Study Tour 2013A journey to the greatcity of Istanbul, Turkey

Who’s Paying?!?The truth behind studentspending and income

Dr. Patricio DaltonInterview with the Microexpert of Tilburg University

June 2013 / Edition 2

Column: Supply and DemandThe Shale Gas Revolution

European Debt CrisisSyntrus Achmea Interview

Meet an active member; Jean-CarloExchange Story; Tilburg Vs. Rio

Prevention and the cost of Health Care

ASSET Economics

2

Table of contents3

45

6

10

12

14

20

30

29

22

26

Preface

Column: Supply and Demand

8 Shale gas revolution

Interview: Dr. Patricio Dalton

Who is paying?!?

How is the first board doing?

Study Tour - Istanbul

ColophonThis magazine is a publication of study association Asset | Economics.

Editor-in-chiefDenise Klop

EditorsBoy van der VeldenJoost SlabbekoornFrancesco GerottoJoris van Twist

ColumnistNiek Stadhouders

DesignBoy van der VeldenJoost Slabbekoorn

Photography Eduard CoolsJoep Schoofs

Contact informationAsset | EconomicsRoom E1.05Warandelaan 25037 AB TilburgT: 013-4664040E: info@asset-economics.nlW: www.asset-economics.nl

CopyrightNo proportion of the information in this magazine may be reproduced in any form or by any means without the prior written consent of Asset | Economics

DisclaimerThe opinions expressed in the articles do not necessarily express the opinion of Asset | Economics

Puzzle

Interview: CFO Syntrus Achmea

Prevention and the cost of health care

European debt crisis

Exchange: Tilburg vs. Rio

Interview with an Active Member

3

Preface

The Magazine Committee

Dear reader,

Hereby I proudly present the second edition of The Equilibrium; the magazine of Asset | Economics. After the first edition in 2012, the new

committee decided to take the initial ideas a step further and the result lies in front of you. Many ambitions about the future of The Equilibrium

have been formed during the process, and I would like to thank all my fellow committee members for their hard work and determination.

In line with our own aspirations for the future, this magazine features various people who have followed their dreams and ambitions. Why would

one go on a mission to Antarctica? How can one combine doing research with making a direct impact for destitute children in Argentina? What is

the vision of influential people on Italy’s position and responsibility within the Euro crisis? All these people have one thing in common; they are

inspirational. I hope you will be inspired by their stories as much as I am. We are all hoping for many more inspirational stories, so remember to

always follow your aspirations and knock on opportunity’s door when it is time to do so.

Warm regards,

Denise Klop

Editor-in-chief

4

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In high school my economics teacher, suit and tie, used to pick up a

piece of crayon and draw a large diagonal cross on the blackboard.

A downward sloping demand curve, an upward sloping supply curve,

and markets clear when demand equals supply. I considered it true

and the first foundation on which all my future economic knowledge

would rest was laid. I found that in economics the state of equilibrium

condition is an integral part of most theories, a paradigm that underlies

many discussions, a condition that is assumed to always hold. But

can equilibrium theory really be called a law, a universal truth that

holds, no matter the circumstance? Is our blind trust in the state of

equilibrium justified?

The basic lemma of supply and demand that I described, as found

in every economics textbook 101, is mainly a representation of the

work of W.S. Jevons, who pioneered marginal economics. The figure

we all know and love made its appearance in an essay by Fleeming

Jenkin in 1870, and popularized by English economist Alfred Marshall,

describing the theory of supply and demand in his 1890s Principles

of Economics. In the 19th century Arrow and Debrieu proved that a

market-clearing equilibrium exists, given strict conditions, like perfect

competition. This means that equilibrium is reached only if there are

no market distortions. That is a big if. Let’s sum up some the conditions

necessary to obtain equilibrium: a large number of buyers and sellers,

perfect information, a future market with future prices and no external

effects. The million dollar question is to name a market that fulfills

these conditions. I can’t. All markets are regulated in some way.

Paradoxically, the market that comes closest to a perfect market, the

financial market, is actually the most regulated of all. Let me introduce

to you the law that never holds.

‘So what?’ I hear you think. It’s all about forces moving the economy

away from equilibrium or back to equilibrium. If the latter prevails,

I’d say the law is useful. But let me introduce the notion of unstable

equilibriums. As Marshall nested himself into mainstream economics, a

French economist was pushed into oblivion until recently. Leon Walras

came up with the general equilibrium theory in 1874, which basically

states that everything is connected. Perturbations in one market

distort equilibrium in another. If the horsegate affair drops the demand

for meat, not only does the price of meat drop, all other prices and

quantities in the economy respond. Looking at how the housing

crisis turned into a financial crisis, turning into a sovereign crisis and

back, this sounds reasonable. If the equilibrium changes continuously,

the law is of little use. Walras never really settled in mainstream

economics, mainly because of computational limitations back in the

days. Computable general equilibriums, although widely used by policy

makers, is to academics something like Fernando Torres: expensive,

but doesn’t score.

In France, Walras was not forgotten. Edmond Malinvaud postulated that

the stability of the equilibrium depends on the state of the economy.

He assumed that the pricing mechanism is the driving force towards

equilibrium, but the pricing mechanism does not always work equally

well. In a boom prices are flexible and equilibrium is reached. In a

crisis prices and wages are (downward) rigid and the price mechanism

breaks down. This could lead to lengthy crises, without forces pushing

the economy back to equilibrium.

Mathematician David Ordell convincingly argues in his book Economyths

that the economy, and particularly a crisis, is better explained by agent-

based models. Agent based models consist of persons connected to

each other like nodes in a web. The best predictor of you buying an

Ipad is not your age or income, it is the number of your connections

that own Ipads. People do not make decisions independently, but

are influenced by each other. Agent-based models are a popular side

branch of mainstream economics, explaining crises, exchange rates

and stock markets a little less incorrectly.

Lastly I’d like to point out the tipping points theory, as developed by

Marten Scheffer in his book Critical transitions in nature and society.

This theory states that small perturbations push the economy back

to equilibrium, but large perturbations do not (a tipping point exists).

Scheffer shows that major changing events are preceded by increasing

perturbations. This empirical observation also holds in economics, and

might predict crises the same way increased seismological activity

predicts volcanic eruptions.

To conclude, the recent crisis casts doubt on the usefulness of

equilibrium theory. Maybe it is time to look at the jurisprudence and

demote the law of supply and demand to a simple notion. When it

comes to equilibrium theory, one can only conclude with Confucius:

“True wisdom is knowing what you do not know.”

a law lacking jurisprudence

By: Niek Stadhouders

Supply and demand:

Tuitions increase. Inflation defies our wallets. Under aged unemployment

strikes the Netherlands. How does this affect the average Tilburg

University student? I did a little research around the E-building and

the results are astonishing. In the small group that participated in the

research there was a huge diversity in jobs and ways to gather funds.

Entrepreneurship and creativity roam the hallways and the results are

broad.

The variation and the amount of jobs were as such, that I needed

to cluster them into various segments. I decided to divide them into

study-related jobs, jobs around the University and tutoring, hospitality

and horeca, external financing (which is pretty much DUO and sugar

daddies), construction, skill-related (such as administrative work and

consultancy), sales (which include all the shops), unemployment and

extraordinary income.

