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ECONnectFACULTY OF ECONOMICS AND BUSINESS & EKONOMIKA ALUMNI VOLUME 3 ISSUE DEC.2014 JAN.FEB.2015

Education@FEB

FEB acquires EQUIS-

accreditation.nterview with Ludovic Deprez,

Luc Sels, Tom Van Puyenbroecknd Steve Van Uytbergen

Research@FEB

Can we explain the

evolution of House prices?

Students@FEB

Top Sport @FEB:

Jesse Stroobants

Alumni@FEB

Alumni For

Entrepreneurship

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Education@FEB p 4

Students@FEB p 24

Research@FEB p 16

Alumni@FEB p 33

Alumni For Entrepreneurship. p 33 What is AFE? p 37

Young Alumni Day p 38 Lustrum: Herman Van Rompuy p 39

Top sport at FEB: Jesse Stroobants p 24

My rst weeks at the FEB p 27

Econnect 24-hour Run p 29

A different perspective:

Discover the world @ FEB p 30

Vader Mercuur. A true economists beer

in honour of 85 years of Ekonomika p 32

Can we explain the evolution

of house prices? p 16

In the long run we are all dead,

even in real estate p 19

Telematics insurance:

the safer you drive, the less you pay p 20

The academic heroes of Robert Boute p 22

Contents

FEB acquires EQUIS-accreditation. p 4

Honorary doctorate for Justin Yifu Lin p 9

Awards, chairs and appointments p 12

Quiz for Vriendtjes Tegen Kanker p 14

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As the last days of the year approach, the time has come to self-reect.Plans which are made in the beginning of the year often disappear (withina few months) during the great spring cleaning. On the other hand, it seems

that the presence of Saint Nicholas and/or Santa Claus stirs up the memory of

vaguely made resolutions. Those who want to progress, have to dare to look

back critically on delivered performances throughout the year, which can serve

as the foundation for new resolutions.

A year ago, focus was on determining the future of our alumni association,

following the integration exercise within the FEB. In mid-May (the decision was

made to adjust the existing structure and to open it up to alumni who recentlybecame part of the FEB alumni. In this context the integration of Absoc Alumni

(Campus Antwerp) can be viewed as a best practice in every sense of the

word. In just 6 months a new association was constructed that has now

nished its rst activity!

The main resolution for next year is to work towards a similar model with the

alumni of Campus Brussels. As stated in this issue, this is a process that takes

some time since preserving the identity is crucial in this process. Furthermore,

the success of the latest Ekofeest has fueled the demand for yearly meetings.

As a result, certain parts of the alumni organisation were given new life and

I would like to ask all year managers or people who want to organize a

yearly meeting to contact us. Finally, in order to follow the Utile Dulci motto,

mentoring/coaching programmes are being developed with help of the faculty.

These programmes will be presented to you in the course of 2015. In short, a

number of plans are being developed to further expand the alumni association!

With no less than 41 (self organised) activities in the past year, I would also

like to thank the numerous board members and staff members who commit

themselves to the organization of these activities for free.

On behalf of Ekonomika Alumni, I would like to wish you a Merry Christmas

and a great New Year! Let your rst resolution be to join us at one of our

numerous Ekonomika Alumni New Years receptions!

Ludovic Deprez

Vice-Chairman

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The Faculty of Economics and Business recently acquired the prestigious EQUIS

accreditation for its four campuses. This accreditation conrms FEBs rightful

place amongst the top business schools. The perfect occasion for an interview

with Dean Luc Sels and Campus Deans Tom Van Puyenbroeck (campus Brussels)

and Steve Van Uytbergen (campus Antwerp). Ludovic Deprez, Executive Director

of Ekonomika Alumni, joined the interview to shed light on the importanceof EQUIS for the Alumni Association, but also to discuss the integration of

the Antwerp Absoc Alumni association.

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Education@FEB

FEB ACQUIRES

EQUIS ACCREDITATION

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WHAT PRECISELY IS THE EQUIS ACCREDITATION

AND WHICH ORGANIZATION GRANTS IT?

Luc Sels EQUIS is an international accreditation system

aimed at business schools and faculties in the eld of business.The accreditation is managed by the European Foundation for

Management Development (EFMD), a non-prot organization of

business schools and companies that aim to promote, improve

and internationalise management education. This also explains

why the accreditation is not only granted on the basis of

excellence in education, but also on the basis of relevance of

education and research for companies and businesses. In the

eld of business schools and faculties focusing on business

education, three important accreditation systems can be

distinguished: AMBA (The Association of MBAs), AACSB

(The Association to Advance Collegiate Schools of Business)

and EQUIS (EFMD Quality Improvement System). EQUIS is the

most exclusive label, it is also called the Rolls Royce of

accreditations. It is the most difcult to acquire. The limited and

exclusive list of business schools that are EQUIS accredited

illustrates this well.

WHY IS ACHIEVING THE EQUIS ACCREDITATION

SO IMPORTANT FOR THE FACULTY AND ITS

4 CAMPUSES?

Tom Van PuyenbroeckThe accreditation has a very strong

international component. Acquiring the EQUIS label is important

for FEBspartner network. This accreditation makes working

with other high-quality partners a lot easier. That has been animportant factor in the decision process. Secondly, the

accreditation also helped us in the process of integrating the

four campuses. We have used the EQUIS accreditation system

as a framework for the further implementation of our integration

process. The preparation and the actual visitation have set

things in motion that were coming either way, but the pace was

increased considerably because of it.

Luc Sels We would be much less one faculty today if we had

not gone through this accreditation process.

Steve Van Uytbergen What you nd with each visitation

process, is that you are obliged to do to some self-reection.

You have to write a self-evaluation report, something which is

always a useful exercise and in this case also had an added

value in the integration process. In addition, the award is an

important boost to the international recognition and the further

internationalisation of each of the four campuses.

Tom Van PuyenbroeckEach visitation also creates something

akin to exam stress, particularly at the time of the commissions

visit. That was nodifferent here, and this feeling was shared by

people of all the campuses. That too creates a bond.

WHAT DID THE VISIT OF THE EQUIS COMMITTEEENTAIL EXACTLY?

Luc Sels (laughs) Getting very little sleep.

Tom Van Puyenbroeck A group of directors and deans of

foreign universities or business schools visited us for three days.

To get a good idea of how we engage with our stakeholders,

they attended several panels. They looked at our faculty

governance: how is a faculty managed? There was also a focuson internationalisation. The programmes and student affairs

were looked at, but they also took a close look at the HR policy

and nancepolicy. In fact they tried to get a 360 degree image

of the faculty, ending in an assessment whether you meet the

EQUIS standards.

Luc SelsThis kind of review checks an organization from top

to bottom. Everything is analysed: technical matters such as

our risk management, our nancial position and solvency, the

policy on diversity and sustainability, research and development,

education, corporate connections, etc. In addition, a wide range

of experts from the KU Leuven was interviewed as well:

the technical support services, the education services, the

personnel service, the rector and the chairman. But also

the Alumni association. No stone was left unturned.

This creates a very comprehensive view of a school. You have

to live up to the EQUIS standards in all those domains, only a

few exceptions are allowed. You cant be below par in more

than two or three domains.

WHICH ARE THE STRENGTHS HIGHLIGHTED BY

THE REVIEW AND WHAT NEEDS TO BE IMPROVED?

DOES THIS DIFFER FROM CAMPUS TO CAMPUS?

Tom Van PuyenbroeckThe Peer Review Team has highlightedthe Corporate Connections of the faculty as an area of

excellence. That was perhaps a bit unexpected since most

people do not see us as a standard business school, but as a

traditional faculty within a university structure. It turned out that

our corporate connections are an important strength, which is

a nice surprise. The Corporate Council of the FEB played an

important part in this decision, and also in the preparation.

Luc Sels If you think about it, its not at all that surprising, but

sometimes something like this just has to be brought to your

attention by a third party. What also made a difference are the

researchchairs, the alumni association and the corporate

partners who help support the faculty. The Peer Review Team

appreciated the nature and depth of FEBs cooperation with

businesses. Its about much more than corporate sponsoring.

Its an intensive research collaboration with input from both

sides. In addition to the corporate connections, the level of our

research was also strongly highlighted, as well as the research-

based education. The committee was also impressed by our

students. Those are the domains that really caught their eye.

Tom Van PuyenbroeckAs far as the corporate connections

are concerned, there are slight differences between each

campus. Brussels has a historical, structural contribution of

visiting professors and resonance councils which are useddifferently in Leuven, but it is the overall image of the faculty

across all campuses which got us this great result.

