmosphere, and the international environment, with ­colleagues and students from all corners of the world. What generally motivates me to do research is that many issues are always more nuanced and complex than they seem at first.”


“Tax avoidance used to be viewed more laconically”

Arjan Lejour (53) is Mister Tax Haven. He’s fascinated by multinationals that dodge ­taxes. “It used to be viewed more laconically, but nowadays society has much more of a judgment. Filling up on cheap gasoline just across the border is okay. But Google ­dodging tax is not okay. Where do we draw the line?” In addition to tax avoidance, ­Lejour’s research focuses on the economic effects of the burden of taxation on ­companies. “The tax system is only one of the ­factors in the business climate. A country’s stability, the level of education, and logistics are also important for a ­company.”

In March of last year, Tilburg University ­succeeded in roping him into the position of Professor of Taxation and Public Finance. He combines this with his work as a tax ­project manager at the Netherlands Bureau for ­Economic Policy Analysis (CPB). Lejour is no stranger to Tilburg. He obtained his doctorate there in the nineties. “After more than twenty years of policy making at CPB, I felt the need to share my knowledge. To teach students. I like it here. There’s a good research culture here. We share a lot with each other. Not only at work, but also outside of work, during dinners. They’ve got that figured out here.”

He was born in The Hague and grew up in Moerkapelle. In high school, his favorite ­subject was economics. He was triggered by the book that generations of high school students grew up with, The Core of Economics by Arnold Heertje. “How to make money, that fascinated me. Personally, I don’t care that much for money. If I did, I’d be better off working at a bank.” He is attached to his token. “This tiny device gives me the numerical code to browse through an Eldorado of data at Statistics Netherlands (CBS). Indispensable to my research.” –PdJ

Tilburg University Economics and Management | Research Special | New Scientist | 9


Arjan Lejour, Professor of Taxation and Public Finance


Currency of the future? The Bitcoin, a digital currency, has been around for over ten years. It may be the currency of the future. But why was the Bitcoin actually created? The Bitcoin, a digital currency, has been around for over ten years. Everyone should be able to use this coin without being dependent on an intermediary. But is this currency future-proof? A digital currency faces four problems: there may be no counterfeit currency in circulation, the number of new coins created must be finite, no one may be allowed to monitor a payment, and, finally, there may be no intermediaries who can stop transactions. Our current financial system already solves two of these problems, but not the other two. That is why the Bitcoin was invented.

The current financial system: centralized control

Below is a schematic representation of the organization of our current payment systems. Each system, for example your bank, is ­controlled centrally. In the network, one party (the bank) controls all transactions that take place. If that party disappears, the system will no longer function. This financial system solves two out of four, but unfortunately not all, problems.

Financial system solution

Financial system problem

The centralized party always monitors a transaction. In this system, there is no privacy within a transaction between two points.

Thanks to the control by a centralized party, money can only be spent once.


No counterfeit money

The centralized party in this system is involved in every transaction. It must be completely reliable.

The centralized party has control over how much ­money is printed. If a lot of money was printed, that money would not have value.

Limited issue

No intermediaries

10 | New Scientist | Tilburg University Economics and Management | Research Special

Infographic: Pepijn Barnard, text: Josta Bosma. Source: Financial Market Infrastructures and Payments: Warehouse Metaphor Textbook, Ron J. Berndsen (2018), warehousemetaphor.com. The reader is guided through a metaphorical warehouse in which a guide explains how payments and securities transactions work behind the scenes. The author is Professor of Financial Market Infrastructures and Systemic Risk at Tilburg University.

Bitcoin: trusting the network Digital currencies use blockchains. This is where all points of the network are interconnected. Each point is a user/computer in the ­network. Transactions are approved by each point. This eliminates the need for a centralized party and the network will continue to ­function if a user/computer is lost. The Bitcoin solves all four problems, but also creates new ones, so the question is whether this is really the currency of the future.

Bitcoin solution

All transactions that have ever been made can be found in the system. If a coin is sent twice, the one that was sent first counts.

For each transaction, a new address is created by the recipient. This makes the recipient untraceable.


No counterfeit money

The number of digital coins has been set at 21 million. Because of this, it is not possible to create an infinite number of new coins.

There is no longer a third party involved in transactions. There is no centralized party in the network.

No intermediaries

Limited issue Bitcoin problem

Very slow


Only 4 to 7 transactions can be done per second, much fewer than in the centralized system. This makes this network much slower. The network uses a lot of energy. This is due to the computing power behind the system.

In order to make changes in the network, 51% of users must agree. If the majority of the ­network ends up in the wrong hands, the possibility of counterfeiting exists.

51% attack

The computers that perform all these calculations (the computers of all points) use electric energy. One transaction uses as much energy as 30 households in one day.

