ECONtribute – A Cluster of Excellence for research on economics and public policy

ECONtribute: Markets & Public Policy is a joint initiative of the Universities of Bonn and Cologne, and the only Cluster of Excellence in Economics and neighbouring disciplines in Germany. ECONtribute works to astutely analyse markets and public policy as they relate to structural societal and technological challenges. The Cluster organises their Economics and Public Policy research activities under the roof of The Reinhard Selten Institute (RSI), which is funded by the German Research Foundation as part of Germany’s Excellence Strategy.

ECONtribute: Markets & Public Policy is a joint initiative of the Universities of Bonn and Cologne, funded by the German Research Foundation since 2019, with the objective of developing the analysis of markets and public policy with regards to structural and fundamental societal and technological challenges. These challenges include digitalisation, global financial crises, rising inequality and political polarisation. ECONtribute aims to promote the exchange between researchers, policymakers, and the public, and is the only Cluster of Excellence in Economics and neighbouring disciplines in Germany, including management, psychology, political science, sociology and law. The Cluster brings together researchers from the Universities of Bonn and Cologne, the Behavior and Inequality Research Institute (briq), and the Max Planck Institute for Research on Collective Goods. It organises its research activities under the roof of the Reinhard Selten Institute (RSI).

The RSI was founded in 2017 as an institute for research in economics in honour of Reinhard Selten (1930–2016) who is Germany’s only Nobel Laureate in Economics and served for many years in the Bonn faculty. The institute has turned the cooperation in economic research between the University of Bonn and the University of Cologne into a permanent feature.

The RSI hosts the Cluster ECONtribute: Markets & Public Policy, which is funded by the German Research Foundation as part of Germany’s Excellence Strategy. All principal investigators of ECONtribute are also members of the RSI, and the Cluster’s spokespersons serve on the RSI Board. The RSI and ECONtribute share a joint management office.

Moving beyond traditional approaches

Markets are of vital importance for the functioning of today’s societies, as they are responsible for coordinating the economic activities of millions of individuals and companies. However, they can also generate politically or ethically undesirable results, such as income and wealth inequality, or fail in their functions. For example, prices that do not correctly reflect the impacts inflicted on the environment due to economic activities undermine all efforts to prevent climate change. Serious failures in financial markets led to a global financial crisis, causing a deep recession and bank bailouts that were financed by taxpayers. Cases like these require a correction of market results through public policies.

“ECONtribute focuses on issues that impact politics and society, as well as how we can and should live
in the future.”

Policy interventions have long been justified by market failures. The traditional perspective focuses on market power, externalities and information asymmetries. It considers these factors as sources of market failures and addresses them through regulation, taxation or provision of public goods.

However, the economy has evolved, and with this evolution, new problems have arisen due to structural changes of economic nature, such as digitalisation or the global financial crisis. New problems require new solutions. Unsurprisingly, problems related to the modern economy are difficult to solve with a traditional perspective on market failures. They require a comprehensive approach, taking into account the latest research developments in economics and neighbouring disciplines.

In order to meet these new challenges, the Cluster develops new research designs for analysing market failures and government interventions, systematically combining insights from economic theory, behavioural economics, psychology, political science, and law. The global scientific goal is to develop a new paradigm for analysing market failures and government interventions, addressing pressing social challenges such as globalisation, digitisation, financial crises, climate change, or political extremism.

ECONtribute combines theoretical approaches based on models and empirical methods related to behaviour, considering the constraints established by the legal and policy framework. The Cluster goes beyond traditional approaches, offering innovative solutions to policymakers that, to date, have hardly been contemplated in the field of economics. The Cluster achieves this objective by broadening the vision to new challenges that have arisen as a result of structural changes in the economy, considering new objectives that transcend traditional notions of economic efficiency and welfare, and by employing new instruments.

ECONtribute’s approach to markets and public policy widens traditional analyses of market failures. It does so by centralising three aspects. First, it broadens the vision for new challenges that have arisen due to structural changes in the economy, such as consumer protection in digital markets or financial regulation with a systemic perspective. Second, it considers new goals, such as procedural fairness, or social and moral responsibility, that go beyond traditional notions of economic efficiency and wellbeing. Finally, it employs and advances new instruments, developed in experimental economics or in computer science.

Fundamental and multifaceted research

ECONtribute focuses on issues that impact politics and society, as well as how we can and should live in the future. A wide and diverse array of topics are considered within the Cluster’s core research, such as the economic policy implications of fair taxation or financial market regulation, human capital formation and equal opportunities, as well as digitisation and polarisation. All of these research activities are centered around two fundamental questions: To what extent is public policy required to ensure the proper functioning of markets and to correct undesirable market outcomes? How should such policies be designed to achieve desired goals and avoid political failures?

“Markets are of vital importance for the functioning of today’s societies”

The Cluster is divided into nine research areas that reflect the wide variety of research questions and approaches: Behavioural Foundations, Theoretical Foundations, Markets and Values, Organisational Design and Behaviour, Market Design and Behaviour, Consumer Protection, Financial Stability, Distribution, and Political Economy.

The Cluster’s broad approach differs from other research institutions mainly due to three characteristics: its focus on addressing public policy issues based on fundamental research on the micro foundations of economic behaviour; its comprehensive approach, combining different strands of research within economics and promoting an interdisciplinary perspective; and its innovative approach to research methods. In many countries, including Germany, relevant research in economics is often delegated to non-university institutions, while research in universities remains far removed from real-world challenges.

The Cluster attempts to combine fundamental research with a political perspective, while maintaining the highest scientific standards.

Fostering women and young researchers

ECONtribute prioritises the promotion of early-stage researchers, and strives to significantly increase the percentage of female researchers in the Cluster.

The Young ECONtribute Program (YEP) provides an inspiring research environment for doctoral students and post-docs. It strengthens frequent interactions with other members of the Cluster, as well as with external fellows and short-term visitors. Furthermore, it offers specific research activities, funding facilities, and a wide network in both the academic and political spheres. YEP also supports the transition from doctoral studies to subsequent career paths.

Women are substantially underrepresented in the field of economics. The promotion of diversity and gender equality is, therefore, a central structural objective of the Cluster of Excellence ECONtribute: Markets and Public Policies. ECONtribute prioritises the promotion of female researchers, creating a diverse and inclusive environment and offers a variety of measures to support female researchers. In recognition of its commitment to equality in the workplace, ECONtribute received the University of Cologne’s Jenny Gusyk Prize for gender equality in 2019.

References

• ECONtribute. econtribute.de/ [Accessed 09 October 2021].

Research Objectives

ECONtribute analyses markets and public policy with regards to market failures in light of fundamental societal and technological challenges.

Funding

German Research Foundation (as part of the German Excellence Strategy)

Collaborators

• University of Bonn
• University of Cologne
• Behavior and Inequality Research Institute (briq)
• Max Planck Institute for Research on Collective Goods

Bio

Contact
Niebuhrstrasse 5, 53113 Bonn, Germany,
and
Studierenden Service Center, Universitätsstrasse 22a, 50923 Cologne, Germany

E: [email protected]
W: econtribute.de
W: econtribute.de/contact

ECONtribute – A Cluster of Excellence for research on economics and public policy