Surprisingly, the majority of 27% uses external financing of which

33% is fully financed by their rich daddy (which basically consisted

of the entire Accounting & Finance department). The runner up was

sales with 19%, where you expect to see a lot of shoe and clothing

salespeople. However, 23% of these sales people work in ice salons

and 28% in supermarkets. The next biggest group is hospitality and

horeca, all of the students that go to work at night and return home

just before the start of the first class. This holds at least for the ones

serving your beer at the bars, and they represent 73% of this group.

The other people in this group spend their free time waiting tables in

restaurants, performing in a band or working in the theater.

These three sectors represent 62% of our total population.

The other segments are way smaller, but of course, the most interesting

jobs can be found in these small segments. During our visit we ran into

an active member of

Asset | Economics, who claims to be seasonally unemployed and

identifies herself as a victim of Dutch weather. Near the SBIT part

of our building we run into a professional poker player who earns

quite some bucks by challenging strangers worldwide in online poker

tournaments. Just down the hall I meet a few entrepreneurs, who have

decided to market their products in the form of apps and try to turn this

into a business model. But if you want to study in style, there is only

one job that is truly overshadowing any other job, and that is being

the son of a famous person. And according to our water proof research

methods only 1,5%... is the son of Adrie Koster.

5

Equilibrium W

ho is paying?!?

Where do students get their money from?

Who is paying?!?How students get by

By: Boy van der Velden

12% - Study related

16% - Hospitality / Horeca

27% - External �nancing3% - Construction

19% - Sales / Basic

4% - Extraordinairy income

7% - Skill related

10% - Unemployment

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: P

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Tilburg University boasts a winning team of professors and researchers.

They come from all over the world and bring their experience to the

campus, in a perfect atmosphere of open-mindedness, curiosity and

internationality. The classrooms, offices and labs are the very place

of their work, where they interact with eager students about issues

they study and discover. The ideas that have been put forth by these

remarkable minds are the result of a process that goes by the name

of research. Research, in fact, is the systematic investigation into and

study of materials and sources in order to establish facts and reach

new conclusions; a somewhat vague definition that captured our

curiosity and led us to go deeper inside this world. The interest couldn’t

be greater when coming to the Social Sciences Faculty, and especially

the Economics Department. What really happens behind the wall of

those offices? What does it mean to be a researcher and what is, really,

research?

To answer these questions, we interviewed Patricio Dalton, professor

of Microeconomics 1 and 4 and researcher in the field of Behavioral

and Development Economics. He is 38 years old, good-looking, fit

and extremely enthusiastic. He loves sports, in particular football

(don’t call it soccer, you would drive him ballistic…), which he used to

play when he was young. He is a big fan of San Lorenzo, one of the

biggest football teams in his home country, Argentina. Besides playing

the guitar, he loves listening to all kind of music, from Rock & Roll to

Classical, from Electronic to Latin-American. No surprise, some rumors

also maintain he is a rather good dancer. And don’t forget he has a PhD

in Economics, graduated from the University of Warwick with a thesis

on Behavioral Decisions: Theory, Implications and Applications. We

couldn’t help asking him what the secret of his success and charisma

is. His reply? Simple, passion. Yes, passion, the very reason that led

him outside South America, towards Europe.

“Most of my colleagues that have the chance to leave Argentina

come from wealthy families. They are from a part of the society that

can afford going to elitist schools and have great opportunities and

perspectives. I didn’t belong to that elite, my mother was a housewife

and my father was an entrepreneur that most of the times ended up

making wrong business decisions. I was able to break through despite

a disadvantageous socio-economic background, and I would attribute

this to an internal conviction to give 100% of me in whatever I do.”

Patricio explains his past and is not quite sure about the exact reasons

that led him to be an academic in Economics in Tilburg. Maybe it

was a combination of his parents’ strictness to make him do things

well combined with absolute freedom to let him chase his dreams.

Maybe it was his extreme curiosity to understand why people make

systematically irrational choices in everyday life and they still manage

to survive and be happy.. What he is confident about though, is that

ambitions have a key role in someone’s development. We wanted to

know how strong the links between his background and the research

he conducts are. Clearly, there is an autobiographical trace within his

work when he confesses:

“Economics is all about rationality. But real-life experiences contradict

this assumption. Without allowing for systematic human mistakes

economic models are just incomplete. Perfect rationality is only a

simplifying assumption, arguably unrealistic. It is useful only as a

benchmark, but if we want to understand reality, we are bound to

6

Dr. Patricio DaltonBy: Francesco Gerotto & Denise Klop

Equilibrium Interview

: Patricio D

alton

use realistic assumptions. That is why I ended up studying Behavioral

Economics”

Understanding the implications of making wrong choices is one of the

goals of Patricio’s research. In particular, he studies the intersection

between not fully rational choices and development. He makes a very

strong argument about the complementarity of wealth and aspirations.

In his opinion, a necessary ingredient to success is to believe in own

capacity to be successful in challenging and novel activities. Living in

poverty impacts peoples’ expectations and aspirations. This in turn

makes it more difficult for the poor to escape from poverty”. In line with

this, the rich are better off than the poor. Because a rich person has

more material resources, he can compensate the lack of determination

with other means. The poor, instead, need to rely more on their beliefs.

Hence, when those beliefs are constrained by external circumstances,

only the well-off can hope to succeed, while the poor shall perish.

However, when aspirations are not restrained, the poor have a greater

incentive to perform well, because it feels like a once-in-a-life-time

occasion which they cannot spoil.

In light of this, Dalton has begun to investigate whether raising

aspirations can help raise levels of achievement among the poor,

Together with co-authors he is conducting a field experiment with

the Orchestras for Children and Young Students in Buenos Aires.

They want to examine whether the aspirations of children from very

deprived backgrounds are raised by their participation in classical

music orchestras. The researchers will examine whether their regular

participation has spill-overs in other dimensions such as educational

performance.

“It is a very complex project. The goal is to measure the change in

the kids’ life brought about by the orchestras. It is an unrepeatable

opportunity for the children, and they are aware of it. We selected 40

of the poorest schools in Buenos Aires, went to the municipalities and

offered the plan. Later, 20 out of the 40 schools have been randomly

selected, and the lucky ones gained access to the instruments and

classes with the bests Argentinean classical musicians. We have ran

a baseline survey and now we are doing the preliminary analysis of

the data. Although some may think it is a bad invested luxury good, it

is not. This program is improving these children’s lives. The teachers

are among the most renowned artists of Argentina, and the feedback

from the students is positive; they feel valued and watching their

professor in a tour around the world gives them extra incentives to

work hard. That’s exactly what I was talking about. Poverty is not just

about material disadvantage. It is a much more complex issue that

also involves non-material disadvantages like lack of aspirations and

self-confidence. With this program, we expect that the children will

gain these non-material resources which are also needed to escape

from poverty”

When we asked Patricio about his time in Tilburg, he told us that he

enjoys his time here in Tilburg. “I consider myself very lucky in finding a

job in one of the best universities for research in Behavioral Economics

of Europe. Moreover, I like the company here, there is a marvelous

group of researchers with which I have very stimulating conversations,

always feeding our brains with new knowledge. You may define us

nerds but we actually enjoy wondering about everything.”