Tilburg University Economics and Management | Research Special | New Scientist | 11



CentERlab: a unique laboratory What do consumers pay attention to when choosing a smartphone? Why do people lie? How do we negotiate? These and many more questions are answered at Tilburg ­University’s CentERlab. ­CentERlab offers ­researchers the opportunity to simulate an economic or business setting in order to investigate people’s behavior. This ­behavioral research is very important. ­Behavior plays a crucial role in many areas of the economy: financial ­markets, trade, marketing, a ­ ccounting, management, et ­cetera. It is, therefore, important for ­organ-

i­­­ zations to gain insight into this behavior. CentERlab consists of three parts: a large lab with 65 computers where research is done into people’s economic behavior. Here, for example, ­researchers study why and how people invest in stock markets. In another part of CentERlab, ­scientists are researching what people base their product choices on. This is done using eye tracking. In a soundproofed cabin, ­participants are shown, for example, ­smartphones with ­different features. The eye-tracking system in the cabin ­registers which ­features the ­participants are looking at.

In this way, it is also possible to study whether consumer choices can be ­controlled. CentERlab also has a negotiating room where n ­ egotiation experiments take place. This room also contains a kitchen where ­experimental studies f­ ocusing on taste and product choices are carried out. For example, do people like a leading brand better than a generic brand? Thanks to its large size and many options, CentERlab is unique in the Netherlands. The lab is a great added value to Tilburg University’s research, ­providing answers to questions that companies are struggling with nowadays. –JB


Fight poverty with experiments Patricio Dalton and Elena Cettolin build on research by Nobel laureates with the ultimate goal of helping people escape poverty. By Joris Janssen


ow can you get an economy up and running? And how do you keep it that way? The science of economics has no shortage of complex theories, models, and ways of thinking about this. But how do you find out whether an economic measure devised somewhere around a policy-making table

14 | New Scientist | Tilburg University Economics and Management | Research Special

actually makes sense? For this, economists are getting help from an unexpected source: medicine. After all, the way in which researchers test whether a drug works is also very suit­ able for testing whether economic inter­ ventions work. Take, for example, research into the effectiveness of all kinds of devel­ opment aid. The method works so well that the three economists who introduced this research strategy into economics ­science received the Nobel Prize for it in 2019. Esther Duflo, Abhijit Banerjee, and Michael Kremer have since become true celebrities in the relatively new research field of experimental economics. Development economist Patricio Dalton and experimental economist Elena ­Cettolin,

The research that developmental economist Patricio Dalton and experimental economist Elena Cettolin do is different, but their goal is the same: to help people escape poverty.

both of Tilburg University, build on the ­research of these Nobel Prize ­winners. Each in their own way: Dalton does a lot of research in developing countries, ­Cettolin tests economic theories in a ­laboratory setting. Even so, their worlds overlap considerably. Not only because they are a couple as well as colleagues, but also because the ultimate goal of their research is the same: to help people escape poverty.

Entrepreneurs in Indonesia In recent years, Dalton’s work focused on countries such as Kenya, Ghana, and ­Indonesia. There, he researched the ­barriers that small entrepreneurs encoun­ ter in their attempts to grow their business. ­Together with his colleagues, Dalton ­received a grant of four million euros from the Department for International Develop­ ment, a UK government agency responsi­ ble for development aid. In Indonesia, the Dalton team took a ­close look at retailers. In a city like Jakarta, there are thousands, maybe hundreds of thousands of them. And although at first glance they look very similar, they are quite

“Surprisingly, we found that people who were stressed don’t act more irrationally”

different from each other, Dalton discov­ ered. “Some work in an enormously effi­ cient way and succeed in growing their business. Others don’t grow at all. We wanted to s­ tudy what kind of practices all these ­entrepreneurs have in terms of, for example, ­reporting, marketing strategies, planning, and whether they discuss impor­ tant decisions with friends and family. Then we looked at which practices contrib­ ute to the success of the small businesses.” To this end, the team conducted in-depth­ interviews with around one hundred retail­ ers, after which they compared the results with the performance of the companies. This resulted in a list of ten best practices. Then it was time for the experimental part

of the research: if you compile these best practices in a handbook, together with ­guidelines on how to implement them and a number of known pitfalls to avoid, can you help other entrepreneurs grow? A group of 260 randomly selected retail­ ers received the handbook. Another group of 260 received not only the manual, but also two half-hour help session to imple­ ment the tips. Another 260 received the handbook and the opportunity to watch a documentary about fellow entrepreneurs who already successfully put the tips into practice. Finally, the same number of ­entrepreneurs received the total package, and one last set of entrepreneurs, the ­control group, received nothing at all. “Then we waited eighteen months,” says Dalton. “After that, we looked at which tips had been taken up, which entrepreneurs had or had not started working with them, and whether this had had an effect on their income.” Dalton’s research is a textbook example of ‘randomized research with control group’, a research strategy that has been common­ place in medicine for centuries. Scottish doctor James Lind first used the technique in 1747 to find out how best to treat scurvy – at least his report is the ­oldest description of it. Randomized ­controlled trials (RCTs) have since found their way into psychology, education, ­agriculture, and, for twenty years, economics.