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EQUIS Accreditation is awarded by the EFMD,

recognized globally as an accreditation body

of quality in management education with

established accreditation services for

business schools and business school

programmes, corporate universities and

technology-enhanced learning programmes.

EQUIS looks for a balance between high

academic quality and the professional

relevance provided by close interaction with

the corporate world. A strong interface with

the world of business is, therefore, as much

a requirement as a strong research potential.

EQUIS attaches particular importance to the

creation of an effective learning environment

that favours the development of students

managerial and entrepreneurial skills, and

fosters their sense of global responsibility.

It also looks for innovation in all respects,

including programme design and pedagogy.

Institutions which are accredited by EQUIS

must demonstrate not only high general quality

in all dimensions of their activities, but also

a high degree of internationalisation.

FEB boasts the largest international

exchange network of any faculty in Flanders

and has extensive links with the corporate

world. National accreditation (NVAO)

demonstrated FEBs dominance as the top

school in Flanders. International EQUIS

accreditation now asserts FEB is not a big

sh in a small pond, but an international

leader in research and education in the eldof economics and business.

By achieving this accreditation, FEB afrms

its place amongst a select group of

accredited schools, such as Amsterdam

Business School, Babson College, BI

Norwegian Business school, Copenhagen

Business School, Edhec, HEC Paris, IESE,

IMD, Insead, Judge Business School

(Cambridge), London Business School,

Rotterdam School of management, SadBusiness School (Oxford), Stockholm School

of Economics, etc.

Steve Van Uytbergen The corporate connections are

present on all campuses, but not always in the same way.

For example, on the Antwerp campus, company projects are

part of the dissertations of our Bachelor students. As such,

education in cooperation with companies is structurallyembedded. The concept of compulsary business projects for

all students is relatively unique within the faculty. The

accreditation applies to the entire faculty, but the committee

also paid a lot of attention to the identity and strengths of each

campus individually.

WHY IS THIS ACCREDITATION IMPORTANT FOR THE

(CURRENT AND FUTURE) STUDENTS OF THE FEB?

Luc SelsThe accreditation raises the bar for the FEB. You will

no longer be compared with other Flemish universities, but with

other accredited schools such as the London Business School,

the Guanghua School in Beijing, HEC Paris or Singapore

Management University. You really do play in another league.

We will therefore have to be even more strict on our own quality,

and that can only benet the students. Some things still have

to be developed further. The mix between analytical skills and

management skills is one of these. This attention to management

skills is more strongly developed on the other campuses than

in Leuven. This is a work in progress but also an exercise in

balance, since we do not intend to lose our focus on analytical

skills. The access to international partners is important for the

students as well. The accreditation allows us to forge even more

partnerships with top business schools. EQUIS also contains

lots of new focus points, for example sustainability and diversity,which we need to focus on even further within the programmes.

That leads to better education and a better preparation for the

labour market. In addition, you have the international students

of whom we know that they are more likely to opt for schools

which have been accredited. Foreign students have little

information to make a choice and they are easier led by an

accreditation like the EQUIS label. This also implies that we will

get a more international environment in the FEB. And I also think

that the value of the degrees will become greater, especially for

international careers.

Tom Van PuyenbroeckIn Brussels we have many international

students, and they were the rst ones to notice that we had

acquired the EQUIS accreditation: Yes, we study at a school

with the EQUIS label!.

Education@FEB

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AND WHAT IS THE IMPORTANCE FOR THE ALUMNI?

Ludovic Deprez Well, we can include the alumni associationin this move for integration. Four campuses, each with its own

past for what the alumni operation is concerned. We must now

move towards one central cooperation. And for the alumni

operation, we want to work to make it a stable whole without

losing the identity of each campus.

THIS ACCREDITATION IS VALID FOR 3 YEARS.

WHAT HAPPENS WHEN THAT TERM EXPIRES?

Luc Sels We have to submit a progress report each year on

the areas of improvement. After three years, another committee

will visit to reassess the process again in all ten domains.

And then there are three possible outcomes. Either we lose

the accreditation, or we get an extension for 3 years, or we

get an upgrade to a 5 year accreditation. That last one is the

most desirable outcome, obviously.

Tom Van PuyenbroeckAn accreditation for 5 years is hardly

ever awarded to a school which applies for the rst time. So we

should be quite satised, especially because we were in the

middle of the integration process.

Luc SelsThe integration has proven to be both an advantage

and a disadvantage. On the one hand, the committee noted

our approach to the integration as a strong point, along withthe corporate connections. They were pleasantly surprised that

after only one year we were already so far along in the

integration process. On the other hand, it was noted that it is

impossible to complete such a large-scale integration after only

one year. We must demonstrate that within three years from

now we form one faculty in more than one way. This is

reasonable, since we work hard day in and day out to make it

so. The policy on sustainability is very elaborate in Brussels for

example, not so in Leuven and Antwerp. Within three years

there should be a faculty-wide policy. In internationalization,

each of us is currently working with its own portfolio of

international partners, something which needs to change.

The three working points are: nalizing the integration, attracting

more international faculty and putting more international

programmes on the market.

THE BENEFITS OF EQUIS

ACCREDITATION

International recognition of excellence

Mechanism for international benchmarking

with the best

Sharing of good practice and mutual learning

Agenda for quality improvement and future

development

Acceleration of quality improvement in

international management education

Asserting a strong international reputation

and meeting the high standards of the best

business schools in the world

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WHAT WERE THE ADVANTAGES FOR ABSOC ALUMNI

TO INTEGRATE IN EKONOMIKA ALUMNI? AND WHAT

ARE THE BENEFITS FOR EKONOMIKA ALUMNI?

Ludovic Deprez Student association Absoc asked to

integrate following the integration of the faculty. We sat down

and I was surprised how smoothly it all went. We agreed almost

instantly, the overall structure was to be strengthened by using

each others strengths. There are concrete benets for both

sides, especially since we can now offer a wider range to all of

our graduates.

Steve Van Uytbergen In my opinion, an important leverage

was created by the Absoc student association, which has been

governed by some strong boards in recent years. Absoc promoted

the idea to revitalize a local alumni organisation, which in all

honesty had been on a back burner for quite some time on the

Antwerp campus. Here too we wanted to use the integration

as a boost by putting the new Absoc Alumni under the overall

structure of Ekonomika Alumni, an organization that can fall

back on a tradition of many years and a strong structure.

In addition, the alternative of a completely independent alumni

group for the Antwerp campus wouldnt have been logical at all

in the integration context. Thus, the decision was quickly made.

Ludovic Deprez What I would like to add is that Absoc is a

subset with its own board, it is still responsible for its own

activities and finances, but they can use our central

administrative ofce, our experience, our connections. It is

important that the graduates keep a bond with Absoc and are

not just dropped in an organization with which they have no

relationship. Now, there are 15 or 16 subsets within the alumni

operation (such as regions, departments, generations, Absoc)

that each have their own operation, but which we stimulate to

engage in cooperation on some aspects. If we, for instance,

have an activity in Antwerp which is organized by Absoc for

recent graduates, then the entire region of Antwerp, every

recent graduate and Absoc will be invited. In the past this would

have only been Absoc. Only by cooperating, canwe achieve a

stronger product.

Luc Sels It is important that we have these regional centres

and that this matches the activities of Absoc Alumni. It's not

just joining a group in Leuven, but rather one in your own

province. This also offers opportunities with Brussels, which

also has a well-developed group. If we can expand the activities

on both sides, it will only make us stronger as an alumni group.

ARE TALKS WITH THE BRUSSELS ALUMNI

ASSOCIATION ON THEIR WAY?

Ludovic Deprez We will start talks mid-December, to discuss

the possibilities and possible difculties. We have to try to

preserve the identity of each campus and to integrate this

identity in the overall structure. For Absoc that went pretty

smoothly since there was demand from both sides.

The intention would be to strive for a similar structure as we have

with Absoc, just because we see that that works quite well.

HOW MANY MEMBERS WILL BE JOINING AND HOW

MANY MEMBERS DOES EKONOMIKA ALUMNI NOW

HAVE IN TOTAL?

Steve Van UytbergenAbsoc Alumni is currently still in its

startup phase. The recruitment campaign for new members is

still ongoing. So it is a little early to be giving a meaningful

indication of the number of members.

