This year’s Francqui Prize, often dubbed ’the Belgian Nobel Prize’, has been awarded to three KU Leuven economists: Laurens Cherchye, Bram De Rock, and Frederic Vermeulen. For the first time in the history of the Prize, there are three laureates - a perfect illustration of what team science can accomplish.
The three economists from the KU Leuven Faculty of Economics and Business have developed a methodology to reliably explain and predict the decisions made by individual family members and the distribution of money and time within families. The jury praises the research for its high societal relevance: it allows for sharp conclusions about the impact of government measures - including a reform of the personal income tax or divorce legislation - on family decisions and the individual well-being that goes with it.
The prize-winning project focuses on the analysis of the decision-making behaviour of individual family members, based on the ’collective model’. This economic model explicitly takes into account that individuals in families have distinct preferences. The laureates further expanded this model and developed a methodology to can not only explain the decisions made by family members and the distribution of time and money within families but can also predict these elements.
This predictive power, in particular, constitutes the enormous societal contribution of this research. It allows for a better assessment of the impact of new policy measures on the distribution of money and time within a family - including child benefit and specific tax rates, for instance. Furthermore, the methodology offers the possibility to measure poverty and inequality with greater precision compared with currently used methods.
One of the most important findings so far is that there is an unequal distribution of money and time between family members. What is more, traditional poverty figures systematically underestimate the poverty of women within a family.
"Studies on consumer behaviour typically assume that families behave like one single decision-maker - the ultimate unitary approach. For the implementation of new government measures, too, this tends to be the underlying assumption, while a family is characterised by complex interactions and different negotiation positions. Our critical take on the unitary approach and our scientific drive to explain and change the world are what led us to design this methodology," according to the three laureates.
Studies on consumer behaviour typically assume that families behave like one single decision-maker, while a family is characterised by complex interactions and different negotiation positions.
The strength of this methodology is that it may also be applied to other fields of particular social relevance. For one thing, it could be the basis for new models to analyse and predict the production behaviour of companies in relation to the financial limitations they face.
About ten years ago, Laurens Cherchye, Bram De Rock, and Frederic Vermeulen established the research group GARP (Group for the Advancement of Revealed Preference). This group comprises about twenty researchers from KU Leuven and its KULAK Kortrijk Campus, and from ULB. The researchers are thrilled that the Francqui Prize has been awarded to several laureates for the first time in its history. This shared prize demonstrates the strength of their collaboration and the complementariness of their expertise - a case in point of academic research that is more than the sum of its parts.
"As a former Dean of the Faculty of Economics and Business, I am very familiar with the work of Laurens, Bram, and Frederic, but also with the strength of their sustained cooperation," says Rector Luc Sels in reaction to the news. "They have already won awards before, including the KU Leuven Pioneer’s Prize for the Humanities. The international community, too, praises them for their significant contribution to the science of economics. So I’m not really surprised, but I’m very proud. I’m also especially pleased that the Francqui Foundation has recognised the value of team science."
"First and foremost, I’m very happy for my three colleagues," Dean Wilfried Lemahieu adds. "They are excellent academics who absolutely deserve this prize. The fact that this award recognises a team with researchers from Kortrijk as well as Leuven makes it even better. After all, our faculty is active on four campuses, whereby we use the power of cooperation and cluster educational and research expertise. Our Faculty motto is ’rigorous and relevant’: we strive for research that is academically excellent but also has a real impact and may form the basis for more substantiated policy decisions. The prize-winning research is a perfect example of this approach."
About the Francqui Prize
The Francqui Foundation was established in 1932 by US President Herbert Hoover and Belgian diplomat Emile Francqui. After the First World War, both men invested in scientific organisations to stimulate research in Belgium. Each year, the Foundation awards its Prize to researchers in a three-year rotation of fields: humanities, exact sciences, and biomedical sciences. The Prize represents a sum of € 250,000.
The official ceremony for the Francqui Prize 2019 will take place in Palace of the Academies on 6 June.