Poverty and stress For economic experiments, however, you don’t necessarily have to go out into the field like Dalton does. There is also plenty to be gained in the laboratory, for example if you want to investigate how people make economic decisions – the discipline that Elena Cettolin is involved in. Are people’s economic decisions always rational? And if not, what influences the extent to which people are able to act ­rationally? If you want answers to such specific questions, then as a researcher you need to be able to control your variables as well as possible. Research in the field is all well and good, but what you really need is an

Tilburg University Economics and Management | Research Special | New Scientist | 15

experimental economics

“Esther Duflo will be a very important role model for women in economics” environment that is stripped of undesirable external influences to the extent possible. In her research, Cettolin focuses, among other things, on whether poverty has a ­negative impact on people’s ability to make rational decisions. This is a salient research topic, because the line of reasoning tends to be reversed: that poor people are poor because they make irrational, and there­ fore worse, decisions. “Our assumption is that poor people experience more stress than other people, because they are more frequently confronted with circumstances that give cause for concern,” says Cettolin. “We want to study whether this hinders ­rational thinking.” In a recent experiment, Cettolin had a number of test subjects perform a task that caused them a lot of stress. The stress level could be measured by looking at saliva particles. Subsequently, the subjects had to make a number of economic decisions. This showed how rationally they acted at that moment. And the results? “Surprising­ ly, we found that the people who were stressed did not act more irrationally,” says Cettolin. In her opinion, this does not mean that there is no definitive link

­ etween stress and the rationality of one’s b decisions. “We have tested a situation with extremely high, but short-term stress. The next step is to look at decision making in people suffering from chronic stress.” Because you can zoom in on individual economic theories and predictions very well in the laboratory, it is a very good ­addition to research in the field, such as that of colleague and partner Patricio ­Dalton. “The lab and the field don’t have to compete with each other,” says Cettolin.

Nobel Prize as stimulus With their research, both Cettolin and ­Dalton stand on the shoulders of Nobel Prize winners Duflo, Banerjee, and Kremer. They introduced experimental methods to ­economics and laid the foundation for such experiments to be carried out “in the wild” of everyday practice in emerging economies. “We owe almost everything to them,” says Dalton. “They themselves copied this ­methodology from the field of medicine and began investigating how it can be used to help people escape poverty. Moreover, and equally important, they developed the organizations that enable scientists to carry

16 | New Scientist | Tilburg University Economics and Management | Research Special

out research in developing countries under complex conditions. For example, without an organization like the Abdul Latif Jameel Poverty Action Lab (J-Pal), my research in Indonesia would not have been possible.” Cettolin shares this view. She believes Duflo, Banerjee, and Kremer revolution­ ized the way people in the field of econom­ ics think about testing policies and making causal connections. She also points to a nice potential finding of the awarded ­Nobel Prize. “Duflo is the youngest winner of this prize ever. And she’s also a woman – only the second to win this prize. I think this will make her a very important role model for women in economics.” Back to Indonesia. What was the result of Patricio Dalton and colleagues’ RCT? The handbook full of tips in combination with the film and, in particular, the two help sessions increased the income of the entre­ preneurs by 30 percent. Dalton is delighted with this outcome. “This is an incredible result. The costs for this project were 120 dollars per entrepreneur and their income increased by no less than 300 dollars per month.” RCTs such as Dalton’s have already given many people in emerging economies a push in the right direction. “According to Esther Duflo’s estimate, around 400 million people have benefited from programs that were scaled up after their effect was ­demonstrated by an RCT,” says Cettolin. The experimental work of economists such as Dalton, Cettolin, and the Nobel Prize-winning founders is really only just beginning. “I think the research field is ­going to grow explosively in the near ­future,” says Dalton. “The Nobel Prize has been a great stimulus. RCTs are now an ­established method in a field in which many people are doing all manner of ­creative things that build on the work of the three Nobel Prize winners.” And the good thing is: where policymak­ ers sometimes still have difficulty convert­ ing the results of scientific research into action – how long did it take for significant climate measures to be taken – they seem to take the results of experimental eco­ nomics to heart. “RCTs are currently the best we have to demonstrate causal links ­between economic measures and their ­effects,” Cettolin explains. “That just can’t be ignored.”