Ludovic Deprez I always nd it dangerous to talk about

members in the sense of paying members; after all, we are on

organisation for all graduates. You have people who prefer not

to pay their membership but who do often come to activities.I believe that our primary goal should not be to have as many

paying members as possible, but to have as many activities as

possible in order to appeal to and engage everyone. Whether

that is with Absoc, in West Flanders or at the Department of

P&L, it makes no difference.

Luc SelsThis evolution mirrors what we have witnessed with

the faculty. You start with negotiations, yougrow into an

association with autonomous institutions, and finally, you

integrate legally and organizationally. Many of the alumni of the

Antwerp and Brussels campuses never studied in Leuven.

They cannot have a common identity. This shared background

will only be present in the recent graduates. But we are heading

in the same direction with a corporate structure which includes

many identities. So we will use each other's economies of scale

and, hopefully, evolve into a stronger entity. Even so, student

groups will always remain local, and that does affect the alumni

operation a bit. I think you'll always be working with different

chapters or subsets within one alumni structure. But as long as

all those chapters are placed into an overall structure and open

up their activities to each other, the integration will be an

enriching experience.

Michael Boelaert

INTEGRATION ABSOC ALUMNIIN EKONOMIKA ALUMNI

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Honorary doctoratefor top Chinese economist

Justin Yifu LinOn Monday, 8 September, Vlerick Business School and KU Leuven jointly conferred an

honorary doctorate on Professor Justin Yifu Linn on the occasion of the ofcial opening

of Vlericks academic year. Professor Lin is one of Chinas foremost economists and is

the former Chief Economist and Senior Vice President of the World Bank.

Professor Lin was born on 15 October 1952 in Taiwan. He received an MBA from the

National Chengchi University (Taiwan) in 1978, an MA in political economy from Peking

University in 1982, and a PhD in economics from the University of Chicago in 1986.

He has held positions at top universities including Yale and Duke and was co-founder of the

China Centre for Economic Research and the National School of Development at Peking

University. He has advised many international institutions, including the Asian Development

Bank and the United Nations Millennium Task Force on Hunger. In 2008, he became Chief

Economist of the World Bank, the rst person of Asian descent to hold that position.

Currently, Justin Yifu Lin is pursuing an ambitious research project that examines

industrialisation in countries undergoing rapid development. His research also sheds new

light on the causes of stalled growth in poor regions.

PATIENCE TO COOK A STONE

Professor Louis-Henri Verbeke, Chairman of the Board of Directors of Vlerick Business

School, delivered the laudatio for the new doctor honoris causa. He emphasised

Professor Lins bold yet gentle demeanor and lauded Lins impressive contributions as a

researcher and as Chief Economist for the World Bank.

Professor Lin played an important role in planning Chinas modern economic

development. In his work, he resolves the ostensibly irresolvable: he built a world-

encompassing career without losing sight of China, he reconciled economic performance

with real social harmony, and he successfully brought free market thinking in line with

the needs of developing countries. None of these trajectories are easy, but, to quote one

of his colleagues, Professor Lin possesses the patience to cook a stone.

In his honouree address, Professor Lin spoke specically about the Chinese economy

and his vision of the role of the market and government in the economy. Since the

transition from a planned economy to a market economy in 1979, Chinas economic

development has soared. China has transformed itself from a poor, agricultural, inward-

looking country into an economic world power and world producer. However, the

sustainability of the Chinese growth model is constantly questioned. In his speech,

Demystifying the Chinese Economy, Professor Lin explained why China has been able

to support such dynamic growth, the price the country has paid for its growth and

whether China will be able to sustain this growth in the years to come.

Rector Rik Torfs closed the session by ofcially conferring the honorary degree on

Professor Lin. In the citation, Lin is lauded for his contributions to the advancement ofChinese society, his academic accomplishments in the area development economics,

his pioneering work as a co-founder of the National School of Development and his

courage and dedication in defence of universal human rights.

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Laudatio for Professor Justin Yifu Lin,

delivered by Louis-Henri Verbeke,

Chairman of the Vlerick Business School.

Rector Torfs

Your Excellencies

Esteemed Colleagues

Ladies and Gentlemen

Dear students

It was not so difcult I thought, to

introduce Prof Justin Yifu Lin to you.

These are the words I took from the titles

of his 25 books: Demystifying, The

Quest, Rethinking, Development and

especially Against the Consensus.

He is not the only economist who begs to disagree; very few

however distinguish themselves in doing so as world class

players. Even fewer would give credit to their team rather than

themselves. Almost none have created an institution which

provides rst rate thinking to a leading nation and trains that

nations economic leaders.

The name he chose has a meaning in the thought of Confucius.

Yifu Lin means: A persistent man on a long journey, I learned,so perhaps, just perhaps, his path was unavoidable.

He is a famously eminent scholar of course. Famous in many

ways. Courageous. Intensively private. Gentle. Paradoxical.

Polite but reportedly desperate when presented with a personal

business opportunity.

With a PhD of the University of Chicago, he went back to China

with free market thinking but not the Chicago version. He

would dispute and be very annoyed by the claim that he created

a Chinese version of free market thinking. Since we aim to

please him, at least today, I will restrict myself to suggesting,

sotto voce, that he assembled a team which was not irrelevant

to some of the changes which occurred in China.

Prof Lin is an unusual man. He was born on an island off the

coast of China. He was the rst Chinese to return with a US PhD

after the cultural revolution. He was the rst Asian to be named

Chief Economist of the World Bank but, more importantly,

so he replied to a journalist in a rare moment of cheekiness,

I quote, more importantly I may be rst Chief Economist of the

World Bank understanding the needs of developing countries.

Since providing loans to developing countries is the goal of the

World Bank that comment went far.

He is a bit of a hero for all those who profess and try to live the

world of competing truths. State intervention and free markets,a global career and loyalty to his people, academic excellence

and pragmatically building institutions, political clout and civil

society, economic performance and harmony.

To me he is the kind of man whom Gandhi thought of when he

stated that one has to be the change one wants to see.

He also makes me think, at times, of the other great Asian

economist, Sen of India, the 1998 Nobel Prize in Economics,

who shares the idea that justice cannot be seen in binary terms

and must be managed in a continuum , an idea opposite to

some Western abstract ideals and single truths.

Ladies and Gentleman, I agree with Prof Lin that, whether in

economics or in justice, one size does not t all. As a man from

the East and a man of the West, he does not just serve China.

He pursues development e.g. for Africa. A global man who helps

us to practise the ultimate Greek virtue Thaumazo, the

intellectual attitude most necessary of academics in general and

economists in particular to distinguish rather than to ideologize.

I cannot but thank the Katholieke Universiteit Leuven, with the

Universiteit Gent, the Schools parent university, for gracing this

event with its centuries old tradition. I personally thank the

University and Rector Torfs for the honour of presenting this

Laudatio in the Universitys traditional robes, an honour which

I do not deserve.I cannot end this laudatio without acknowledging the 20th

Anniversary of the National School of Development, NSD,

founded by Justin Lin as the China Centre of Economic

Research, at Peking University, which the Vlerick Business

School proudly partners with.

NSD is most arguably the leading think tank for China, a

major educational reformer and a pioneer in economic and

management thinking.

Let me end with Prof Lins introduction to the brochure

published for the National School of Developments 20th

anniversary. He quotes the 4th century Chinese philosopher

Mencius by some likened to Socrates: If I reect on myself and

nd myself to be right, then even if it be an army of a hundred

thousand, I will go forward. That and Renew yourself day

after day, time and again are the mottos of the NSD and its

founder Professor Dr Justin Yifu Lin, the persistent man on a

long journey . One of his colleagues reportedly said about him:

He has the patience to cook a stone.

Prof Justin Yu Lin does satisfy every possible meaning of the

concept of distinction. Todays event is but acknowledging this.

For these reasons, Honourable Rector, I invite you on the

recommendation of the Academic Counsel of the Katholieke

Universiteit Leuven as parent university of Vlerick BusinessSchool, and the Vlerick School to confer the honorary

doctorate of the Katholieke Universiteit Leuven upon Professor

Dr Justin Yifu Lin.

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Press conference Professor Dr. Justin Yifu Lin Q&A

WHAT DOES THIS HONORARY DOCTORATE MEAN

TO YOU?

Its a privilege to receive this honorary doctorate from a very

prestigious institution in Europe. On the one hand, its a

recognition of my involvement in the development of an

academic institution and on the other hand, it provides a platform

for further engagement with Belgium. I can say its a great

opportunity and a great honor for me.

