Farewell to Eric van Damme: Ministerial policy is too political and lacks sufficient scientific basis  

by Clemens van Diek 

Exit homo economicus 

Van Damme has tried to capture this complex reality using models of game theory. While these games center on the economy – the stakes – first and foremost they are about people and the choices they make. Through experiments, it became clear to Van Damme that in most cases the (neo)classical principle of homo economicus does not hold true. When it comes to the behavior of homo sapiens, rational thought is in short supply. All kinds of emotions come into play: solidarity, justice, power, and status. Ignorance plays its part too. We often make decisions based on limited information. Isn’t economics also about studying the behavior of these bumbling humans and their emotionally driven actions? After all, there are people behind all those macroeconomic figures that form the basis of the budget, national forecasts and corporate balance sheets.  

Absolute highlight: speaking at John Nash’s Nobel Prize ceremony  

An impressive academic career  

As he goes from professor to professor emeritus, Eric van Damme can look back on an impressive academic career spanning 44 years. In that time, he has supervised 35 PhD students, served on dozens of PhD committees, written over 700 articles on a host of economic topics including competition, regulation, monopolies, auctions, coordination, various market types (power, mail, taxi, healthcare, water) and even happiness. His work has appeared in leading international journals, in Dutch-language publications and in studies commissioned by regulators and government departments. His résumé contains the full details. He also believes it is important for the deeper scientific message to rise to the surface. But substantiated by clear arguments! He did his bit from 1999 to 2005 by writing columns for national newspaper AD and as the firm advocate of a Code of Conduct for Economists. In his view, this was needed to counter those so-called experts peddling misguided interpretations and exaggerated notions in the media. He felt strongly that people’s confidence in economists and the reputation of economics as a whole was being undermined by the idle chatter served up by some of his fellow academics. Talk about beauty and the beast!  

Lecture in Stockholm  

The highlight of Van Damme’s career came in 1994, when he had the privilege of giving a lecture in Stockholm, in honor of John Nash when he was awarded the Nobel Prize in Economic Sciences. The game theorist, made famous by the Oscar-winning film A Beautiful Mind, had barely recovered from a period of mental illness and was unable to deliver the prestigious lecture to the Nobel Prize Committee himself. Eric was one of three economists invited to hold a lecture in his place, explaining the significance of Nash’s work.   

“The Nobel Prize is the highest award in our profession,” he explains. “To stand on that stage was an absolute honor I think back on that solemn ceremony with real pleasure. Several Nobel prizes have been awarded to game theorists, and my work was often cited in theirs and was included in the bibliography. That was also the case in 1994.” In 1998, he brought Nash to Tilburg. Nobel laureate Reinhard Selten also played an important role in Van Damme’s career, as co-supervisor on his dissertation Refinements of the Nash Equilibrium Concept (Springer 1983). After working at TU Delft, the German professor invited him to work at the University of Bonn in 1986.  

  I can be difficult sometimes   

An early setback  

This career path was by no means a given for Van Damme. Although he was a bright kid in elementary school, young Eric screwed up his high school entrance exam: at the time, this put higher education out of reach for a boy from a village in the rural backwater of Zeeuws-Vlaanderen whose father was a farm laborer and factory worker and whose mother was a housewife. But his teacher Mr Lammens could see the boy’s potential and recommended him for a high school that offered him some prospects. With barely a hitch he worked his way through the tiers of the Dutch education system and gained admission to university, studying mathematics in Nijmegen. Much to the pride of his family and the entire village!  

“My parents were humble people. I got my norms and values from them. I was raised not to interrupt someone when they are speaking. But I can be difficult sometimes. I stick to my principles, but I don’t think I am a bad person.”  

Quasi-academic nonsense   

Van Damme quickly learned to jettison his aversion to interruptions after attending his first game theory conference in Germany, where speakers were constantly being interrupted by audiences eager to get to the essence of what was being said. Although this was new to him, he went on to apply that experience in seminars and workshops in Tilburg. University executives also found themselves having to deal with his critical views. If he felt strongly about something, he was quick to put pen to paper. This could take the form of an open letter or, as in 2014, a full-blown petition entitled Put Researchers First, For a Better Tilburg University. He accused the Executive Board of not having a clear mission or an academic identity, and of having too little regard for science and scientists. He criticized the board’s strategy document as being full of “quasi-academic nonsense”. Looking back, he says, “That may not have been the wisest approach to take. It didn’t have much effect either.”  