“Sometimes research resembles a thriller”

Jasmin Gider (36) is a globetrotter. Bonn, Bayreuth, London, ­Singapore, and Toronto feature on the resume of this child of a Turkish father and a German mother. And now, for a year, Tilburg does as well. That is where the Finance lecturer feels like a fish in water. “I have colleagues from Italy, Spain, Belgium, and the Netherlands, but also from Turkey and Iran. I’m learning new things here every day in an ambitious environment. What more could you want?” As a child she already had an enquiring mind. Laughing, she says: “My parents say I asked too many questions, and I was ­never satisfied with the answers.” At university, she studied economics and philosophy. “They go well together. Philosophy taught me to tackle problems in a structured way.” On the table is the book White Collar Crime by Edwin H. Sutherland from 1949. “I’m very attached to it. Sutherland describes the financial crimes of the 1930s and 1940s in a powerful way. He also coined the term ‘white-collar crime’.” Our conversation touches on one of her specialties, insider trading. We discuss the world of CEOs, lawyers, and tax specialists involved in large (exchange) transactions. Anecdotes fly across the table. For example, about the CFO who complained at a meeting of Alcoholics Anonymous about the stress he was under from an upcoming takeover of the company. Another AA member then bought shares and became rich. “Who is wrong in this case? The CFO who pours out his troubles, his fellow sufferer, or both? It’s a gray area that leads to notorious cases. A hedge fund manager made seventy million dollars through insider trading, but also received an eleven-year jail sentence.” She sees a parallel with science. “Sometimes ­research resembles a thriller – you never know how it’s going to end up.” –PdJ

Tilburg University Economics and Management | Research Special | New Scientist | 17


Jasmin Gider, Assistant Professor in Finance

Tilburg School of Economics and Management in facts & figures


worldwide in Business ­Administration according to Shanghai ARWU 2019


in Europe according to UT Dallas Top 100 Business School Ranking 2019


in Europe and


worldwide in Finance according to Shanghai ARWU 2019


Economics and Business ­students, 26% of whom are ­international


in Europe and


worldwide in Business and ­Economics according to the Times Higher Education Ranking 2020


scientists, 50% of whom are ­international


in Europe and


worldwide according to ­Economics & Business News Ranking 2020


PhD dissertations in 2019

Tilburg School of Economics and Management contributes to a large number of socially relevant topics by conducting top-level international research into, among other things, sustainability, entrepreneurship, innovation, market governance, and the ageing population.



in Europe and

Man of extremes From the fastest sports records to maximum insurance coverage: John Einmahl focuses on extreme values. In doing so, he himself ­combines two extremes, namely fundamental mathematics and practice-based research.

20 | New Scientist | Tilburg University Economics and Management | Research Special

By Yannick Fritschy


hat is the highest we can achieve? What is the worst thing that can happen to us? We want to know what the ­extreme possibilities are in all kinds of ­situations. But these boundaries are not always easy to define. Professor John Einmahl specializes in research into extreme values. This is a branch of mathematical statistics, an applied area of mathematics. “Actually, I focus on fundamental math. 80 to 90 percent of the time I’m proving theorems to understand how something works,” he says. At the Faculty of Economics, Einmahl’s work is, therefore, classed as highly theo­ retical. But for mathematicians, it is very practical. Because research into extreme values has many applications, from the world record for the 100-meter sprint to insurance damage in the event of a largescale catastrophe.

Kipchoge, who did not run an official race. “In our prediction, we ­assumed that the average quality of the top runners would remain the same over the years. That seems to have been the case with the 100 meters in recent years, but not with the marathon,” explains Einmahl. “In addition, for marathons you have to take into ­account changing circumstances, such as the course and whether the runners run in groups or alone.” But why do statisticians focus on pre­ dicting sports records? “It’s less important to society than research into insurance benefits, for example, but it’s something that attracts a lot of people,” says Einmahl. “Our research was published in leading journals and received a lot of attention in international media.”



Fastest Faster, higher, stronger. Following the Olympic motto, athletes continually set new, unfathomable records. Only last year, Kenyan Eliud Kipchoge was the first ­human to run a marathon in less than two hours. Where does it end? Together with Tilburg colleague Jan Magnus, Einmahl predicted extreme ­records for the 100 meters and the mara­ thon in 2006. For the 100 meters, they ­calculated 9.36 seconds as the ultimate top time. A time that was considered ­impossible fifteen years ago, when the world ­record was at 9.79 seconds. But when ­Usain Bolt ran the 100 meters in 9.58 seconds in 2009, the statisticians’ ­prediction suddenly turned out to be ­realistic. On the other hand, the marathon was a lot harder to predict. In 2006, Einmahl and Magnus decided that the world record would remain just over two hours and two minutes in the next few years. Now the world record is 2:01.39 – and even under two hours if you include the time set by

If you look at a graph of life expectancy at birth in the Netherlands, you see a clear increase from 71.4 years in 1950 to 81.8 years in 2018. So, on average, we are living longer and longer. You would, therefore, expect that the maximum age a human can reach would also shift further and further. But that does not seem to be the case. In 2017, Einmahl, together with his son Jesson and Laurens de Haan, applied the theory of extremes to our maximum lifespan. It turned out that we have been hitting a wall since 1986, and that wall is set at approximately 115 years. There is a margin of error, you could reach 120, but it seems that no one can reach 200.