WHAT ARE THE MAIN CHALLENGES FOR THE

CHINESE ECONOMY IN THE YEARS TO COME?

In my analysis, I always look at the potential of growth and thechallenges. If you can overcome the challenges and tap into

the potential, you can grow. The opportunity lies in the

advantage of backwardness (a developing country borrows

technology, industry and institutions from the developed

countries at low risk and costs). China has the potential to

grow to 8% (average growth). The main challenges that China

must overcome are income disparity and corruption. The roots

of both challenges are the same, but we have to cope with

them to satisfy the people, especially for the low and middle

income people who envy the rich. One way is increasing

discipline and monitoring the Chinese government. They have

to help the poor in terms of education, housing, and

distribution of income Another way is to eliminate the

possibility for corruption.

IS THE CRISIS IN UKRAINE A CONCERN FOR

CHINAS ECONOMIC RELATIONS WITH RUSSIA,

OR LOOKING AT THE EUROPEAN TRADE

SANCTIONS -, RATHER AN OPPORTUNITY?

China is a market economy in the globalizing world and we will

tap into the potential of new opportunities. China is poor in

resources but Russia has a lot. China has been negotiating with

Russia for access to natural gas and other resources for a long

time. Recently, we concluded an agreement with Russia for theuse of the gas for twenty years, worth 400 billion US dollars.

So what is good for China, is good for Russia.

HOW DO YOU EVALUATE THE ALLIANCE BETWEEN

SCHOOLS IN LEUVEN AND BEIJING? WHAT ARE

THE MAIN REASONS WHY THE LEUVEN STUDENTS

SHOULD CHOOSE CHINA/THE BEIJING UNIVERSITY

TO STUDY ABROAD?

We are proud to have this sort of collaborations. In a process

of modernization, we need to benet from each other. Our MBA

program in China, as a result of our collaboration with Vlerick,

has been ranked rst by prestigious institutions like Financial

Times and Bloomberg. This alliance is also good for Vlerick

because China is likely to maintain an economic growth. By the

end of this year, China may be the largest country in the world

in economic sense (with the largest market). So there are hugebusiness opportunities in our country. If students are coming to

China, it will benet their careers. I see this collaboration as a

win-win situation for both Chinese and Vlerick students.

IMPRESSIEVERSLAG

On the occasion of the opening of the academic year at Vlerick

Business School, an honorary doctorate was procured to

Professor Justin Yifu Lin. In advance, there was a small press

conference for economic media where Professor Lin described

the headlines of his book Demystifying the Chinese economy.

The keynote of the lecture was advantage of backwardness.

A developing country can benet from experiences and

knowledge of developed countries. China achieved great results

with low risk and lower costs because they borrowed

technology, industry and institutions from the advanced

countries. Besides this, other relevant topics of the Chinese

growth were discussed, inter alia the costs for success and tips

for other developing countries.

I can conclude that it was a very interesting afternoon and a

true honor to meet the man whos considered very inuential

in the analysis of economic growth in China.

Josephine Verschoore

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Education@FEB

Aw

ards,c

hairsa

ndapp

oitmen

ts

12

KBC CHAIR: A DATA QUALITY FRAMEWORK FOR EFFECTIVE

RISK DATA AGGREGATION AND RISK REPORTING

The objective of this research

chair is:

to conduct research for the

development of a Data Quality

Framework for nancial data and

for the inuence of business

processes and ICT-architecture

on data quality;

to conduct research on the way

to achieve a high quality ofnancial data.

The titleholders of this chair are

prof. dr. Monique Snoeckand

prof. dr. Wilfried Lemahieu

Prof. Anne ter Braak wins IJRM-EMAC Best Paper Award

Professor Anne ter Braakhas won the 2013 IJRM-EMAC Best Paper Award.

She received the award in Valencia, Spain, at EMAC 2014, the annual conference of

the European Marketing Academy. Does private-label production by national-brand

manufacturers create discounter goodwill? (co-authored by Barbara Deleersnyder,

Inge Geyskens and Marnik G. Dekimpe) was considered the best paper published

in the International Journal of Research in Marketing in 2013.

Paul Verdin has

been appointed

as Senior Fellow

at the Mossavar-

Rahmani Center

for Business and

Government

at the Harvard

Kennedy School

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13

KU LEUVEN AND COCA COLA SERVICES

SET UP A NEW CHAIR.

On 28 october, the agreement between the Coca-Cola

Services NV/SA firm and the KU Leuven was officially signed,formally establishing a new research chair. This chair is

called: "COCA-COLA CHAIR: Gaining business value out

of Big Data and Predictive Analytics" The titleholders of this

chair are Professor Dr. Wilfried Lemahieu and Professor

Dr. Bart Baesens

2015

Francqui chair

Professor Bram De Rock

(FEB) will hold the 2015

Francqui chair at the

Universit de Namur.

Vlaamse

Wetenschappelijke

Stichting

The Prize of the Vlaamse

Wetenschappelijke Stichting

has been awarded to

professor Laurens Cherchye,

for his joint research with

professors Bram De Rock

and Frederic Vermeulen

(all FEB)

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Education@FEB

14

Quiz for

Vriendtjes Tegen KankerA great combination of quiz fun, humor and warm commitment

for charity: that is the summary of the quiz for Vriendtjes Tegen

Kankerthat took place on October 7 in the Pieter De Somer

auditorium. Following the well-known concept of De Pappen-

heimers, three panels with each a famous Fleming, a professor

at the Catholic University of Leuven and a chairman of a student

association battled for eternal glory!

Prof. Dr. Luc Sels, Klaas Delrue and Koen Spliet (for Economicsand Business), Prof. Dr. Luk Draye, Bart Cannaerts and

Michael Bauwens (for Arts) and Prof. Dr. Ignace Vergote, Els

De Schepper and Victor Mazereel (for Medicine) were grilled

by the Funds godfather, Tom Lenaerts. All under the super-

vision of juror Rik Torfs and the audience, that also played for

great prizes. After an exciting battle the team with Bart

Cannaerts was allowed to call itself the winner of the evening!

Thanks to the numerous attendees the Vriendtjes were able

to make a nice contribution for the much needed research

for ovarian cancer, a rare and aggressive form of cancer that

affects women of all ages.

Vriendtjes Tegen Kankerwants to give every woman a fair

chance in the fight against this silent killer and at the same

time increase awareness for the disease. By selling hand-

made jewels, participating in sports activities and other

various initiatives, money is raised for the research that falls

under the direction of Prof. Dr. Ignace Vergote, European

expert in gynecological cancer.

Ordering jewels or learning more about the functioning

and activities of Vriendtjes Tegen Kanker can be done on

www.vriendtjestegenkanker.be. You can also directly support

Vriendtjes Tegen Kanker by contributing on the donation

account of the KU Leuven, account number BE45 7340

1941 7789 (mentioning the credit number EVO-FOVTK1-

O2010). Gifts ranging from 40 euro are tax deductible.

Farewell to Louis Baeck,

the rst popular Flemish economist

On 29 November 2014, retired professor Louis Baeck

passed away at the age of 86. He was often

mentioned in the news, when discussing important

current affairs and especially development economics.

Books like De Wereld is ons Dorp and Staat Brazili

model? have become classics in their eld. Louis

Baeck was a student of Gaston Eyskens, father of

Mark Eyskens, former Prime Minister and Professor of

economics at the University of Leuven. His specialization

in development economics and the economy of

developing countries was inspired by his experience

in Congo, where he taught at the Lovanium University

in Kinshasa for a while before 1960. Ekonomika Alumni

will continue to commemorate Louis Baeck as a great

icon of the Leuven economic school. He applied the

motto La vie, c'est l'art de la rencontre daily.

On behalf of the Faculty of Economics and Business,

the alumni association Ekonomika offers itscondolences to the family.

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Research@FEB

Can we explainFrank Vastmans en Sven Damen

16

From the mid-1990s until the recent nancial crisis, house

prices have increased at an astonishing growth rate in almost

every developed country. Never before had house prices risen

so fast, for so long, in so many countries according to

The Economist (November 26th, 2011). Even after the crisis,

The Economist (November 26th, 2011; January 4th, 2014) and

many policy institutions argue that many property markets "are

still looking uncomfortably overvalued. But how do we measure

whether or not a house price is above its fundamental value?

