Expedition econometrics

Text: Trio MedienService Bonn

In the fields of labour and health economics Gerard J. van den Berg is a world leader. He investigates how economic conditions in childhood influence later life and develops his own methods for his empirical studies.

“Econometrics is like a voyage of discovery,” says Gerard J. van den Berg. “I distil information from a wealth of data that isn’t directly visible, but is important economically.” He analyses people’s individual sets of data, correlates them and then draws his scientific conclusions. Quantifying the relationship between economic causes and effects with the help of statistical methods is the essence of econometrics. The Dutch researcher belongs to a mathematical-empirical school of thought within the broader field of economics and develops his own methods of analysis which colleagues also use later to investigate econometric questions. “In econometrics we have to make sure we avoid seemingly logical, but nevertheless incorrect conclusions. That’s why the development of analytical methods is a major part of my research,” says Gerard J. van den Berg.

His life so far clearly illustrates that he is one of the ten top economists in the German-speaking area: in the latest rankings of the financial newspaper ”Handelsblatt” he is placed ninth out of a total of 250 economists.

The Humboldt Professor is particularly interested in long-term effects, such as the factors that influence the length of employment and unemployment, or how living conditions experienced in childhood affect health in adulthood. Van den Berg has carried out numerous studies examining the effects of government policies on the labour market: for instance, whether a reduction in unemployment benefit leads to people finding work more quickly, or whether further education and training reduce the length of unemployment. He based one study on the data of all the people registered as unemployed in Sweden from January 1993 to June 2000 to analyse the effects of a particularly costly and time-consuming training programme.

The results of the study are ambivalent: at the end of the training programme the participants did find employment faster than others, but this effect did not last long, and the total duration of unemployment was not reduced. “If we include the weeks spent at the educational facility in the length of unemployment, the net effect is nil,” explains van den Berg. Although as a researcher he does not want to get directly involved in politics, he still wants to contribute to improvements. “If our research results have a positive impact, then I’m satisfied.”

Distribution of opportunities in early life

Another of van den Berg’s major fields of research is health economics. “Our analytical methods are similar to those we use in labour economics. After all, we’re looking at large time spans here as well: How long does a person remain healthy? How long is his or her life span?” explains van den Berg. He adds that health economics is new research territory where “many extremely interesting results” can be gained. The questions he explores are socio-politically explosive, for instance to what extent does a family’s economic situation at the time of a child’s birth and during its early development help to determine life expectancy? The focus here is on equality, or inequality, of opportunity from the very start.

However, van den Berg does not draw direct analogies between parental poverty and the later health of their children. “That would be too straightforward. Too many other factors are involved. Personality and the parents’ level of education are important, as well as the value they attach to education. These factors play a decisive role in determining the family’s standard of living and the way the children are raised,” he says. In order to exclude individual factors he compares the life spans of people born during a recession with those of people born during an economic upturn. An economic crisis affects many households; it is a temporary negative shock of an external nature which leads to a deterioration in the situation of most families.

The result is unequivocal. In the cases of several countries van den Berg was able to show that “recession children” die earlier than others. One of his studies is based on 14,000 sets of data for people born in the Netherlands between 1812 and 1912. Another uses the data for Danish twins and shows that the life expectancy of a 40-year-old person is reduced by eleven months if he or she were born during a recession. In this case the risk of a heart attack or a stroke is significantly higher than among “boom babies”.

Although the data in these studies are taken from the last two centuries, van den Berg sees parallels to the present. People in those days also suffered from stress, when their livelihoods were threatened. The impact of stress on life expectancy is one of the themes that he wants to investigate in Mannheim together with physicians, sociologists, demographers and epidemiologists. Van den Berg says that discussing research approaches and sharing opinions with other experts is now one of his most important methods of work. That is why he intends to use a large part of the funding to finance positions for junior scientists and to build a new research group for empirical economics.