“In the 100-meter sprint, Usain Bolt only goes a few percent faster than number one hundred” “Some researchers claim that there is no maximum age. Our research shows that there is,” says Einmahl. “This is a very strong point of extreme value theory: you

can determine whether there is a limit to something. In other statistical research, you have to choose in advance whether to use a model with or without a limit.” How can the average age increase, but not the maximum age? “In the past, people more frequently died at a young age,” says Einmahl. “But I don’t know why you can’t live to be 200. I’m not a biologist.”

Most disastrous A dike must be high enough to withstand the strongest storms. But how high is high enough? You can make the dike tens of meters high just to be sure, but that costs a lot of money and is bad for the view. It would be better to have a dike that is just high enough to (almost) never flood. In the Netherlands, it has been established that a flood like the one in 1953 may only occur once every 10,000 years. With extreme ­value theory, you can calculate which dike height corresponds to this. Similar research is carried out into the maximum strength of an earthquake, for example in Groningen. Based on this, you can determine what type of foundations the houses in the area should have. Another important field of application of extreme value theory stems from this. ­Suppose a catastrophe were to occur, how much money would an insurance compa­ ny have to pay out? An insurer wants to have sufficient reserves not to go bankrupt in such a case. But, on the other hand, they do not want to require premiums that are too high, because then customers will switch to the competitor. The maximum payment in the event of a calamity is a lot more difficult to calculate than sports records or maximum life ex­ pectancy. “In the 100-meter sprint, Usain Bolt only goes a few percent faster than the number one hundred. And the oldest person is only a few percent older than the hundredth on the list of oldest people,” says Einmahl. In the case of the largest ­catastrophe imaginable, the amount of the damage is no less than twenty times higher than in the number forty on the list of larg­ est disasters. As a result, the total payout is very difficult to predict, which makes the research a lot more exciting. We can’t ­perform miracles, but we use the best methods to predict these things in the best possible way.”

Tilburg University Economics and Management | Research Special | New Scientist | 21

Seduced by a

label Supermarkets and food manufacturers are masters in manipulating our buying patterns. Can and do they want to seduce us into a healthier and more ­sustainable pattern of consumption? Arjen van Lin analyzes the effect of labels, nutritional values, and large price discounts on what we put in our shopping carts.

Text by Sebastiaan van de Water


young woman in a waisted jacket stands in front of a bin full of blue plastic packets. Her pursed lips betray doubt. The contents of these shiny bags have little to do with the ideal of sustainable wholefoods. Yet here is an opportunity that cannot be missed, ­according to a white-and-orange sign with the image of a rodent. These are the “ham­ ster weeks”. And so, at this Albert Heijn XL supermarket in Tilburg, Unox instant noo­ dles are “buy one get one free”. These kinds of large price discounts are an important weapon for Albert Heijn, as ­Arjen van Lin, Assistant Professor of

­ arketing at Tilburg University, knows. M “Albert Heijn is not an EDLP supermarket. So, they don’t have ‘everyday low prices’, but rather, they use the hi-lo format. They attract customers with extreme discount promotions, hoping that they will also fill their shopping carts with more expensive items.” But Albert Heijn’s tactics are under ­attack. “The British government has asked supermarket chains to stop all buy-oneget-one-free promotions,” says Van Lin. “The fear is that people will be tempted to buy more than they can eat, after which they throw out the remains.” But is this assumption correct? Van Lin and his fellow researchers have analyzed the buying and throwing-out behavior of households. “Our data suggest that people

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“Why do people buy what they buy? This question is still at the heart of my research”

seem to be more aware of products pur­ chased during promotions. For example, they are quicker to freeze the items.” So, super discounts do not make us any more wasteful. Still, the young woman is not yet convinced. She takes up one of the blue packets in her hands and squints. Hidden behind the flap are the ingredients, printed in small letters. If it had had ‘made in Chernobyl’ on it, she could not have thrown the packet back into the white bit faster than she does now. Resolutely, she walks away from the pile of dehydrated dough with palm fat, sugar, and salt. If only everyone shopped that conscien­ tiously. Politicians would like nothing more, in view of rising healthcare costs. That is why more and more traces of (gov­ ernment) campaigns to make us consume more healthily are becoming visible in ­supermarkets. But are these initiatives ­going to work? If anyone can answer that, it is Van Lin. His blond hair reached his shoulders when

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“The number one factor, especially for low-educated classes, is still the price”

On the shelf, the Nutri-Score letters hardly stand out between the hundreds of jars full of logos and labels. BRAM BELLONI

he started an after-school job at C1000 as a fifteen-year-old student. Stocking milk ­cartons, he worked his way up to shift ­manager of a team of shelf stockers in more than seven years. In the meantime, he completed his secondary education and a degree in marketing in Tilburg. “I became interested in the question: why do people buy what they buy? That issue is still at the heart of my research.”

