I Was One of the Few in the Class Who Asked Questions

Jacques-Francois Thisse

Photo: Arina Vorvul

Belgian economist Jacques-Francois Thisse is Academic Supervisor at the Center for Market Studies and Spatial Economics at HSE in Saint Petersburg. In an interview with HSE News Service he talked about why he likes Saint Petersburg, what fascinates him about Russia and how disillusion in Marxist ideas led him to studying market economies.

Early years

I did not attend primary school. As a child, a lot of my time was devoted to studying piano (my father was an orchestra conductor). When I was 12, my father sent me to a technical school, assuming that it would not distract me from music too much. That was not the happiest time for me due to the fact that I never particularly enjoyed dealing with tool-machines or working with my hands. I was, however, very good at mathematics and history. There were a few other kids like me in the school, we were all in a class together. We had excellent teachers, the most influential one for me being my main teacher of mathematics.

After graduating from this school I decided not to pursue a career as a musician, instead, I wanted to study at a university. Because I did not go to a regular high school, I had to take a lot of exams to enter university: Geometry, Algebra, Trigonometry, French, English, History and Geography. Finally, I started studying mathematics at the University of Liege (Belgium).

University

I was a rather good student at the University, and one of the 19 who graduated with a bachelor’s degree (there were 151 of us who started).

Like many other students in the 1960s, I was fascinated by Marxism. I did not want to do pure mathematics (I didn’t think I was a talented enough mathematician), applied maths attracted me more. However, mathematicians have something of a prejudice against “applied” sciences, so I had a hard time finding an advisor who could help me choose a direction. I was trying to figure it out myself, looking at faculties. When I heard about “econometrics” somewhere, I thought that mathematics and economics together was something interesting to study. I found out where the class was held, walked in and interrupted the lecture of a young professor whose name was Ivan Langaskens. I was very lucky he let me stay.

 I read Solzhenitsyn who significantly cooled down my Marxist ideals

I became a graduate assistant of Professor Ivan Langaskens who supported my idea to write a PhD thesis in Economics. But, in order to do that, I needed a Bachelor’s degree in Economics which I had to finish quickly (in two years instead of four).

In addition to my studies in economics, I attended lectures on general equilibrium taught by Professor Jacques Drèze at the University of Louvain. His classes turned my mind over; they were very different from anything I had ever heard before. Every week we received a reading list that we were supposed to go through and prepare questions on. I read everything that Jacques Drèze suggested and constantly asked questions; in fact, I was one of the few in the class who asked questions. So, one day the professor wondered who I was. When he found out that I was a mathematician, he suggested I write a thesis on general equilibrium theory. My academic advisor Professor Lagaskens however viewed the topic as too mathematical. He was more interested in applied aspects of research, he wanted to know how to change things, whereas I was eager to learn why they happen and what they tell us.

I accidentally came across a book by a French professor who composed a fine synthesis of ideas developed by several German economists specializing in spatial economics.

None of my colleagues, however, expressed any interest in the topic at the time.

In 1975, I defended my dissertation. Back then, I was still on the left, politically, so it was more about planning than market mechanisms or competition. By the time I received my doctoral degree, I already had three or four publications, which was a lot for Belgium. As the University did not have specialists in my area of research, three professors on my defense committee were from abroad: Canada, France and the Netherlands.

My wife and I had our first child in 1975 and a month later, I was offered an Assistant Professor position at the School of Engineering of the Catholic University of Louvain where a small department was doing research on urban planning. I taught economics to students – future engineers and architects, and that was a challenging task. After six years, I became Associate Professor. It was during that time that I moved away from the ideas of planned economy and towards market economy. I think there were two factors influencing that move: first, I discovered game theory, and second, I read Solzhenitsyn who significantly cooled down my Marxist ideals. Many people from my generation experienced a similar shift in values. Quite a few mathematical economists started from Marxist ideas and centralized economies but quickly came up against the fact that reality was much more complex.

In 2011 the chapter of my life that is related to Russia and the Center for Market Studies and Spatial Economics at HSE began

Eventually I started to work in industrial organization, strategic behavior of companies, cities and regional development. These topics were gaining popularity; therefore, opportunities to publish in top journals emerged.

I traveled a lot, visited universities in the USA, Canada, France, Israel and Japan. I got several job offers from American universities, which were quite tempting. However, I was the only child in a large family that survived two world wars and the Great depression. I could not move to another continent. So, I went to Paris – the city where my mother was born and that I had known my entire life. From 1989 to 1996 I taught at Paris I – Sorbonne. In 1992 – 1996 I also led the research center of the French school of civil engineering (École nationale des Ponts et Chaussées).

Together with my friends Simon Anderson and Andre de Palma I started working on a book about consumer choice mechanisms. It really captured my attention. I studied many papers in psychology, making photocopies of everything that I found interesting, which, fortunately, my job as a research professor allowed enough time for. I found a lot of useful information in two journals, Journal of Mathematical Psychology and Psychological Review. My knowledge of mathematics helped me figure out the articles in the first journal, which in turn gave me enough expertise in psychology to start understanding the second, purely psychological journal.

