Professor Paul De Grauwe on his career: “Don’t fall in love with the theory”

MAASTRICHT. Monday morning, 11 January, Tongersestraat 53. Members of staff from the School of Business take their seats in an intimate setting for a lecture by professor Paul De Grauwe (Ukkel, 1946), the international economic authority who will be appointed honorary doctor at Maastricht University this afternoon. He will not speak about his hobbyhorse – the euro – this morning. Honorary supervisor Joan Muijsken has invited him to speak about his career as an economist: what made him who he is today? What changed his views? Who inspired him? In other words, The making of an economist.

ImageHandler.ashx“We must remain critical about our theories and ourselves,” De Grauwe starts off. “We must try to prevent ourselves from falling in love with our own theory. If you do fall in love, something that has also happened to me, then it becomes very difficult to estimate the value of inconsistencies in the theory. You are inclined to push them aside or disregard them. Cognitive dissonance is lurking.”

As a young researcher, De Grauwe fell for the Efficient Market Hypothesis: just let the market do its work, government should not get involved. Later on in his career, he started to doubt this and he saw the limitations of the free market, which for example, did not consider those who were weaker or the environment. After some time the homo economicus – “the cornerstone of our profession”- fell from his pedestal, partly because he had read the work of the Portuguese neurologist and writer António Damásio. “One of the books that Damásio wrote, was Descartes’ error. He discovered that after a brain disorder, people who have no emotions, but do have power of reason, find it hard to look after themselves. You need emotions to be rational. That was an eye-opener for me. Emotions play a role, we had better take them into account.”

De Grauwe was involved in Belgian politics for twelve years. How does the academic world compare to politics, someone in the audience wants to know. “I was in parliament and that enriched me but also frustrated me. If you want to achieve something in politics, you have to be very ambitious and want to fight. I didn’t want that and was a backbencher. I don’t want to belittle politicians. They have an impossible job to do. People expect a great deal from them, but they can never live up to those expectations, because they always have to compromise. Subsequently everyone feels betrayed by them. We are often cynical about politicians, but I now know that they are not stupid and they are often just as honest as you and me. I personally experienced how difficult it is to bring about change. In theory, we know how something should be done, but in practice it is seeking a balance: between what you want – the first best – and the compromise that you must make. If you are not careful, nothing will be left. I was not good at that, I was driven by the first best.”

This article was originally published in Observant, the independent weekly of Maastricht University. 

Watch Prof De Grauwe’s 11 January lecture, “My Economic Thoughts Revisited,” and last year’s lecture, “Is the Eurocrisis Over?

There is one comment

  1. Martin

    In my view, the title is misleading. There is a difference between the title “Don’t fall in love with the theory!” and the quote “We must try to prevent ourselves from falling in love with our own theory.” I strongly disagree with the first, but I support the second statement. The title statement will be mistaken as a plead against doing theory in general, but I am sure that this is not what Paul De Grauwe intended to say.

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