Healthy letters With Van Lin as your guide, a visit to a ­supermarket feels like wearing the truth goggles from the science fiction film They Live. He explicitly shows you things that normally only affect you subliminally. “Look, this is interesting,” says the assistant professor, pointing to a detail on a jar of HAK apple sauce. “We’re going to see this much more often in the future: the Nutri-­ Score. One value, from A to E, to ­represent the health value. The Dutch ­government wants to put a lot of effort into this and has already involved several companies. The score on this jar is remarkable, by the way.” The packaging shows a green box with an A. A jar of red cabbage with apple gets a B. Lower scores are nowhere to be found. Coincidence? “Due to European rules,

­ utri-Scores are not mandatory. Compa­ N nies are allowed to decide for themselves whether they put a D or E on the packag­ ing.” Will the Dutch consume more health­ ily as a result? Van Lin pulls the same face as the woman did earlier at the bin of ­noodles. He is familiar with the ­studies that “prove” that people react positively to the new labels. “Yes, when they choose be­ tween two jars in a lab setting. But on the shelf, surrounded by hundreds of jars full of logos and labels, these letters hardly stand out. This will probably not be enough to help lower educated segments of the population in particular to consume ­differently.”

Stop sign Van Lin knows of better solutions. “People are more sensitive to negative information. In Chile, they cleverly responded to this fact. There, all products with excessive ­sugar, salt or fat have a black warning label on them in the shape of a stop sign. Our research shows that this can be effective, depending on the product category. Come on, I’ll show you something.” Van Lin walks straight to the path of munchable products and grabs a bag of

24 | New Scientist | Tilburg University Economics and Management | Research Special

Lay’s chips from the shelf. “Look at the ­bottom left.” There are four numbers: the quantities of sugar, fat, saturated fat, and salt. The highest values are red. “Lay’s is owned by Pepsico. They place these ­numbers on all their products in the name of transparency. But not always in the same way.” The researcher walks to the next isle, where the boxes of Quaker’s Cruesli are. These boxes also have the ­nutritional values on the front. “But now there are no colors. They’re less conspicu­ ous. There may be an idea behind this. ­People know that chips or ice cream is ­unhealthy. A few colors will have no effect on consumption. That’s also the case in Chile. But thanks to marketing, breakfast cereals enjoy the reputation that they are a ‘good start’ to the day, even though some are full of sugar. Our Chilean research shows that warning labels on breakfast ­cereals do inhibit sales. It’s probably no co­ incidence that Pepsico, owner of Quaker, avoids colors that stand out on breakfast cereal.” Companies like Hak and Pepsico know very well how to embrace noble health la­ bels without jeopardizing their own profits. Does this make changing consumer behav­ ior a mission impossible? Van Lin: “No. But we have to realize that factor number one, especially for low-educated classes, is still the price. A sugar tax could be effective. But a combination of eye-catching labels and discount campaigns that capitalize on them is also a powerful option. Because it is certain that ‘buy-one-get-one-free’ pro­ motions work. I know that from more than just data. My own garage is full of supplies bought during hamster weeks.”


“I don’t have a brush, I have data”

Energetic. That’s Christoph Sextroh (35) in a word. He talks nineteen to the dozen about his work, but also about his other passion: art. He proudly shows off the silkscreens on the wall of his office. Images of a steak and sausages. “Art, like science, studies society. For me, art is a source of inspiration to look at reality in a creative way. Out of the box thinking. As a scientist, you also have to be creative in ­coming up with solutions. Only the toolbox is different. I don’t have a brush, I have data.” Sextroh grew up in the German city of Westerstede, near Bremen, an hour’s drive from Groningen. In high school, he was not a nerd (yet). He was a drummer in the Drammerland-Ensemble percussion group, was a member of a local youth parliament, and

made movies of pop concerts for local TV. Friends of his became actors, while Sextroh chose the path of science. Accountancy, his field, fascinates him immensely. “It’s way more than bookkeeping,” he says laughing. “Accountancy is more than just the figures in an annual review. The relevant information may not be in the figures you are looking at, but in the communication around them. The world of financial information has changed dramatically in the last ­decade and continues to do so. Society expects much more openness from companies. These days, they also communicate their results via Twitter and Facebook. People share their views about companies on social media and on specialized internet forums.