Apparently, he is truly maximizing his utility in Tilburg. After his paper

on aspirations and poverty we asked him if he has other project in mind

and that is what he replied:

“At the moment I am very much puzzled by how to increase productivity

in small and medium enterprises in Africa, not only looking at the

external constraints the entrepreneurs face, but also to study the non-

material constraints they may suffer from. Examples of the former are

attitudes, aspirations, beliefs, preferences, cognitive biases, etc; the

latter are simply the external context.”

He concludes saying that very soon the boundaries between Sociology,

Psychology and Economics will disappear, in favor of a new holistic

approach that merges all the different methods of analysis. He

forecasts: “In the near future there will be no distinction between these

disciplines; we will all be social scientists”

7

8

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For long it has been known that layers of slate at two to four kilometers

below the surface contain natural gas. However, only recently the

extraction of this gas has become technically and economically

feasible. In the 90s, the American entrepreneur George Mitchell

combined the techniques of fracking and horizontal drilling to extract

natural gas from layers of slate. Unlike conventional natural gas, shale

gas is not stored in large reservoirs underground but it is trapped in

small fractures in the shale. By drilling horizontally and pumping large

amounts of mixture of water and chemicals under high pressure into

the stone layers, the fractures are cracked and the gas is released and

can be captured. This process is called fracking.

“The US has been the only industrialized country that has been able to decrease its emissions of

greenhouse gasses in the last five years”

Shale gas is not only present in the United States; it can be found all

over the world. There are also large stocks of shale gas available in

Europe, China, Mexico and Argentina. However, the US is far ahead in

drilling for shale gas compared to the rest of the world. The high shale

gas production caused energy prices to decline sharply in the US over

the last year. The abundance of cheap energy has caused many energy

intensive industries that previously moved out of the US to relocate

there, boosting the US economy. The rise in domestic production of

gas also lowers the dependence of the US on foreign countries for its

energy needs. Fracking is now also used in the US to drill for oil, so

expected is that the US will become completely self sufficient in its

energy production within the coming years. Furthermore, according

to the research firm IHS, the lower energy imports have caused a 10

percent decline in the US trade deficit.

As previously mentioned, Europe is probably also well endowed with

shale gas. For example, the Dutch research institute TNO estimates

that there is about 500 billion m3 of shale gas in the Netherlands.

However, so far European governments are reluctant to join the shale

gas hype and some countries, like the Netherlands, have banned drilling

until further notice. The use of chemicals in the process of fracking

is controversial and is the main reason why European governments

have not yet allowed drilling for shale gas. A main driver behind the

bans is the Europeans themselves who are skeptical towards shale gas.

Commonly in Europe, the state owns all resources below the surface,

even though the land is privately owned. Therefore, land owners in

Europe mostly experience the downsides of drillings on their property

since the revenues go to government. On the contrary, land owners in

the US own the resources themselves and therefore encourage drillings

because it means big bucks and easy money.

There are many benefits attached to shale gas for European countries.

Especially Eastern-European countries could lower their dependence

on Russia for the supply of gas. Russia has proved itself an unreliable

w

At the moment when the general belief was that the production of fossil fuels has peaked

and energy prices were soaring, the extraction of natural gas from layers of shale deep

underground causes a true energy revolution. What’s up with this so called shale gas?

Shale gas revolution: a game changer?

By: Joost Slabbekoorn

w

Shale gas revolution: a game changer? Equilibrium Shale gas revolution

partner over the past years with repeated, credible threats to stop the

supply of natural gas if their demands were not satisfied. However,

even when bans on drilling in Europe are not lifted, Europe can still

profit from the shale gas revolution. New techniques to liquefy natural

gas make it possible to transport natural gas by ship whereas previously

this was only possible using pipelines. Therefore, the possibility of

importing cheap shale gas from the US will cause prices to drop in

Europe anyhow and can diminish the influence of Russia.

“It is expected that the US will become completely self sufficient in its energy production within the

coming years”

The shale gas revolution in the US already affects Europe, however in a

dubious way. The abundance of cheap gas in the US makes industries

switch from coal to gas as its energy source. The result is a substantial

drop in coal demand, and therefore the price of coal also sharply

declined. Cheap energy available for Europe! At first sight, this seems

to be a positive thing, but burning coal is the worst energy source in

terms of emission of greenhouse gasses and other nasty things. The

availability of cheap coal has caused many European manufacturers and

energy producers to substitute cleaner energy sources for coal causing

higher emissions of greenhouse gasses in Europe. On the contrary,

due to the increased usage of natural gas, the US has been the only

industrialized country that has been able to decrease its emissions of

greenhouse gasses in the last five years!

All in all, the production of shale gas will certainly have a huge impact

on the (economic) relations in the world. Whether European countries

lift bans on drilling or not, they will profit from the availability of shale

gas by reduced energy prices. However, exploitation of the European

shale gas reserves would mean that Europe can secure itself a cheap

and clean energy source for a considerable amount of time. For this

reason, it is worth considering starting to drill in Europe too. Britain has

already lifted their ban so let this be an example for the rest of Europe.

Frack to the future!

9

Shale gas: how does it work?

10

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ow is

the

firs

t bo

ard

doin

g?

A few years ago, there was no study association for economics students

at Tilburg University. Most economics students who were interested

in joining committees did so at the Faculty Association, which had

several committees and activities especially for economics students. As

every other field of study already had its own study association, a new

association for economics students would naturally fit in the structure

of the Faculty Association. In cooperation with TiSEM, Asset founded

Asset | Economics in the summer of 2009. Then, the first board was

formed and they started off with the association.

“In the beginning our main focus was to attract as many active members as possible by organizing

activities whilst spending almost no money”

Chantal explains how she joined the board of Asset | Economics: “I was

an active member at the Faculty Association and I considered a board

year there. However, they asked me to become a board member of the

newly founded study association. I had to think about it, I considered

it to be a great opportunity but I knew it was not going to be easy.”

Indeed it was not easy. Founding an association means beginning from

scratch. As External Affairs Officer, Sophie was responsible for attracting

sponsors to the new association: “Of course I believed that there would

be companies interested in us, but I also wanted to think outside of

the box which companies that could be. Furthermore, it was really

difficult to get an idea of the amount of money we could charge. I had

to start from scratch approaching companies”. However, being under

the umbrella of the Faculty Association did help a lot. New economics

students who joined Asset automatically became a member of Asset |

Economics. Furthermore, Asset | Economics received a loan from the

Faculty Association as starting capital. Companies already knew the

name Asset, which helped a lot in approaching them. Furthermore,

there was ample of help from other associations, who for example

kindly helped by providing the furniture.

All the committees and activities from Asset aimed at economics

students were transferred to the new association. However, the board

had to work hard to get the association running: “In the beginning

our main focus was to attract as many active members as possible by

organizing activities whilst spending almost no money”, explains Bart.

The intensive promotion of the association by the first board paid off,

as they quickly gathered a sizable group of active members.

“You learn to work in a team, and you really get to know yourself.”

The first board experienced the start as being the hardest part. After

the first half year, many things were sorted out and the association

got ‘running’. Of course, in this process, the board had some heated

discussions. Elin: “We always took plenty of time for our lunch, invited

active members to join us and used it to catch up with each other.”

v

You wouldn’t tell but Asset | Economics is just four years old. The people in the first

board of our beloved association are already graduated and working. Let’s meet them

and look back at the start of Asset | Economics!