PRICE-TO-INCOME RATIO

An often used measure of overvaluation in the housing market

is based on the price-to-income ratio. The indicator is dened

as the ratio of the average house price to the average income

per capita. Any deviation from the long-run average is interpreted

as over- or undervaluation. The idea is that temporary deviationsfrom income are possible, but that house prices will return to

its fundamental value in the long run. It is indeed perceived

wisdom among housing market observers that house prices

cannot outgrow income in the long run (see The Wall Street

Journal; July 25, 2002 among others). Figure 1 presents the

over- or undervaluation based on this indicator for Belgium, its

neighboring countries, the United Kingdom and the United

States. We observe that the current price-to-income ratio can

deviate signicantly from its historical average. Of all OECD

countries in which statistics are available, Belgium has the

largest deviation in the second quarter of 2014. The Belgian

price-to-income ratio is currently 44% above its long-run average.

The existing literature, however, does not nd convincing evidence

that house prices do return to income in the long run. Thus the

question remains: does there exist an alternative fundamental

value to which house prices converge in the long run? And if so,

what does explain the recent evolution of house prices?

BORROWING CAPACITY AS THE MOST IMPORTANT

DETERMINANT OF THE HOUSE PRICE

In our research, we nd convincing evidence that the amount

that households are able to pay through their mortgage is the

most important determinant of house prices, rather than income

alone. We adjust the commonly used price-to-income ratio as

most borrower have to borrow for their home purchase through

a mortgage. The amount that households are able to pay is then

critically dependent upon their borrowing capacity. Historically,

the growth in the borrowing capacity is driven by growth in theaverage income. But in recent decades, decreasing interest

rates had also an important role. This is not surprising: a

decrease in the interest rate of one percentage point, increases

the borrowing capacity by 10% given the same amount of

monthly mortgage payments.

Also differences in mortgage characteristics and the scal

advantage for homeownership have an important impact.

For these determinants, we observe large differences over time

and between countries. In the Netherlands (among other

countries), interest payments were fully deductible from taxable

income. The scal deductibility of interest payments resulted in

a large share of interest-only mortgages in the Netherlands.

Borrowers did not repay their mortgage to make maximum use

of the scal advantage. Belgium was, on the other hand, the

only country in the world where borrowers could deduct capital

payments (instead of interest payments) from their taxable

income until 2005. The deductibility of capital payments

provided a scal incentive to repay the mortgage over a relative

short time period as the scal benets are tilted towards the

nal mortgage payments.

For these reasons, we developed a model in which house

prices are dependent upon the long-term interest rate,

mortgage characteristics and the scal advantage for home-owners, in addition to the evolution of income alone. This allows

us to calculate one indicator, the ability to pay (ATP) for housing.

Figure 1: Over- or undervaluation in 2014Q2 based on

historical price-to-income ratio

Source: OECD. Own calculations.

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the evolutionof house prices?

17

The indicator measures the borrowing capacity of the average

borrower, given a xed percentage of income that goes to

mortgage payments.

In Figure 2, we construct our measure of ATP for housing in

Belgium. We step-wise include the different components in the

indicator: rst the evolution of income, second the effect of the

interest-rate, and nally the effect of the scal advantage for

homeowners. We are then able to compare these different

indicators with the evolution of Belgian house prices since 1973.

The yellow line at the bottom presents the evolution of average

disposable income per capita. A comparison of the yellow and

blue line, reveals that income alone is insufcient to explain the

recent evolution of house prices in Belgium. From the mid-

1990s, we observe a structural divergence between the

evolution of income and house prices, which is also observed

in many other countries. The green line presents the evolution

of the borrowing capacity if we incorporate the effect of the

evolution of the long-term interest rates and the effect of the

scal advantage before 2005. We can see that the indicator isable to explain the evolution until the mid-2000s due to

decreasing mortgage rates.

In 2005, the Belgian government introduced a new scal

advantage for homeowners (woonbonus). For the average

household, the net tax relief more than doubled. The new

system was no longer a pure capital deduction, such that

borrowers had an incentive to take a longer mortgage term to

make maximum use of the scal advantage over a longer horizon.

The dashed green indicator in Figure 2 includes the effect of

new scal advantage since 2005 in combination with longer

mortgage terms due to scal optimization. A comparison of the

dashed green line and the blue line indicates that the inclusion

of the effect of the scal advantage is able to explain the recent

evolution of house prices in Belgium.

To summarize: rst-time homebuyers spend a xed percentage

of income on net mortgage payments over time. The evolution

of the interest rate, mortgage characteristics and the tax relief

results in variation in the borrowing capacity, given thesemortgage payments. The econometric tests indicate that house

prices and the measure of borrowing capacity adjusted for the

net tax relief are cointegrated. Temporary deviations between

house prices and the indicator are thus possible, but house

prices will converge towards the indicator in the long run.

An important result is the relationship between the scal

advantage for homeowners and the house price. The study

includes 8 countries in which it is possible to deduct mortgage

interest or where the maximum rate at which mortgage interest

is deductible has changed over time. In 7 of these countries,

the net tax relief for homeowners capitalizes into house prices

according to the predictions of the model. The results, therefore,

indicate that the effectiveness of a general scal advantage for

homeowners is limited. Figure 3 indeed conrms that the

average home-ownership rate in Belgium was not affected by

the major policy change in 2005.

Figure 2: The evolution of Belgian house prices and indicators

Note: The house price is equal to the third quartile of the sale price of houses

on the secondary market. We correct the series to control for thereclassication between houses and villas that took place between 2004 and

2005. Source: StatBel, NBB, ASLK. Own calculations.

The results indicate that the

effectiveness of a general scal

advantage for homeowners is limited

as the net tax relief for homeowners

capitalizes into house prices according

to the predictions of the model.

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Research@FEB

OTHER DETERMINANTS OF HOUSE PRICES

Furthermore, we nd evidence that the borrowing capacity is

also a determinant of the price of new construction in Flanders.

The long-term relationship between the borrowing capacity and

the house price is thus observed for both the price of new

construction and houses on the secondary market. The double

relationship indicates that new constructed homes and houses

on the secondary market are close substitutes. The land price

of the building plots is then determined on a residual basis: it is

equal to the borrowing capacity minus the construction cost.

This residual pricing mechanism implies that the comparative

advantage of new housing supply in case of house price

increases disappears. The price increases on the secondary

market are indeed translated into the land price.

The latter is indeed important to understand the role of

demographic forces in models that explain the evolution of

house prices. The demographic pressure increases the price ofhousing, but an increase in the supply of houses decreases the

house price accordingly. If growth in the number of households

is equal to the growth in the supply of housing, the net effect

on house prices is equal to zero. Demographic pressure is often

a temporary determinant, with no role in the long-run evolution

of house prices. This is the case for most countries where the

supply of housing is in line with household growth. A permanent

demographic shrinkage would, however, cause a permanent

effect on house prices. The effect of demographic shrinkage could

indeed have an important effect for some countries in the future.

IMPLICATIONS FOR THE FUTURE

The reader who expects a clear forecast of future house prices

will be rather disappointed. The results do indicate that house

price corrections since the recent nancial crisis were stronger

in countries that were relatively more overvalued based on the

indicator of the borrowing capacity. But for Belgium, we do not

observe a structural overvaluation based on the indicator that

incorporates the effect of the new scal advantage since 2005.

But this does not indicate that house prices cannot decrease

in the future.

The announcements by the Flemish government with respectto changes in the net tax relief from 2015, do have a predictable

impact on the borrowing capacity of households. Given the

same amount of net mortgage payments, the tax reform

decreases the borrowing capacity by 6 to 7%. If the other

determinants remain unchanged (which is unlikely), the model

implies that house prices will converge in the long run to a

fundamental value that is 6 to 7% lower than without the tax

change. The evolution of future house prices is, however,

dependent upon the evolution of all fundamental determinants

of the borrowing capacity, some of which are relatively difcult

to forecast.

REFERENCES

Damen, S., Vastmans, F., and Buyst, E. (2014).

Kunnen we de prijsevolutie van woningen verklaren?CES-Leuvense Economische Standpunten, LES (S) 2014/142.

Damen, S., Vastmans, F., and Buyst, E. (2014).

The Long-Run Relationship between House Prices and

Income Reexamined: The Role of Mortgage Interest

Deduction and Mortgage Product Innovation,

KU Leuven Discussion Paper No. 14.09.

Vastmans F., Buyst E., Helgers R., and Damen S. (2014).

Woningprijzen: woningprijs-mechanisme & markt-

evenwichten. De logica, nood en valkuilen van

betaalbaarheid als woningprijs determinant, Steunpunt

Wonen, Leuven.