The accountant is no longer the clerk who produces the annual financial accounts, but someone who actively understands and ­manages all the information about and around the company – whether it’s to provide better information or make better decisions.” He is at home in Tilburg. “The university is an international community, where you keep coming up with new ideas. Everyone here thinks out of the box. The students here are also curious and critical, which makes teaching a pleasure. For me as an academic, it’s not just about producing knowledge, but also about sharing it. Within the field, with society, but certainly with the students, so that they can carry the torch into the future.” –PdJ

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Christoph Sextroh, Assistant Professor in Accountancy


Lending and bubbles Rik Frehen, Fabio Braggion, and Emiel Jerphanion of Tilburg School of Economics and Management are conducting research into the relationship ­between cheap credit (low interest rates) and stock market speculation. They are studying whether access to cheap credit leads to speculative behavior among investors. Given the unprecedented low interest rates at the moment, this is a very relevant question. However, the question is difficult to answer because there may be many reasons why investors take out credit. In order to gain insight into the relationship between the granting of credit and speculation, the researchers dived into history. Based on very detailed historical stock transactions, they are studying the trading behavior of over 15,000 investors involved in the so-called South Sea Bubble in 1720. They conclude that cheap credit contributed to overvaluation and, ultimately, to the bursting of the bubble.


The authors have also written a blog about this research: www.tilburguniversity.edu/tisem/bubble Illustration: cartoon by William Hogarth depicting the chaos of the downfall of the South Sea ­Company in 1720.

Data for a

good cause A solution to social problems may be hidden in the mountains and mountains of data that humankind produces on a daily basis.

Hein Fleuren

Text: Ans Hekkenberg


he amount of data collected by hu­ mankind over the past two years is greater than that of all previous years put together. These are the

billions of Whatsapp messages we send every day, as well as patient data, stock market information, and the data collected by Statistics Netherlands (CBS). These huge mountains of data hide secrets that data science can uncover. With its Data Science for Social Good program, Tilburg University offers its

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Dick den Hertog

r­ esearchers a clear assignment: to search for solutions to social problems that are currently still hidden in data. Dick den Hertog, who led the University’s Impact Program until early 2020, and Hein Fleuren, his successor, introduce three ­projects led by researchers from the Facul­ ty of Economics.

Nutritional data


an you feed hungry mouths with data? According to the Zero Hunger Lab you can. With this project ­Tilburg scientists want to combat food shortages. Their main achievement: a mathematical model that improves the efficiency of the emergency aid chain in areas affected by famine. “We are working with the World Food Program of the United Nations,” says Hein Fleuren, initiator of the project. “The World Food Program provides food for between 80 and 100 million people every year. Behind this effort is a huge logistics operation. Where do you buy food? How do you transport it? How long do you store it? There are so many

factors at play that there are millions of different ways of distributing food.” It is impossible for people to consider all these scenarios. The mathematical ­model that Fleuren’s students created can do just that. This led to considerable efficiency gains in the distribution of food parcels. “Our model was used in Yemen, where 17 ­percent more people now have access to emergency food, with the same budget as before. We were also able to reduce the cost of Syrian food parcels by 12 percent,” says Fleuren. The intention is to eventually deploy the Tilburg model in all countries where the World Food Program is active.

Personal plan



“We can use data to make companies richer. We’d rather help people who need it”

ow do you draw up the best radiation treatment plan for a patient with cancer? You have to take into account the location and size of the tumor, but also the location of the healthy organs around it. From which ­directions is radiation best, and for how long? For a doctor, it is almost impossible to come up with the optimal plan, because there are many different factors involved. As a result, the ­answer differs from patient to patient. Again, data science can open doors. “We can ­create a model that calculates the best solution,” says Den Hertog. The model considers different scenarios, with radiation from different angles and with different intensities. “From a large pool of possible radiation plans, you’ll find the best plan.” It is an example of personalized medicine, medical treatments tailor-made for an individual. It is an ultimate goal for many doctors. “It can be ­realized with smart mathematical techniques,” says Den Hertog. “We can find the best radiation treatment plan in 30 seconds.”

A good start


hen you were born, did your ­parents own their own house? Congratulations! Chances are you will have a great job as an adult. Statistics Netherlands data shows that children who grow up in a privileged environment develop better, are less exposed to crime, and have a wider choice of careers than children who do not. “Where can we find vulnerable young people and what can we do to help them? These were the questions that led to the Smart Start project,” says Fleuren. The Smart Start researchers want to forestall problems. Dick den Hertog: “When a child gets into trouble, it’s really too late. You do what you can to support such a child, but it’s like trying to empty the ocean with a thimble. That’s why we want to identify families where problems may arise at an early stage and offer them positive support.” To achieve this, the researchers are studying data from Statistics Netherlands, the Dutch Mental Healthcare Association, and the food bank. They are looking for characteristics with which to recognize a vulnerable family. “For example, parents with a low level of ­education and debts – two ingredients that can lead to fewer opportunities for children,” says Den Hertog. One of the Smart Start pilot projects is taking place in the municipality of Heusden. When a child is born there, parents with “vulnerable characteristics” receive an offer of coaching in the future. Den Hertog: “Like a baby care package, but only for those groups that need it.”

Hein Fleuren and Dick den Hertog are at­ tached to the Faculty of Economics. How did they become involved in research projects that seem so far removed from the economy? Den Hertog: “The mathematical methods of data science are generic. You can apply them to business – I’ve spent years doing just that. But you can also use them for applications that make society better.” Fleuren agrees. “As data scientists, we can make rich companies richer. Or we can help people who need it. With these programs, we are opting for social impact.”