How is the first board doing?

From left to right: Elin Hekman (Treasurer), Bart Compen (Chairman), Chantal Remorie (Secretary) and Sophie Houwen (External Affairs Officer)

By: Joost Slabbekoorn

11

Equilibrium H

ow is the fi

rst board doing?

The funny thing about starting an association is that many things you

introduce will turn into a habit, as other boards simply continue the

practice: “The silly line we used to describe the voting procedure during

the General Members Meeting is still there” says Bart (laughing). Also,

the home bar of Asset | Economics is still Heuvel 15. However, this has

not always been the case. After a disappointing experience with a first

bar, the board conducted a pub crawl to search for a new one. After a

friendly talk with Toon, the bartender of Heuvel 15, they decided that

this would be the perfect home bar and it has been so ever since.

In retrospect they would have done things slightly different. Looking

back, the board thinks that they were a bit too thrifty. They were

reluctant to spend money but they reckon it would have been nice

if the association had contributed more money to social activities.

However, due to the thrift and hard work of the first board, a solid

foundation has been laid for the association to grow. All four of them

agree that the experience and the skills they learned are of great value

to them now. Sophie: “You learn to work in a team, and you really get

to know yourself.” They had an unforgettable experience and the board

is glad to see the association is still developing.

Bart Compen is Analyst

Private Equity and

Infrastructure at MN, a

pension administrator.

His team selects private

equity fund managers

for pension funds. He

chose this job because

he is interested in Asset

Management and Private Equity, specifically as

one sees how companies operate and how value

is added.

Sophie Houwen is

Assistant Advice at

the Pensions Actuarial

Insurance Services

department of PwC. She

is a consultant in the

area of pensions, which

includes amongst others

employee benefits (such

as designing pension plans), calculations and

valuations. She likes the combination of working

with numbers and explaining those to clients.

Furthermore, PwC is a large organization so there

are many challenging projects and opportunities.

Elin Hekman is Associate

at the Assurance

department of PwC,

therefore she is not

an economist but an

accountant. She monitors

the control protocols

and verifies the financial

statements of companies.

She likes the fact that accountancy is a true

profession and that her job is very specific.

Chantal Remorie is

Business Controller at

the TweeSteden Hospital

in Tilburg. She analyzes

management information

to advise the organization

and support in investment

analysis, about human

resources, finance and

production and also supports the management

with financial issues. The main reason for Chantal

to work in a hospital is her affinity with the health

care sector.

Life after study

12

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debt

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Euro zone recession: 2008. Everything started some time before,

when in 1997 the Asian financial crisis led the mighty investor America

to withdraw its capital from the unstable developing countries. As a

reaction, Malaysia, the Philippines and South- Korea became the new

global creditors, offering cheap funds to recover from negative growth

trends and stimulate the domestic economy. On the other side of the

Ocean, in the US, interest rate were dropping, and banks, with the

support of sloppy rating agencies, allowed bad credit households to

make insolvent loans. Very soon the inexpensive mortgages drove real

estate prices to skyrocket, thus starting the housing bubble. It was

the beginning of the end. The subprime crisis led to the collapse of

Lehman Brothers, unable to repay their debts, and in England, the

bank run on Northern Rock bank run shocked the European markets.

Later, Greece starts crumbling, under the austerity pressure and a

self-fulfilling prophecy of mistrust. At this time, also Italy steps in and

enters the equation of the crisis.

With a bewildering government debt history, Italy owes more than

100 percent of his GDP to financing countries since 1992. Jointly with

a fragile government, unable to cooperate, the Italian peninsula also

faces a downward sloping trend in growth, which has recently been

negative. All these reasons contribute to today’s depression in the

markets and loss in credibility, which is one of the most important

drivers of the Euro zone recession. In fact, when Euro countries that

invested in Italy stop believing and fear a default, they pull interest

rates on government bonds up, and prices down, aggravating the

Italian debt even more. The consequences are tremendous on the

population: heavy taxation, unemployment, unrest, decrease in

consumption, cuts on education and health care and more generally, a

fall in social welfare. The outcome is instability and uncertainty, along

with corruption and evasion. At least, this is what the media and the

academic literature explain. But what does an Italian really think? How

does he survive the recession? Has he got any hope of redemption?

And also, what are his expectations? For this interview, an Italian

entrepreneur and a banker were interviewed.

Franco works in a metal leasing and scrap trading company. He is an

entrepreneur and, above all, a human-being. He has 10 brothers and

a son, and he really believes that the values of family and education

are pillars to everyone’s future career. Carmelina is a banker. She is a

sportswoman, always smiling and very self-confident. She never loses

her pragmatic attitude though, very down-to-earth and scientific when

it comes to explanations. These intimate connoisseurs of a reality that

affects both their private and public life gave their precious viewpoint

on the Italian situation; a situation they face every day.

You had chances to know personally the history and the evolution of

the economy of your country, to what would you attribute role of cause

and catalyst?

Franco starts off by making a comparison. “The actual crisis is a

phenomenon that does not affect the entire globe. Areas like Asia,

India, Australia, New Zealand and South America are developing fast

and the standard of living there is much higher compared to the past.

The US and Europe are stagnating, especially Portugal, Spain, Greece

and Italy.” According to him, the cause goes necessarily beyond mere

economic reasons. “In Italy for instance, misgovernment and corruption

are the very reasons, while the loss of social identity, traditional values

and trust for institutions is the catalyst.”

Carmelina seeks the origins in the past. “In the aftermath of the

Second World War, the fast capital growth of Italy led banks to become

looser, thanks to new financial intermediaries such as derivatives and a

policy of thrift that fuelled a speculative bubble in the financial system.”

According to her, the catalyst is the deregulated financial system. “The

climax was reached in the 1990s and went on until 2000. The effects

were devastating, because the first buyer of financial derivatives

and target of the speculative attack was the government, thereby

augmenting its debt exponentially.”

European debt crisis:An Italian perspectiveBy: Francesco Gerotto

13

Equilibrium European debt crisis

Which are the consequences, especially the ones you experience at

first hand?

A main consequence mentioned is the decrease in the standard of

living for the middle-class, reflected by the scarcity of food and social

security provisions, more expensive and under-ranked universities,

crime and a waste of resources. As Carmelina states, “there are fewer

and fewer opportunities for investment, more unemployment, delayed

pensions, and cuts on research, education and health care. This causes

unhappiness and pessimistic markets.”

What would you get rid of in the first place? And what would you

implement in the current system?

The answer is clear and both agree; Italy requires more checks

and balances. “We need less bureaucracy, with a more efficient and

sound control system. Also, it is also important that we do not tighten

incentives to grow.” Furthermore, facilitations in the employment

process for the youngest, a concrete reduction in taxes and public

spending, invest in schooling sector and improve public services are

needed. “I would also eliminate the fiscal pressure”, Carmelina adds.

What is the role of the government in the crisis, to which extent is it

guilty?

The state is not the direct cause but had and is having a fundamental

role. “In Italy there is this tedious manner to think about yourself

and yourself only. If no one is able to reach agreements, why should

politicians be? We complain, but we deserve our government. Once

educated to a social living, we can hope for and claim a government

that is not self-interested, but interested in Italy,” Franco says.

