Having a Nobel Prize recipient as part of the staff is considered by many university ranking systems as a great indicator of the quality of the education of that institution. Directly benefiting from the presence and experience of such a person is less of a straightforward consequence.
In the spring semester of this year Mr Tirole (2014 Nobel Memorial Prize in Economics Sciences recipient) decided to give a series of conferences on various economic topics.
The goal of these lectures was to give students an insight into how economic intuition was built, and how the theories of the last decades were actually getting their intuition from very simple modelling.
Jean Tirole tells us more about the genesis of this conference series: “The idea was to take selected and current policy issues (climate change, unemployment, some specific questions related to business models and antitrust, the financial and Sovereign crises) and to show that simple modelling often goes a long way toward understanding issues and guiding policy.
As in other disciplines the art of modelling consists in isolating economically relevant features in a tractable way and ignoring those dimensions that may be relevant, but whose consideration will not overturn the insights.
The vast majority of economics students will not become researchers, but for all, learning how to approach a complex real-world question through the lens of abstraction and to understand the back-and-forth between this abstraction and reality is part of what it means to become an economist, besides being intrinsically rewarding.”
The lectures covered current issues and policies using a modelling framework, to check for inconsistencies or if the policy was designed to give the right incentives to economic agents. The goal was to illustrate the explanatory power of modelling. These topics were aimed at gaining an understanding of the driving forces of the markets and how to then properly design the policies that will regulate them.
Mr Tirole also tells us more about the benefits of modelling, both before a given policy is implemented, but also to keep research moving forward : “Modelling has multiple purposes. First, modelling forces us to make our implicit assumptions explicit. Second, it helps check the logic of our arguments and to think about caveats concerning our recommendations, pointing at the need for further work. As Dani Rodrick says in his recent book, we employ mathematics not because we are intelligent, but because we are not intelligent enough. Third, empirical work is hard to interpret and provides little guidance for policy without a conceptual framework.”
On the topic of transplanting this type of learning approach to economics, Jean Tirole gives us a balanced approach:
“Obviously this approach cannot substitute for more structured learning. It also requires motivation and intellectual curiosity (clearly students in the class have self-selected, making the exchange with students very rewarding on my side). But it is useful to sometimes step back and think about what it means to be an economist and learn how to approach concrete problems by making use of techniques that one learns elsewhere in the TSE program.”
These lectures were a great opportunity for students to exchange ideas with Jean Tirole and to get to know more about the research in progress and topics that we would not necessarily cover in more conventional lectures.
by Arthur Hill