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opinie interview

“Information technology weakens our cognitive skills�


30 | New Scientist | Tilburg University Economics and Management | Research Special

If we rely too much on technology, without thoroughly training its users, we give up control and with it our freedom, warns Anne-Françoise Rutkowski.

By Fenna van der Grient


nformation technology, better known as IT, has many bright sides. IT connects people worldwide, disseminates infor­ mation at lightning speed, and contrib­ utes to better medical care. But on the oth­ er hand, there is a dark side that is o ­ ften underestimated and can cause m ­ ajor problems. Professor of Information Man­ agement Anne-Françoise Rutkowski stud­ ies how we can arm ourselves against this dark side and wrote the book Emotional and cognitive overload – The dark side of Information Technology with Carol Saunders of the University of Central ­F­lorida.

had fifteen minutes between the occur­ rence of the problems and the crash. This proved to be insufficient to get to the bot­ tom of the problem. A combination of too much information, limited time, and lack of training can lead to poor decision-making.” How can you prevent disasters like this?

“Training is essential. And, in a broader perspective, good education. I think there are long-term effects of IT of which we are not sufficiently aware, especially effects on children. They are the first generation to grow up with this amount of technolo­ gy, even at school. Research shows that the use of IT in education affects the way in which children process information. For example, researchers found that neu­

What is the dark side of IT?

“Information technology overloads the brain. Thanks to technologies such as the Internet and smartphones, more informa­ tion comes at us than our brains can han­ dle. The effects of this can be ­divided into an emotional and a cognitive component, which affect each other. The emotional component includes issues such as stress and problems with work-life balance. At the same time, it appears that IT can weaken our cognitive skills, which is reflected, for example, in impaired decision-making skills. The latter, in combination with time pressure, can have disastrous consequences.”

“We need a better understanding of how the ­algorithms behind these technologies work” ral activity was far more enhanced in chil­ dren who had practiced printing by hand than in those who had simply looked at letters on a screen. Excessive IT use also leads to a loss of concentration. They’re losing really important skills.”

What kind of disastrous consequences?

Will IT give them new skills in return?

“In the cockpit of an airplane, good deci­ sion-making skills are essential. We have published about crashes of Boeing 737 MAX aircraft. Boeing assumed that, on average, the pilots only need four seconds to decide upon a course of action, even if the source of the problem is not com­ pletely clear. Following the crashes of the 737 MAX, Boeing now acknowledges that pilots need about ten to fifteen seconds. The level of training obviously plays a ma­ jor role here. In 2009, an Air France plane crashed into the Atlantic Ocean. It was lat­ er shown that one of the causes was that the co-pilots were not well trained. They

“They do indeed acquire other skills, such as flexible and interactive learning. But we don’t yet know what the exact impact is of a lot of IT use on their brains. And that’s dangerous, which is why psychiatrists ­recommend using less IT in education. German psychiatrist Manfred Spitzer even considers Steve Jobs schools, where ­children learn everything via the iPad, to be child abuse. There are advantages, but they don’t outweigh the disadvantages, such as addiction and hyperconnectivity.” How does IT overload the brain?

“IT produces huge amounts of informa­

tion that many people can’t handle. ­People are often blamed for this: we are too slow, we make mistakes, we get over­ loaded, and become stressed. In our book, we use the blender metaphor. ­Imagine that your brain is a blender with information being added in the form of pieces of fruit. If your blender’s engine is strong enough, you can turn it into some­ thing manageable. If you throw too much fruit in the blender at once, you can’t pro­ cess it properly. You end up with indigest­ ible chunks.” Can IT itself also provide us with a solution for the overloading of our brains, or do we have to look for that solution outside the digital world?

“Artificial intelligence can help us, but the danger is losing control. Think, for example, of the problems we have with Cambridge Analytica, which influenced elections via Facebook. We need a better understanding of how the algorithms ­behind these kinds of technologies work. If we rely too much on technology, without training people to understand the artificial intelligence and the algorithms behind it, we give away con­ trol and, with it, our freedom. Think of arti­ ficial intelligence as a blender with a very strong engine that can help you mix. You may have fewer problems with indigestible information. But if you don’t know what the input is, you have no control; you don’t know whether you will end up drinking strawberry, banana or potato.” Is there a world possible in which we experience the joys but not the burdens of IT?

“I think so, but we will always have the problem of globalization. For example, there are companies and countries that are making good progress in the area of work-life balance. Mercedes, for example, gives its employees the option of automat­ ically deleting all emails received during holidays. A new labor law in France gives employees the right to disconnect outside of working hours. But the problem is that companies in these countries communi­ cate, trade or compete with companies in other countries. Different rules apply there, and it’s usually not the healthier country that wins.”

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