Carmelina looks at it from a different perspective. “The new government

is facing the bitter reality of a threatening debt. This is the result

of very low purchasing power in the past, which was compensated

with seigniorage that ended up raising inflation sky-high. Moreover,

increasing tax rates is not a solution itself, government spending must

be drastically moderated and until now the government was not able

to avoid tax evasion.”

Who deserves your trust?

A difficult question for both, “I would give my trust to very few people

and only to honest and hardworking persons that still believe in the

future and have dreams”. Examples for Franco are Pope Francesco,

the European Parliament and development or research institutes.

Carmelina on the contrary, believes in the ECB and the EMU. “I believe

in Mario Draghi and interest rates below 0.30 that allow cheap funding

for small firms. I believe in stability promoted through control.”

Privatize or nationalize non-viable institutions?

Franco smiles, “Privatize”. Carmelina agrees, and thinks it’s important

to stimulate competition and to leave the market free to reach

equilibrium. Control is necessary nonetheless.

What would you do to get out of the recession?

Franco focuses on a social reform, whereas Carmelina believes in

financial changes. “First things first, we need to re-educate the

next generations to a social behavior and teach them the values of

community and brotherhood. This has to be accompanied by a reduction

in the bureaucracy, a cut on taxes and expenses, a liberalization of

the economic branches and finally fuel households’ trust through a

campaign of social advertising focused on for example externalities and

economic awareness.” Carmelina thinks reforming the financial system

is important. She proposes to lower the cost of money to increase

incentives to invest, stimulate corporations to hire young workers, and

cut taxes, especially on property.

How can the Conclave, the election of the new President Napolitano

and the Prime Minister Letta affect the loanable funds and stock

market, creating huge fluctuations within days?

According to Carmelina, every election is hope for a change. “The link

between these three figures is the promise of stability when taking over

their predecessors. The new Pope is somehow a symbol, a person who

deserves trust and is able to encourage people to carry on during these

times of crisis. In the same way, investors also believe that a successful

or unsuccessful election can change the fate of the country.

What do you think about the euro?

Franco is sure Italy needs the euro and the integration in the Euro zone.

“I believe in a federal Euro area and in cooperation. Going back to the

lira means lowering our purchasing power, which although stimulating

exports, would reduce our foreign competitiveness.”

Confronting the two thoughts, a pattern emerges. In fact, both Franco

and Carmelina, who experience the crisis on their skin, feel the need

of a reform, a change that allows improving the economy and, more

generally, the world they live in. This is possible only by intervening

on a social and institutional level at the same time, ensuring a sound

financial system and promoting education. The underlying goal is, of

course, structural stability, a renewed trust, and a new and necessary

equilibrium.

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Leaving the rainy cold city of Tilburg behind us for a week we fly off

towards a historic city in West Turkey, with various formal and informal

visits ahead of us, scheduled with military planning. A city that has had

various names throughout history; a city straddled by the Bosporus,

with over 2600 years of history the city of Istanbul.

After a late departure on Friday night and a star dinner at the terminal’s

Burger King, we got on a plane to our destination. After a tour through

the Asian part of Istanbul, we arrived at the Gakos House Hostel in

the city center. Our hostel was just 15 minutes from the great Taksim

square, and within crawling distance of the lively Turkish nightlife. We

didn’t have much time to adapt to this new environment.

Tired from the journey, but strengthened by this new inspiring

environment, we took on the Turkish public transport and visited

the famous Blue Mosque. Unprepared for this religious landmark

and overexcited by the sunny weather, us touristy creatures hadn’t

prepared for the strict religious clothing regulations and had to

reschedule the visit to later in the week. After this first encounter with

Turkish culture we decided to embrace our differences with the Turkish

culture and visited a shisha-bar where we smoked traditional hookah

while enjoying various cold beverages. This small gathering led to an

incredible karaoke-night on the fifth floor of the venue with various

study tour artists performing. A performance by our very own Charlie’s

Asians, Linda, Roos and Jessica and various questionable male duos

that shook the stage.

Late October, the Study Tour Committee’s primary assembling. 159 days of planning, brainstorming and bookings further, twenty participants got on a plane at Schiphol. The Study Tour 2013 has begun, we’re off to Istanbul!

STuDy TOuR ISTANBuLBy: Boy van der Velden

Equilibrium Study Tour

On the second day of the journey the study tour really took off. We

started the Crazy 88, where the teams within the study tour had to

earn points by making photos of various settings.

These settings involved; bananas, moustaches, team photos, planking

photos and various other pictures of predetermined circumstances. The

first of these photos were generated near the beautiful Dolmabahçe

Palace built by the empire’s 31st sultan around the 1840s, a pearl of

Ottoman History and a must-see for everyone.

After traveling back in time it was time to relax, so we got on the

Bosporus cruise were we traveled down the great river that is the

Bosporus which embodies the border between Europe and Asia. After

arriving back at the harbor the fellowship returned to the hostel and

left for a night out in a traditional Turkish bar where we enjoyed some

Turkish live music. In the sounds of traditional guitar tunes, another

day came to an end.

The next morning brought us a visit to the famous Topkapi Palace, this

time our cultural visit heirs from the Byzantium time, the largest palace

in Istanbul, and home of Ottoman Sultans for over 400 years until the

sultans were moved to the Dolmabahçe setting.

After this inspiring visit it was time to suit-up and become international

businessmen for our first formal activity, a visit to Borsa Istanbul,

the Turkish stock exchange. After a lecture on Turkish GDP, world

economic growth rankings and flight distances we got to take a look

at the action: the trading floor of the exchange. The Borsa Istanbul

turned out to be a modern and inspiring environment where you can

see the impact of western civilization and development.

After this formal visit a small delegation decided to have a few beers at

a venue we stumbled upon. Little did this small delegation know, this

bar was about to become the setting of one of most epic evenings of

the study tour.

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Study Tour 2013 - Istanbul

Study Tour 2013 - Istanbul

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The evening started out as any other evening, dinner, small talk,

the enjoyment of a few drinks. But that changed rapidly when the

realization came that five stories up, a party on the rooftop was waiting

for us. Within seconds the situation escalated. Sipping beer and wine

became shots everywhere, conversations became dance battles, the

floor became a bonfire and at a certain point there was someone on

the bar waving an umbrella. A night to remember, but also a night that

had to end at some point, as any other.

The following day the prestigious Koç University trip was planned,

identified as being the best university in Turkey. Expectations were met

at arrival of this magnificent setting. In the mountains outside Istanbul,

a brand new state of the art university was constructed. We were given

a tour by two northern American former students who made us familiar

with the great facilities offered by the school. After a lecture by one

of the professors we thanked the Koç delegation for their help during

our stay and returned to the city of Istanbul for a visit to the Basilica

Cistern.

The Basilica is an underground wonder constructed many centuries

ago to provide the sultan’s palace with water and is famous for being

a setting in the Bond film From Russia with Love. A hundred and fifty

feet above us the Blue Mosque had waited for our return. In a second

attempt we got to experience one of the largest mosques in Turkey. An

impressive structure overall, even in these modern times.

Another day in Istanbul arrived; a day to get our behinds moving, so

we took a boat to the Prince Islands where the ladies enjoyed a ride

in a horse and carriage, and the guys competed in a tour around the

island on mountain bikes. After the exercise it was time to relax, time

to experience three hundred years of relaxation history, a visit to the

Hamam.