CentER: putting Tilburg on the map  

Another career highlight was Van Damme’s time at CentER. Econometrician and pioneering dean Arie Kapteyn brought Van Damme to Tilburg in 1989, where he was appointed to the university’s newly established Center for Economic Research. There he would later go on to hold various administrative positions, including Director of Graduate Studies.  

CentER was to become a prestigious research center that put economics in Tilburg and the Netherlands back on the global map. Before this upsurge, a critical report had insisted that economics in Tilburg had no future. Thanks to the likes of Van Damme, Rick van der Ploeg, Ton Barten, Helmuth Bester, and later Harald Uhlig, Peter Bossaerts and Lans Bovenberg, Tilburg received an unprecedented macro- and microeconomic boost, largely due to a vibrant academic culture involving a host of prestigious seminars and guests, including Nobel laureates such as Nash, Selten, Sen, Tirole, Kahneman, Aumann, Stiglitz and Imbens. Everyone, from general economists to business economists, was encouraged to benefit from these developments. An essential part of this transformation was the founding of the Graduate School, with a program in Economics and later Business. Both received recognition from the Royal Netherlands Academy of Arts and Sciences (KNAW). Many young PhDs found their way to Tilburg. By the mid-1990s, the faculty had rocketed up the rankings to first place in Europe based on its research output. Every member of the faculty was given a desktop flag bearing the slogan #1 in Europe.   

In name, CentER still exists but as an institute it has been absorbed into the faculty. “The culture of CentER has been preserved and strengthened,” Van Damme comments.“Now the entire School of Economics and Management at Tilburg is in a good place. Initially, this was achieved at the expense of education, an imbalance that then had to be corrected. There are no free lunches.”   

Applicable research must be evidence-based

Impact  

Impact is now the order of the day...  

“Applicable research and being of service to society is fine, but it has to be evidence-based. When you focus on impact, you often find yourself too close to the practicalities. The flow from science to policy becomes difficult. In the ‘inventory-analysis-recommendation’ cycle, it’s analysis – the role of science – that often suffers.”  

Which aspects of your own research would you call successful in terms of impact?  

After some thought, Van Damme replies, “We’ve actually done more policy research that hasn’t been adopted.... but as TILEC we did write influential pieces on the mail market. And science-based auctions were introduced as a result of our research.”  

Government departments driven by politics  

Among regulators such as the Netherlands Competition Authority (NMa) and the Authority for Consumers and Markets (ACM) there is more expertise to be found than in government departments, where the important work is done. “But ministerial policy is too politically driven and lacks sufficient scientific basis. People also come and go too quickly. Knowledge transfer is not working as it should.”  

How can that be changed?  

“You need to select people on the basis of the quality they offer and their relevant knowledge and skills. Then you need to retain them in the same area for longer, so that they have time to keep knowledge up to date. Policy should not be driven by management but by expertise. We live in a knowledge society, don’t we? Hospitals have PhDs in all their important positions, as do regulators and supervisors. What’s the situation in government departments? I reckon they are less well-represented there.”  

There are roughly 100 key questions in the economics catechism

Improve economics education  

As a member of the Teulings Committee, Van Damme helped modernize the high school economics curriculum. “Arnold Heertje emphasized that economics is about scarcity and money,” Van Damme says. “But people are at the center of the economy. Heertje also said as much, but that part of his message was evidently not understood. There are roughly 100 key questions in the economics catechism. You have to teach the answers to those questions. What exactly is economics? What is central to the field? What do economists do, and why?”  

However, economics teachers tend to be rather conservative when it comes to ‘their’ curriculum. They form a distinct group, one that does not welcome change. There is a lot of opposition. But Eric argues that you need to win them over.  

Today’s textbooks feature more microeconomics. Does that mean we’re getting there?   

“No, we still have a way to go. Who knows, that’s a process I might get involved in. But first things first: it’s time for a vacation, rest and devoting more attention to my family. Something that’s been lacking all these years.”  

As a grandpa, Eric will soon have his work cut out for him. His first grandchild arrived in 2022 and the second is on the way.  

Do you look back with satisfaction?   

“My contribution at CentER was marginal. Arie Kapteyn was the creative force. I was more about the structure. As Graduate School Director, I made my contribution to the seminar culture and establishing a Scientific Council with top economists from my network. What I am proud of is my scientific impact, particularly the frequently cited article I co-wrote with Hans Carlsson (2). The fact that my work has also been used outside of game theory, by the US Supreme Court for example, is another source of pride. It’s extremely rare for academic work from outside the US to influence the highest level of US lawmaking. And Stockholm 1994, of course. Yes, all told, there’s reason enough to be quite satisfied.”   Ever the modest man from Zeeland.