Goeyvaerts G., Haffner M., Heylen K., Van den Broeck

K., Vastmans F.(cordinator), Winters S., and Buyst E.

(promotor), Onderzoek naar de woonscaliteit inVlaanderen, onderzoek in opdracht van Wonen

Vlaanderen (2014).

The price increases on the secondary

market are translated into the land

price as new construction and

houses on the secondary market

are close substitutes.

Figure 3: Home-ownership rate in Belgium (in percent)

Note: The home-ownership rate is dened as the share of the population

that lives in an owner-occupied home. Source: EU-SILC.

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In the long run we are all dead,

even in real estate50 before Christ. Caesar has overtaken all of Gaul, except for

one small village. Crismus Bonus (was he after all a banker?),

the Roman garrison's commanding centurion, nds out that the

Gauls have a magic potion, which makes Asterix, Obelix and

their friends invincible.

2014 after Christ. Belgium is about the only village in this

globalized world where, six years after the start of the nancial

crisis, housing prices have not yet decreased. Strange.

Following respectful sources as The Economist and the OECD

housing prices are only in few other countries as overvalued asin Belgium. Up to 60 percent. Do the Belgians have a magic

potion as well? Trappist of Westvleteren?

Belgians have a strong traditional belief in residential real estate.

Three out of four Belgians own a house. That is one of the

highest rates in the world. But the recent residential real estate

performance in Belgium is less spectacular than most people

estimate. If one takes into account the ination and the

improved quality of the average house sold, there has been no

relevant increase in housing prices in real terms (i.e. corrected

for ination) since 2009.

Frank Vastmans and Sven

Damen have proven the much

greater relevance of the

borrowing capacity (compared

to price-to-income) to under-

stand the evolution of housing

prices. As researchers they are very careful to make projections

about the future. In my opinion (journalists are paid to be more

outspoken) the magic potion of the Belgians is gone.

The secret (?) cocktail of three major tasty ingredients

approaches its expiration date.

ONE.

The continuous decrease of the mortgage rates (from 14

percent in the mid-eighties to less than 4 percent today) will not

last forever. Mortgage rates will never drop under zero. Be sure,

one day they will go up again.

TWO.

The chances of an increasing purchasing power are going to be

very limited in the coming years. Whether we like it or not, the

federal government Michel I and its Flemish counterpart Bourgeois

I have no other choice than to ask their people for a couple of years

of socio-economic blood, sweat and tears. The best of the cuts

has still to come. (Journalists are born pessimists.)

THREE.

The fiscal advantages are under pressure. In Flanders the

woonbonus has already been made less attractive.

ING estimates that the woonbonus is cut by up to 40.775 euro

over the entire period of a loan of 20 years. There will be much

less of a free lunch in real estate.

Ceteris paribus, the Romans said. Of course, the other

conditions do not stay the same and will inuence the prices.

And never underestimate the unique character of a house and

its location. And the dynamics can change over the years.

A villa in Brasschaat and a fermette at the countryside were

fteen years ago seen as the ultimate investment, a one

bedroom at in Brussels as a much less interesting alternative.But today?

One should also be careful to see the demographic boom as

the saviour of last resort for the entire market. There will be large

increases in cities like Brussels and Antwerp, but less

inhabitants in the villages. The average number of people in

towns with less than 5.000 inhabitants has diminished with

4 percent since 2000.

Belgians need to develop a more realistic approach towards

real estate prices. The last thirty years were exceptional.

Those who still doubt: take a look at the Herengracht house

index. It covers housing prices from the construction of the

Herengracht in Amsterdam in the 1620s up to 2008. The street

has been a top location for over nearly four centuries. In 2007

the average housing price at Herengracht (2,6 million euro), after

correction for ination, approached the historical record price

of 1776. We all know what happened with the housing prices

in 2008 in the Netherlands. And Im afraid that neighter drinking

a trappist or a new fiscal potion or derivative loanched by

their government, will help in the short term neither the Dutch

nor the Belgians.

PATRICK LUYSTERMAN

Licentiaat T.E.W. 1978

MBA 1979

Member of the BoardEkonomika AlumniAntwerpen

Journalist

Works at the businesspaper De Tijd, coversreal estate

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Telematics insurance:

the safer you drive,the less you pay

Using telematics technology in commercial vehicles enables

to transmit and receive information that allows an insurance

company to better assess the accident risk of drivers and

adjust the premiums accordingly. A small black box device,

containing a GPS system, electronics that capture hundreds

of sensor inputs, a SIM card and some computer software, isinstalled in your car. It monitors your driving behavior directly

and shares this information with the insurer. Simply put, the

less and the safer you drive, the less you will pay.

Car insurance is traditionally priced based on self-reported

information from the policyholder, most importantly: age,

license age, postal code, engine power, use of the vehicle, and

claims history. However, these observable risk factors are only

proxy variables, not reecting present patterns of driving

behavior, such as temper, skill, and aggressiveness behind the

wheel. Hence, a lot of heterogeneity between drivers remains.

Over time, insurers try to rene this a priori risk classication

and restore fairness using no-claim discounts and claim

penalties. This so-called bonus-malus system differentiates

based on the historical claim pattern rather than present

patterns of behavior.

It is expected that these traditional methods of risk assessment

will become obsolete. Your car usage and your driver abilities

can be better assessed based on telematics data collected,

such as: the distance driven, the time of day, how long you have

been driving, the location, the speed, harsh or smooth breaking,

aggressive acceleration or deceleration, your cornering and

parking skills Furthermore, the data collected from your car

can be enriched with other sources of data, for example roadmaps (and corresponding speed limitations), weather and trafc

information. This high dimensional data, collected on the y,

will force pricing actuaries to change their current practice.

New statistical models will have to be developed to adequately

set premiums based on individual policyholders motoring habits

instead of the risk associated to their peer group.

The drivers most likely to benet are those the standard

insurance market is currently overpricing. Infrequent drivers willreceive a fairer premium, making vehicle ownership more

affordable. Young drivers and drivers in other high risk groups,

who are typically facing hefty insurance premiums, can be judged

based on how they really drive. Women under the 2012 EU

ruling, banning price differentiation based on gender, may be able

to conrm through telematics that they really are safer drivers.

Through this form of pay-how-you-drive insurance, fairness will

be increased and cross-subsidization reduced. This improved

customer segmentation will allow insurers to dynamically align

insurance policies with actual risks.

Clearly some positive side-effects are to be expected.

Telematics insurance gives a high incentive to change the

current driving pattern and stimulates more responsible driving.

Gamication of usage-based insurance can further enhance the

customer experience by making it more interactive, gratifying

and even exciting. Less and safer driving is rewarded, leading

to improved road safety and reduced vehicle travel with less

congestion, pollution, fuel consumption, road cost, crashes

Governments could set taxes based on actual car usage.

Toll operators could automatically apply road usage charging.

Car sharing services could evaluate personalized car care.

Automated emergency response, immediate crash or break-down assistance, theft tracking, geo-fencing, no texting while

driving, accident reconstruction and scam identication can also

be achieved thanks to the black box.

Telematics technology the integrated use of telecommunication and informatics

may fundamentally change the car insurance industry by allowing insurers to base

their prices on the real driving behavior instead of on traditional policyholdercharacteristics and historical claims information. Telematics insurance or usage-based

insurance (UBI) can drive down the cost for low-mileage clients and good drivers.

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The choice for the kind of tracking device to be used is a raging

ongoing debate. Professionally installed black boxes are the most

reliable, but also the most expensive UBI solution on the market.

Alternatives are self-installed onboard diagnostics devices, smart-

phone solutions, embedded factory-installed solutions and some

sort of hybrids, which all have their strengths and weaknesses.

Telematics insurance still seems a niche market. Even though the

technology rst surfaced more than 10 years ago, the high

implementation costs of the device and its complexity limited its

success. Technology and telecommunications advances have

however improved the cost substantially. Early adopters of UBI

were seen primarily in North America, Italy and the United

Kingdom due to the higher premiums, particularly for young

drivers, and a higher incidence of fraudulent claims and vehicle

theft. Montis decree of 2012, mandating Italian insurers to

provide a telematics option, has made Italy the most active

country in Europe in telematics insurance, with the overall

penetration level approaching 5%.