The Hamam is a Turkish bath where you can enjoy a massage, or

just steam your troubles away. A visit to Istanbul will not be complete

without a few hours in the Hamam. In the evening we enjoyed a

nice dinner and the match of the year, Galatasaray vs. Real Madrid in

Equilibrium Study Tour

the Champions League and subsequently, a visit to an underground

nightclub ironically located on the fifth floor. Slowly, the study tour is

coming to an end.

Day 6, our last day, the day of the Galata Tower, the day for a formal

visit to the Dutch Consulate, where they just celebrated 400 years

of political relations between the Netherlands and Turkey, but mostly,

the day that we would visit the Grand Bazaar. This was, of course,

the most important visit of the week according to most of our female

participants.

4 hours of souvenir hunting, shopping and the overall acquisition of any

useless item that fits in your suitcase, absolute mayhem, and a perfect

end to a great study tour. Tired but satisfied, devastated but enriched.

The study tour came to an end. It was a great cultural experience, an

incredible trip, with extraordinary people.

Thanks to the committee for their great work in the organization of

the trip. And thanks to all the participants for making the journey

unforgettable.

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The Study Tour Committee

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In February 1991, on a small island within the Kingdom of the

Netherlands, an environmentalist is born, ready to make a change in

the world. Not in his early days however, but after his mother pushes

him to become a boy scout he was introduced to the environment and

the earth. With a backpack full of ambition packed by his parents in his

early days, Jean-Carlo decides to change to world a little bit at a time.

At the age of 16 he enters a competition to join an Arctic expedition

organized by Robert Swan, an environmentalist himself targeting

Curaçao as a small community with a big oil refinery and little

environmental awareness. Jean-Carlo and two others, Diane Copini-

Rigaud and Arthur Nieuw, win the competition with a project called

E Palu (the tree), where they created a poster that could be used in

schools as a way to teach primary school students about trees and how

they create oxygen by consuming C02.

After long preparations the expedition to Antarctica began. An

experience of a lifetime and the basis of environmentalism in the future

of this 17 year old that experienced the entire trip in complete awe.

After the adventure that is the arctic, a period of speeches began. By

visiting high schools and universities, and sharing his experience about

the journey, he creating awareness on Curaçao about environmental

issues worldwide.

“I traveled to Antarctica to see with my own eyes how this grand continent is being put in danger

by climate changes occurring worldwide”

After returning from Antarctica and just before coming to the

Netherlands, Jean-Carlo organized a project called The Green Bus. They

lived in a double-decker bus for a week using nothing but sustainable

resources like solar and wind energy, and became instantly famous on

the small island. For this project he teamed up with Andrew Servania,

who is currently studying in Breda.

One can imagine it must be an amazing experience to be famous on

such an island when you just turned 17. The fame was nice according

to Jean-Carlo: “I could use it for all future projects and events as a

promotion tool, people recognized me in the street and I got a lot of

free beers when I visited bars, which is also not a bad result of fame.”

Jean-Carlo organized all this, and his other events during his high

school period at the Radulphus College in Curaçao.

“The weather is nice in Holland”

The next step was already known by him since he started high school

in Curaçao. “I’m going to Tilburg University, in the Netherlands.” Why

Tilburg you ask? Because originating from a small and close community,

he was attracted to the coziness of Tilburg University. The coziness, the

large economics department, sustainability center and of course the

environmental economics course at Tilburg University attracted him.

He joined Asset | Economics during his second year. During his bachelor

his entrepreneurial drive was tickled again and he decided he wanted

to organize again. He joined the Economics Dinner committee and was

so pleased with the process that he immediately started with the Case

Day committee.

Jean Carlo is currently wrapping up his bachelor with honors and is

ready to start his masters in September. If you think he is done here

in the Netherlands you are wrong. After graduation he has decided to

20 20

Interview with an active member

Jean-CarloAlves da Silva

By Boy van der Velden

Equilibrium Interview

with an active m

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stay in the Netherlands for a while to work and gain new experiences.

That, and enjoying the Dutch the climate of course, according to Jean-

Carlo. “The weather is nice in Holland; temperatures that are around

29 degrees everyday eventually annoy you”. Even teaching or given

lectures and speeches about environmental issues might be an option.

Maybe someday even politics.

For the moment he is pleased with his current situation. At university

he remains scoring among the highest of his class, has just been

promoted to the “topklasse” of the Ballroom Dancing competition into

C-class of the ballroom dancing league DMN. Besides these skills Jean

Carlo enjoys arching and gaming in his spare time.

Facts on Jean-Carlo

* JC is the “Benjamin” at his Arching association “De Vriendschap”.

* JC has been in a relationship for the last four and a half years.

* His girlfriend’s name is Sasha Perozo.

* JC dances at “Van Opstal” in Tilburg.

* JC speeched about environmental awareness in Michigan USA.

* JC trained for his arctic trip by sitting in a freezer at -20 degrees

celcius in Curaçao.

* He did this while reporters waited outside.

* JC and his arctic team were welcomed back like a star after his

adventure.

* All other information can be found on www.jc-dasilva.nl.

Activities JC:

Studying Economics at Tilburg University, Currently

Case Day, Asset | Economics, 2013

Economics Dinner, Asset | Economics, 2012

The Green Bus, 2010

Antarctica Competition, 2010

Inspire Antarctica expedition, 2010

Michigan International Camporee, 2010

Speeching at Schools, 2010

Graduating HAVO, 2010

E Palu Project, 2010

Random facts:

Uma is superhot Donny is not

Hein be hating

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Name: Jean-Carlo Alves da SilvaDate of Birth: February 2nd, 1991Profession: Student / EnvironmentalistS t u d y : E B E , t h i r d y e a rCountry: Curaçao, Netherlands AntillesUn ive rs i ty : T i l bu rg Un ive rs i ty I d o l : R o b e r t S w a n W e b s i t e : J C - d a S i l v a . c o m

By Boy van der Velden

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By: Denise Klop & Joris van Twist

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We interviewed two fellow students about their international

experiences; Izabella Mundim Brito, a Brazilian student who is studying

in Tilburg, and Ivo van Well, a Dutch student who went on exchange

to Rio de Janeiro.

Izabella is 29 years-old and comes from the capital of Brazil. She lived

and studied in Sao Paolo and finished her bachelor in San Carlos.

She worked at IBM for four years, after which she decided to do her

masters in the Netherlands. Izabella is in the International Committee

at Asset | SBIT and helped organizing the study trip to Brazil. She has

been in Tilburg since August last year, and is now writing her thesis.

Ivo is 21 years-old and studies Economics in Tilburg, where he also

participates in the Outreaching Honors Program. He is a board member

of AIESEC and an active member at Asset | FIRST. Next to this, he

enjoys playing soccer and going out with his friends. From July to

January, he studied at Fundação Getulio Vargas in Rio de Janeiro.