You can fight for every old building, prohibit development of new buildings like in Paris and Saint Petersburg, or you can consider the logic of economics – cities need to develop

All this work resulted in the joint publication of a book Discrete Choice Theory of Product Differentiation in 1992 (MIT Press). I would say it is my biggest achievement, something I am proud of. The book is still popular, with about 100 copies sold yearly. We used a few psychological models describing consumer choice mechanisms, as well as game theory models that also describe firms’ strategic behavior and tried to relate these two areas to one another.

In 1996, I returned to the Center for Operations Research and Econometrics (CORE) at the University of Louvain. In 2011 the chapter of my life that is related to Russia and the Center for Market Studies and Spatial Economics at HSE began.

Russia and HSE

I came to Russia for the first time in 2009 when the former rector of NES Sergey Guriev invited me to teach a course in spatial economics. My wife and I spent a month in Moscow. I cannot say that it is my favorite city; however, I loved Saint Petersburg, which we visited for a weekend. The city charmed me with the atmosphere, the architecture, the music.

The next time I visited Russia, I met Sergey Kokovin from Novosibirsk. It turned out that we had many common research interests, in particular, spatial economics and monopolistic competition. I invited Sergey and his colleague Evgeny Zhelobodko to the Center for Operations Research and Econometrics (CORE) in Belgium. We started working together, obtained our first results, and soon, an idea emerged to apply to the Russian Ministry of Education and Science for a grant.

The problem is that Russian and many European academics, unlike Americans, have the habit of judging people, not ideas. As a result, people are afraid to hear negative comments about themselves and refrain from voicing their ideas

I thought it was an exciting opportunity. My family had been interested in Russia for a while. My father - because of music, myself – because of politics, and this gave me a chance to learn more about this country and its history and literature.

Projects at the Center

Our application for a grant was accepted and with the money we set up the Centre for Market Studies and Spatial Economics at HSE. The Centre works on several research areas. First, there is monopolistic competition and its applications to spatial, regional and international economics. Second, we work on projects devoted to determining the role of cities in modern economies. We try to understand the reasons why cities are efficient and what their role is in emerging and developing innovations. So far, there are more questions than answers. For example, are Moscow and Saint Petersburg metropolitan areas, which could be similar to New York or London? Can Russian planners learn from the experience of other countries?

For example, one of the problems that currently face many American cities is the development of large shopping malls in the suburbs, where land is cheaper. As a result, people do their shopping outside of the cities. The city centers get less foot traffic, and, consequently, fewer cafes, restaurants, cinemas, etc. In Rome, Paris or Barcelona the city centers are very busy during nights and weekends. The question Russian urban planners should be asking is: how will activity in their city centres be affected by the development of large suburban activities? Would the malls kill off the city centers?

From my point of view, it is important to find a balance between the two objectives. On one hand, it’s essential to keep the city center alive, as a place where people meet, socialize and spend time; on the other hand – shopping malls outside of the city are really efficient (sellers spend less, which results in lower prices for buyers).

One of the key issues that need to be resolved for Russia to have an adequate tourist infrastructure is related to the behavior of Russian consumers

Another important question is how to develop business activity in the inner city while preserving its historical heritage (the latter being especially important for Saint Petersburg). You can fight for every old building, prohibit development of new buildings like in Paris and Saint Petersburg, or you can consider the logic of economics – cities need to develop. That requires utilizing available space. Saving all the old buildings in the city center is something that only very wealthy countries can afford. The vast majority need to find a compromise.

In this regard, London, with its business district – the City - that fits rather sensibly in the general plan of the city is an inspiring example. The state government should have distinct and consistent policies about such issues.

The Academic Environment

Why don’t universities here cooperate as they do in the US or other countries? Why do universities in Boston organize joint seminars, but not in Saint Petersburg? I suppose one of the reasons for this is that the university system in Russia is still very hierarchical and not open enough to new ideas. If you want academic people to work efficiently, they need to feel confident; they need to be able to talk about their ideas, even if they are not sure that they are good ideas. The problem is that Russian and many European academics, unlike Americans, have the habit of judging people, not ideas. As a result, people are afraid to hear negative comments about themselves and refrain from voicing their ideas.

Tourism in Russia: potential and drawbacks

One of the key issues that need to be resolved for Russia to have an adequate tourist infrastructure is related to the behavior of Russian consumers. They must become more demanding. If you do not like the food in a restaurant, you must complain and get something better. Change will be possible only when consumer will change and start to change the sellers’ bad habits.

Of course, there are also missing or bad highways and trains. There are two beautiful Russian cities located relatively close to Saint Petersburg – Pskov and Novgorod. They are authentic ancient cities, very different from Saint Petersburg, with peculiar architectures. Nevertheless, it is very challenging for a foreigner to travel to any of these cities independently. The journey appears extremely stressful, starting from purchasing a ticket, to road services, to finding useful information in English. This is very inefficient.

What should the priorities be?

For some reason, many people view themselves as experts in economics. But most of them do not understand the basic principles of economics and are not interested in learning them.

Everybody has their own opinion but nobody wants to learn what exactly is behind the working of economic activities. For example, most people agree that education needs funding; they say that knowledge is very important, just like music, theatre, etc. But they forget that knowledge is also a major production factor that is important for the country’s economic growth, which we need to invest in. And, possibly, for that, sacrifices need to be made. If a country wants a developed education system, it may need to sacrifice some things.