In other European countries, with less insurance fraud and theft

issues, premiums have always been much lower, yielding a smaller

margin to pay for such technology. Yet, the European Court of

Justice, ruling that gender is prohibited as a rating variable, might

further limit the use of proxy variables, such as age and postal

code, when pricing insurance risk. Moreover, the European eCall

initiative, which is scheduled to come into play by the end of 2017

or early 2018, forces all new-model passenger cars to install a

telematics device that will automatically dial 112 in the event of an

accident, providing precise location and impact data. Insurance

companies could easily jump the wagon by expanding the devicecapabilities towards telematics insurance support, rendering the

current device debate obsolete on the long term and driving

increased usage of telematics in insurance.

Potential sources of resistance include privacy concerns, data

ownership and data security. However, many consumers value

the benets more versus the loss of privacy in the growing use

of smartphones and tablets, social media networks, GPS

systems, electronic toll collection devices, search engines

personalizing adverts based on data mining, online retailersanalyzing shopping patterns... In insurance, the notion of trust

has always been a key factor in the relationship as insureds

share a lot of sensitive information. If the potential savings on

their car insurance are signicant enough and they trust their

data is relatively secure, consumers will be more willing to make

the trade-off. Lingering concerns about personal privacy can

be mitigated by aggregating drivers data and moving away from

continuous tracking.

Anyway, insurance companies are challenged to come up with

new business models based on the upswing of telematics,

complying with existing and forthcoming legislation and

regulations. The industry sector realizes the urgency. The winners

might be those who act fast and attract the better risks, leaving

their competitors to lose protable policyholders and to insure only

the most risky drivers. Rating agencies have therefore already

recommended the shift towards telematics insurance. Much is still

to be investigated, creating many opportunities for scientic

research, in which the joint efforts of the research groups in

Insurance and Business Statistics at FEB can play a role.

Meanwhile car manufacturers, telecom and internet companies

invest a lot in connected car systems and driverless vehicles.

Even though still in an early stage, this could phenomenally

reduce the accident rate and require an even more drasticreinvention of the car insurance industry of the future.

Roel Verbelen

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AcademicHero

Every edition of ECONnect, we place the spotlight on a different FEB

professor and let them introduce his or her academic hero.

For this 8th edition, professor Robert Boute chose Marc Lambrecht,Zeger Degraeve and Jan Van Mieghem as a source of inspiration.

The academic heroesof Robert Boute

Marc Lambrecht,Zeger Degraeve andJan Van Mieghem

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23

WHY DID YOU CHOOSE MARC LAMBRECHT,

ZEGER DEGRAEVE AND JAN VAN MIEGHEM

AS YOUR ACADEMIC HEROES?

Robert Boute:There are several people in our eld (Production

& Logistics) who I look up to, like Hau Lee at Stanford University

and Steve Graves at MIT, but ultimately I chose three professors

who inuenced me personally in my academic career, each in adifferent way. First of all I chose Marc Lambrecht of our faculty.

Secondly Zeger Degraeve. He used to be a professor here, he was

at London Business School and is now dean of the Melbourne

Business School. The third person is Jan Van Mieghem,professor

at the Kellogg School of Management of Northwestern University.

All three of them inuenced and shaped me as an academic.

Marc Lambrecht taught the course Production

and Inventory management in my third year as a

business engineering student at the FEB. It was an

eye opener. Professor Lambrecht has the gift to

teach complex course material in a very clear way.

In his course, he could make the link between mathematical

derivations and usable practical insights. This appealed to

me and it inuenced me to choose the major Production

and Inventory management, or Production and Logistic

Management as its now called. Later on, I built my career on

this specialisation and I also completed my PhD with Marc.

The way he guided me, makes me the researcher I am today.

Marc taught me that you need to have academic rigour, but also

not to lose track of the practical relevance.

My second academic hero is Zeger Degraeve.During the last year of my business engineering

course, he had already moved to London, but he

still taught the course Operations research at

the FEB. Each Monday morning he travelled from

London to teach us and Im still grateful to him for that.

He taught us the same way he did his MBA students at the

business school. Something I hadnt witnessed before in

the 5 preceding years. He made use of case-studies, like the

Red Brand Canners Case, which I still remember to this day.

He could clarify a complex operational problem in a clear way.

Like Marc, he could solve relevant problems using mathematics.

And he did so in very engaging manner, with a lot of student

interaction. When I started teaching at Vlerick Business School

after my PhD (I divide my time between FEB and Vlerick) I think

I unconsciously kept the Zeger-model in my mind. I have now

developed my own way, and I certainly dont want to pretend

to be able to teach in the same way as Zeger could, but he

inuenced me greatly in the way I teach today. I still meet Zeger

now and then, but sadly not as much as I would like to. He doesnt

know, but he inuenced me greatly in the way I teach today.

The third person who shaped me is Jan Van

Mieghem. I rst met him when he was on

sabbatical at the FEB in 2005. In 2010 I had the

opportunity to visit his department in Chicago as

visiting professor. Jan is someone who doesnt

compromise when it concerns high quality academic research,

yet he can make an abstraction of that when he teaches

business executives and give the content a spin so that itsrelevant for those participating in his class. He can teach the

same material to MBAs, executives and researchers, each in a

different way that is best suited for them. I nd that to be a gift.

I wrote a paper with him, which was also a great learning

experience. He was very stimulating to really push it to the max.

And what was great is that while we were working, he often

said: Robert, isnt this great fun?. Finding pleasure in page-

long mathematical evidence to then generate practical usable

insights: the beauty of the math, thats what he called it.

Publishing is important, but the intrinsic motivation of the work

itself makes it enjoyable. And for me that enjoyment-aspect is

also very important. Our paper was on offshoring vs. Back-

shoring: do we have to produce in China to benet from low

labour costs, or do you have to stay local where its more

expensive but where youre closer to the market. It is very

relevant today and many companies struggle with this question.

If you can develop useful insights from your research and teach

those in your classes, thats very rewarding. Like Marc, theres

a connection to Jan in the way of thinking and working. We still

keep regularly in touch and often go cycling together.

Something which characterises all three of them is that they are

all very warm people to be around. On the one hand theyre very

committed to their work and they maintain very high standards,

but on the other they enjoy working with young researchers likemyself. I feel truely priveleged to have been inuenced by them

for me all three of them are academic heroes.

Michael Boelaert

ROBERT BOUTE

Associate professor (part-time) Facultyof Economics and Business (FEB) andVlerick Business School

Research Centre for OperationsManagement, Leuven

Robert.boute@kuleuven.be

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YOU HAVE STARTED FOCUSING ON MARATHON RUNNING.

IS THAT A LOGICAL CHOICE NOW THAT YOURE NEARING

THE END OF YOUR ATHLETIC CAREER?

It makes sense that you make that transition towards the end of your

career, but it was certainly not intended to take so long. In 2008 I already

attempted to make the transition to the marathon, but in the end that

didnt happen due to the build-up of injuries. I was out of competition for

three years. So I didnt intend to wait until now, after all Im already 34

years old. The goal was to start much sooner, especially since Ive always

known that the marathon would be my best distance. The ultimate goalwas therefore to make it to the 2012 Olympics in London. Because of my

injuries that didnt plan out.

WHAT INJURIES ARE WE TALKING ABOUT?

Well, the great fortune was that its always been different ones.

Probably compensation injuries, but nothing chronical. People with, for

example, a chronic Achilles tendon injury are likely to be obliged to stop,

but that wasnt the case for me. I have been troubled by my knee, my

feet, little things. It was always a quest to x it. I dont have a very strong

chassis. Thats one of the gifts that wasnt attributed to me. I naturally

have great stamina and I can say that Im a good distance runner, but that

sensitivity to injury will remain a difculty until the end of my career. I founda better balance now, also because the intensity of my workouts has been

lowered slightly since Im combining running with a full time job.

Maybe that balance was needed in order to be able to run marathons.

The name Jesse Stroobants rings

a bell amongst fans of athletics.

Jesse was one of our best

national cross-country runners

and had high ambitions in

marathon running.

After several years of being

injured, however, we lost sight of

him. Now that he has recovered,

Jesse finally resurfaces in

marathon running. Jesse studied

Business Engineering and was a

teaching assistant at the Faculty

of Economics and Business

(KU Leuven). Since 2010,

he works as a research associate

at the Public Governance

Institute (KU Leuven).

Top sport @ FEB:

Jesse Stroobants

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HOW MANY YEARS DO YOU HAVE LEFT

TO COMPETE AT THE HIGHEST LEVEL?