The two countries could not be more different, and we notice that

both Ivo and Izabella see many differences in terms of transportation,

studying, partying, and general culture. Izabella likes small cities, and

“Tilburg has all the big brand stores and even a McDonalds, which you

will never find in small cities in Brazil. The busses drive smoothly and

you can get near your destination easily. During weekends, the city

is pretty much empty which was also happened in my student city in

Brazil.” She practiced riding a bicycle before she came here, because

she knew she would have no life in Tilburg without one. “It is getting

more popular in Brazil as a way of transportation, but cars are not used

to bikes which makes it quite dangerous”. Ivo had to get used to larger

distances, and when going out he first had to make a 45 minute bus

drive. “The traffic in Rio never stops, it goes on 24/7. There is always

a way to get home, even in the midst of the night.” Whether he ever

felt unsafe? “Never. Of course things happen but it is always aimed at

getting your wallet, so if you cooperate you are fine.”

Classes in Brazil are smaller than in Tilburg, and the atmosphere is

more informal. “For example, the name list was on alphabetic order

of the first name. The professors in Tilburg usually hardly remember

my name, but in Rio they really got to know me as a person. One

time, we even had dinner and drinks with some of the professors,” Ivo

explains. His professors were very internationally oriented. “I had one

course in Portuguese and I basically sat there twice a week listening to

people speaking a language I didn’t understand. Luckily the professor

was American so I was able to write my final assignment in English,

and I didn’t even need the course material to do so. The professors

really stressed the importance of participation and motivation, and they

cared less about pure knowledge than in Tilburg”.

Izabella is not loving the timing of lectures. “In Brazil you will never have

lectures during midday, since lunch is very important. This means we

have lectures from eight until noon, and from two in the afternoon until

six. In Tilburg we even have exams during lunch!”. Also, most Dutch

students go into their master straight after bachelor, while Brazilians

usually work first. “In Brazil, companies prefer work experience over

RioEquilibrium

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23

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a masters degree”. She really likes the campus, “It reminds me of my

home university. It is really open and surrounded by forest. All

equipment such as computers is new, I like that.”

In Brazil, there are very few study associations compared to the

Netherlands. Izabella and Ivo are active members of one of the

Asset associations, which is something they missed both in Brazil. Ivo

explains, “There are hardly any associations. We had one, but you

did not really feel involved and I didn’t do many activities with them.

I really missed the association life in Rio, and in that respect I was

glad to come back to Tilburg.” He still met many people, for example

through his roommates and the many parties he attended. “Every day

there are about four Facebook events for parties, and you can choose

the ones you like best. Facebook was really important.”

Both agree that dancing is more important than drinking when going

out in Brazil. “Do not get me wrong, it is not that we do not drink.

But you guys drink a lot! In Brazil we dance more. In Brazil we always

have one day a week with a big party, and in Tilburg there are a

few days when you can go out,” Izabella states. For Ivo, the dance

culture required some adjustments and he took dancing classes. “In

The Netherlands, we might shake our hips once or twice but that’s

it. We talk much more when going out, but in Rio that’s not the case.

Rio has a much clearer dance culture, and you’re expected to dance

as sexy as possible. I was not used to doing this of course. During

dancing classes, I received some private sessions because I could not

really keep up with the group. They did not speak English so I didn’t

understand everything, but in the end they told me I had more talent

than the average Brazilian!”

Izabella did not really experience a culture shock, but compared to

Brazil she noticed that we have a relatively closed culture. “Everybody

is nice, but keeps distance and never invites you to their home. In

Brazil, we like to kiss and hug a lot and switch friends often. In Holland,

if you make friends they are for a longer period of time. This distance is

something that I appreciate less about the Dutch culture. For example,

when I did not have any classes, I had little to no interaction with

anyone and that made me kind of lonely.” She also finds it striking

that Dutch people give money as a gift. “In Brazil we only do that at

weddings and otherwise we just give actual gifts.” What Izabella likes

most about the Netherlands? The freedom and safety.

You might wonder what she thinks of the Dutch cuisine. Well, different.

“The Dutch food is a lot of potatoes, potatoes and more potatoes. But

I think it is fine. In Brazil we basically eat rice everyday with beans and

some meat. I really like the diverse choice of food in the supermarkets

though. Also, you have a lot of fried food and almost everyone has a

frying pan at home.”

The language was a little troublesome for Ivo at first. He memorized

some standard questions and lines, but never really understood the

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answers. “It was hard to communicate with people at first, but at

the end I mastered the basics of Portuguese. I mostly talked English

though.” However, his biggest culture shock was the fact that he had to

be very patient. “Sometimes, you can stand in line at the supermarket

for 45 minutes, which can be frustrating. I coped with this by simply

accepting it and not making a tight planning. It will frustrate you even

more once you miss another appointment.”

The Brazilian atmosphere was also something Ivo liked best. “Everybody

is always smiling. The weather is great, beaches are wonderful and

people are really enjoying life. So, the disadvantage that people are

relaxing a lot is also the advantage. In the Netherlands we spend so

much time on planning which could also be spend on enjoying life at its

utmost. Sometimes we take life too seriously. I hoped I would bring a

little bit of this mindset back home with me, but unfortunately I might

be even busier than I was before.” So, sometimes it might be a little

inefficient, which he also noticed when traveling. “One time, we made

a trip to Pantanal, which is a very large wetland area. When we were in

the airplane, they suddenly decided to make a stop on another airport.

You can get very annoyed with this, but you’ll have to accept it. It’s just

a pity that you have less time to enjoy your vacation.”

The situation in the Favelas was confronting for him. “The richer

Brazilians do not want to know what happens in these slums. I have

been in the Favelas a lot, and have organized some events such as a

soccer tournament. One time, I teamed up with an NGO to organize a

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tour through the Favelas with a barbeque, motor ride, samba music

and much more. We wanted to show the rich Brazilians the other side

of the coin. We promoted the event to almost 400 Brazilians, and only

four of them were a little bit enthusiastic. In the end, we did organize

the event but mainly exchange students subscribed. I was surprised

that many people were ignoring the circumstances in which their own

people live.”

Ivo would really like to return to Brazil one day, and show the country

to his future family. With a smile on his face he imitates, “Look, this

is where dad studied!”. If there’s a chance to be in Brazil for a longer

period of time again, he would seriously consider it. However, he

would make sure that he completely masters Portuguese so he can

easily communicate with everybody. When we asked Izabella whether

she would like to return to the Netherlands one day, she confidently

answered “Of course! I like the culture, it is more open than other

European countries and people are not easily offended. So whenever I

come to Europe, the Netherlands would definitely be a good option!”.

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On a cloudy morning I meet with the team leader of Client Portfolio

Management Thomas Verschuuren of Syntrus Achmea, one of the

leading pension fund administrators in the Netherlands. Syntrus

Achmea is pension fund services provider for more than 80 pension

funds.

A suitable setting for this meeting one might think since general

consensus these days is that financial institutions are struggling.

Are they? Are the Dutch pension funds struggling due to the current

financial situation and investment climate? Is the situation really as bad

as everyone expects? Or is it just the overall feeling of negativity that

overshadows the healthiness of this 870 billion euro industry?

I meet Thomas in the Syntrus Achmea office in De Meern near Utrecht,

in a modern and light building near the A12 highway. Pensions have

been a trending topic in the news lately. With smaller funds being lifted

and merged with larger ones and the total amount of pension funds

decreasing, as well as headlines about the low coverage ratios of the

pension funds over the last years.

How does the services provider of over 80 pension funds in the

Netherlands experience the crisis, with the media writing about

decreasing coverage rates, falling interest rates and increasing

investment risk?

The response is clear. Of course, the financial crisis changed the

markets since changing regulation does have an impact, but the

pension funds still have a considerable amount of capital available.

Clients of Syntrus Achmea, in this case the boards of pension funds;

decide how they want their capital invested and decide the amount of

risk they are willing to take. Syntrus Achmea supports the boards in an

appropriate investment strategy.

“Pension funds are pretty healthy”

An important metric for a pension fund is the coverage ratio. Due to a

decline in stock exchanges, historical low interest rates and increasing

life expectancy, the coverage ratio has decreased over the last years

up until 2009. Fortunately the ratios have been increasing lately and

have already returned to a level with a better safety margin. Though

the coverage ratio is still relatively low, the pension funds’ capital has

never been this high.

How is the situation in real estate and private equity? With the housing

bubble and the stock markets collapsing in the past years, the situation

for real estate and private equity is problematic. As we have seen in

the news lately, stock markets are regaining strength, the real estate

market however remains difficult.

“The pension industry offers interesting career perspectives”

Private Equity is used within the investment portfolio as indexation

and in order to add a little upside. Real estate is also included in the

portfolio but in limited amounts in order to compensate for inflation.

Portfolios are relatively strong by using A-locations and A-investments.

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Thomas VerschuurenTeam Head Client Portfolio Management

Syntrus Achmea

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The pensions industry is being looked after by the pension fund boards

and services providers like Syntrus Achmea. There are still enough

challenges in the next few years with the Eurocrisis, new regulatory

requirements for pension funds and a public debate about pensions.

From a student perspective the pension funds might appear difficult

and sort of dusty as an angle for their future careers.

As we have experienced during the Case Day of Asset | Economics

provided by Syntrus Achmea, pensions can be very appealing,

challenging and even fun to work with. If you enjoy investment and risk

management in a dynamic environment, and you want to know more

about this topic or Syntrus Achmea as a potential future employer, you

can always contact Asset | Economics.

How is our pension build? The 3 pillars of Dutch Pensions

The AOW (de Al-gemene Ouder-doms Wet) is financed through premiums by the government and general govern-ment resources.

The collective employment payments by the employer. Every employee pays an amount of their salary to the pension fund.

The third pillar is constructed in-dividually. There are several ways to build a pen-sion outside the collective system. Examples are bank savings or pension insur-ance.

1 32

Globally, costs of health care are rising fast. In the period 2000-2009

in the OECD costs for health care rose 4.7 percent on average. The

biggest spender as percentage of GDP is the U.S. (17.6 percent in

2010), followed by the Netherlands (12.0 percent). Only about a

quarter of the growth in health care is related to demographics, such

as aging and prevalence of welfare illnesses (COPD, diabetes, heart

failure, obesity). About another quarter is related to new treatment

possibilities, and the rest is sheer growth.

Healthcare is pushing away other public spending, especially in a

time of zero economic growth, and governments feel the urge to limit

the growth of public health care spending. One apparently obvious

solution would be to invest in prevention of illnesses. In table 1 the

costs of behavior-related illnesses are presented for residents in the

Netherlands. You can see that for example 86 percent of lung cancers

are attributable to smoking. This means that prevention of smoking

could decrease health care costs with possibly 280 million euro.

Table 1 also provides us with a rationale for doing what we students do

best: drinking! The next beercantus could prevent your next coronary

infarct, and save society 500 million in costs for strokes. Cheers!

So does this table provide us with a cheap solution to the rising health

costs, the famous easy pickings? Obviously not. With an incidence of

100 percent the greatest cause of death is birth. People die, be it not

from COPD then some other (more expensive) illness will do the trick.

If prevention measures save a person from lung cancer, that same

person might get dementia, Parkinson’s, and fracture a couple of hips

on the way to the hospital. And then I didn’t mention the costs of

residence or retirement benefits!

Actually most health care costs are made in the last life year, regardless

of age. So from a sustainable health care point of view prevention will

not do any good. The personal benefits are large though, in the form

of increased quality of life. The costs to society are almost as large, in

the form of increased social services. I see some freerider options here,

but in my role as public servant I would recommend to you smokers:

keep on steaming, you’ll reach the harbor faster!

Equilibrium P

revention and the cost of health care

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Prevention and the cost of health care

By: Niek Stadhouders

Graph 1: Health care spending as percentage of GDP (2010)

Table 1: Contribution of unhealthy behavior to the cost of health care of causally related illnesses for residents in the Netherlands, aged 20 or older in 2010

Niek Stadhouders graduated his Masters’ in Economics at Tilburg

university in 2012. After his graduation he followed a postacademical

education for policy economist at the ministry of Health, Welfare and

Sports in The Hague. The articles are written on his own title, and are

not representing the view of the Dutch Ministry of Health, or are in

any way attributable to the Ministry or its representatives. For more

information about the articles, contact nw.stadhouders@minvws.nl.

About the author:

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Attributable to (in percentages) Costs in million euro Smoking Obesity Inactivity Alcohol Diabetes 1.137 7 51 10 0 Lung Cancer 326 86 0 0 0 Cancer Others 1.618 12 8 5 8 Acute Myocard Infarct 706 40 15 16 -16 Chronic Hart Failure 545 15 12 0 0 Stroke 1.918 22 6 24 -26 COPD 880 79 0 0 0 Arthrose Hip 150 0 14 0 0 Arthrose Knee 146 0 29 0 0 Lower Backpain 1.116 0 7 0 0 Total 8.543 24 13 9 -6

How is our pension build? The 3 pillars of Dutch Pensions

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uzzl

e Einstein’s Conundrum

Some have said Einstein’s riddle is the worlds hardest riddle. It isn’t. The story is that Albert Einstein created it as a young man, and claimed that 98 percent of the world population couldn’t solve it. Though I’m not certain of the true origin, it is a tough one, and it is a good way to exercise your brainpower. Here it is:

- There are five houses next to each other on a street, painted five different colors.

- A person of different nationality lives in each house.

- The five home owners each drink a different beverage, smoke a different brand of cigar and keep a different pet.

Einstein’s riddle is simply this: Who owns the fish?

Of course, you need the necessary clues:

1. The British man lives in a red house.

2. The Swedish man keeps dogs as pets.

3. The Danish man drinks tea.

4. The Green house is next to, and on the left of the White house.

5. The owner of the Green house drinks coffee.

6. The person who smokes Pall Mall rears birds.

7. The owner of the Yellow house smokes Dunhill.

8. The man living in the center house drinks milk.

9. The Norwegian lives in the first house.

10. The man who smokes Blends lives next to the one who keeps cats.

11. The man who keeps horses lives next to the man who smokes Dunhill.

12. The man who smokes Blue Master drinks beer.

13. The German smokes Prince.

14. The Norwegian lives next to the blue house.

15. The Blends smoker lives next to the one who drinks water.

First of all, a chart is the most useful tool for riddles like this. Make a chart with five columns for the five houses, and five rows for house color,

nationality, type of drink, type of cigar, and finally, pets. This gives you 25 boxes to fill in. Since clue #8 states the man in the middle house drinks

milk, you can start by filling in that one. Now you are on your own. This is a decent riddle, and especially fun for those who like riddles with systematic

solutions. Even if you can’t get the solution, you’ll get a good mental workout doing Einstein’s riddle.

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See you next year!