Id like to have another 2 years, but the context is a lot different

than it was 10 years ago. Back then I consciously chose forsports and I would have given up an interesting job to focus on

my athletics career, but thats no longer the case. If I were to be

offered something that appeals to me, I wouldnt want to use

sports as an excuse not to take it. On the other hand, as long

as I can continue to be active in the university, the combination

should work because my present job provides the needed

exibility. The great advantage of athletics is that you can easily

combine a job with the amount of hours you spend on training.

For a cyclist that would be much harder because of their long

training hours. So I hope to be able to compete on the highest

national level for another two years.

WHAT ARE THE GOALS YOU WANT TO ACHIEVE IN

THE MARATHON?

I would like to nish in 2h15. I didnt achieve that goal in the

marathons of Antwerp and Amsterdam, but I really want to

make that time. Its slightly more modest than my ambition in

2008 when I wanted to nish in 2h12. I can no longer do that

considering my training intensity is lower and because of my

age. Now, with that 2h15 youll still be among the best

marathon runners in Belgium. Our best marathon runner, Willem

Van Schuerbeek, nishes in 2h13. So keeping that in mind,

2h15 is still a national best. Internationally thats different of

course. At the European level youll still be among the better

runners, but at a global level its close to nothing if you look at

the African runners. On the other hand, if you talk about the

Olympics, the BOIC only wants to look at the international limits,

and thats good news for me. The national demands were after

all much higher in the past, around 2h09. Impossible actually.

But the marathon is a competition where many people can

enter, so maybe Rio 2016 is still doable for me if they have a

more exible selection policy. But Im not letting that goal guide

me anymore. It would be nice, but for now I just want to run a

few good marathons.

YOU STARTED OUT WITH CROSS COUNTRY

RUNNING AND THE 5000M ON THE TRACK.LOOKING BACK, WHICH DO YOU PREFER?

The marathon. It has something mythical. You work towards it

for much longer and you also only have 1 chance. So that one

day it has to happen, if not, then you cant just x it a week after

that. That was the case for me in the Amsterdam marathon,

so its difcult to swallow mentally. But I think its such a great

discipline that Im just glad to have been able to nally run that

42k race. I enjoyed cross-country running, but that appeals less

to outsiders. Maybe that ts me best. In Belgium you have the

Crosscup that has been aired on tv for years. People talk to you

about it more often. If I can pick a place for cross-country

running, its on the top of my list.

WOULD YOU HAVE HAD OTHER AMBITIONS,

IF YOU HADNT BEEN INHIBITED BY INJURIES?

I think that if I had been able to make the transition to marathon

sooner, I couldve gotten better results seeing I have pretty goodphysique and other characteristics as an athlete. I do think its

a shame that I never got to prove that, Im convinced that

I could have gotten close to that 2h10. Then I probably could

have been among the best European runners. But yes, that

rmness of the body is inherently part of an athletes career.

WHY DID YOU CHOSE FOR THE FEB AT THE TIME?

AND WHY FOR BUSINESS ENGINEERING?

That was actually the logical thing to do after studying economics

and maths in secondary school. You kind of naturally ended

up with economics as a choice of study at the university.

Especially maths was one of my strong points and then youquickly get to Business Engineering. So for what that is

concerned its been a very easy decision. I never regretted it.

I had a tough rst year where I really had to struggle to make it,

but as soon as that was over everything went pretty smoothly.

Im a genuine Leuven-fan, so they choice to study at the

KU Leuven was also quickly made.

WERE YOU ACTIVE IN EKONOMIKA?

DID YOU ATTEND THE ACTIVITIES?

Not really. I regularly participated in activities, and many of my

classmates and friends were in the praesidium and committees.

But really being involved or actively being part in organization,I didnt have much time for that back then.

DID YOU HAVE STUDENT ATHLETE STATUS? WAS

COMBINING STUDYING AND SPORTS FEASIBLE?

Yes, but I rarely made use of that. I chose to do all my exams in

June to be able to focus on athletics completely in the summer.

I reached my best level after my studies. Thats also a big

difference compared to our national top distance runners of

today like Jeroen Dhoedt or Pieter-Jan Hannes. They already

perform on the top level, during their studies. Thats the big

difference why I didnt make use of my student athlete status,

because my level back then was a little more modest.

WHAT DO YOU MISS THE MOST ABOUT BEING

A STUDENT?

The exibility. Although you do have some difcult exam periods,

you have time throughout the year to deal with your sport.

It was a more relaxed life, especially when it came to having

more time for core strength and stability training. Those are

aspects that are difcult to nd time for now. Its a bit more of a

puzzle now. But to be clear Im not complaining. Because it

works perfectly with the exibility that I have here at the Public

Governance Institute. But thats doing main training, a running

training, all the rest just comes with it when theres time, even ifthe stability training would have its benets in preventing

injuries.. Other than that it was a carefree time. I think that many

people look back on it nostalgically.

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DO YOU STILL HAVE ANY CONTACT WITH YOUR

FELLOW STUDENTS?

Last year, we had our ten-year graduation reunion of Business

Engineering graduates of 2003 and it was nice to see everyoneagain. There are still a few people I have contact with. Now, with

social media its a lot easier to remain contact with everyone,

but for the greater part thats about it. Personal contacts... really

just one or 2.

WHAT YOU REMEMBER OF YOUR TIME

AS A TEACHING ASSISTANT AT THE FEB?

Perhaps it was the stepping to combine my sports and

professional career. I had a lot of luck to be able to combine a

part-time job as a teaching assistant with professional athletics

and that was great. It allowed me to do something with my

diploma. I ended up with the FEB in a very nice section:business economics, strategy and innovation. I'm still in touch

with all my colleagues, the professors too. I made many good

friends working there for 4.5 years. I was completely embedded

in the department, but also in the faculty. Ive been working at

the Faculty of Social Sciences for about the same period of

time, but I only know people from my department here.

That was different at the FEB. You really knew people from other

departments there, you knew the people of the administrative

ofce personally. I still have a good relationship with the dean

too. The FEB is more of a family, a real community.

Maybe having a common refectory helped strengthen that

feeling. For me it was a really difcult decision to leave there.

The time I spent at the FEB is will certainly never forget.

WHERE DO YOU SEE YOURSELF IN THE FUTURE

ON A PROFESSIONAL LEVEL?

There are a number of logical trajectories when you exit the

Public Governance Institute, being that you can end up in apublic function. You meet people that worked here pretty much

everywhere, on a federal level, Flemish level and in local

government. Thats one possibility, but also other non-prot

organisations or the university world are also an option. I think

I have built a very nice resume and that my sports career has

also given me some character traits that could be appealing for

potential employers.

Michael Boelaert

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My rst weeks

at the FEB

It was written down on the post-its which we received at the

information sessions of the Faculty of Economics and Business

before summer: remember: Monday 22/09/2014 rst day

@FEB. I secretly longed for that day to arrive. Not that I had

the extreme urge to leave everything and everyone from

secondary school behind, but the idea of a totally new start

really spoke to my imagination. I was struggling to decide on

what course to take for a long time and because of that

I registered fairly late.

Two days after my registration, I was standing in the Ekobar,

ready to leave for the welcoming weekend. Everyone seemed

to be busy talking and I was wondering how the other rst year

students managed to speak to new people so easily. I was a

little lost waiting for friends that I knew from my secondary

school, until I was approached by some enthusiastic members

of the praesidium and people of the welcoming committee.I suddenly found it was not so hard to speak to others.

That weekend was over before I knew it. The fun activities

followed each other in record time: we started out with speed

dating. This speed date was continued in the bus, where we

also learned the economists song. We quickly sang that song

loudly and with full conviction. In the evening, there was a quiz

and a small party. On Saturday the day started out early with

information sessions by the dean, the academic adviser and the

praeses. The sports activity and paintball were also a lot of fun!

On the last night we held a cantus. I am very glad that I was

able to join this weekend, as it allowed me to meet many new

students. After this weekend, there was maths week. I didnt

follow the maths classes, but I did attend some other activities

organised by Ekonomika, like the international party, where

I came into contact with the Leuven nightlife for the rst time as

an ofcial student.

Finally the day had arrived: Monday 22 September! An auditorium

full of excited students was welcomed by the dean and the

praeses. The infosession was followed by a guided tour and a

barbecue. The days that week were lled with our rst classes

and in the evening Ekonomika once again organised different

welcome activities. We got a lot of opportunities to get to know

our classmates outside of the lectures. We also quickly got to

know our professors: one of them we came to fear, the other

had a very pleasant voice and way of teaching, and so on.

What did become clear straight away: studying at university