Bringing in Public Economics – An Interview with Jukka Pirttilä

29 March 2014

Quite a few prominent Finnish economists have been collaborating with UNU-WIDER throughout the years. One of them is Jukka Pirttilä, who in the beginning of March 2014 became a Research Fellow at the Institute. He is currently on leave from the University of Tampere, where he is a professor of economics.

Development economics has only recently emerged within the Finnish research landscape. Jukka himself did transition economics at the Bank of Finland, then conducted research on theoretical and empirical public economics, mainly in the developed country context, before ending up in development economics. He has a special interest in publicly-provided goods, social protection, and tax policy. Watch the video below or read the interview to know more about

Jukka's research aims for the coming years, bringing together public and development economics, his thoughts on development economics in Finland and UNU-WIDER's role in this.

by Carl-Gustav Lindén

Carl-Gustav Linden (CGL) spoke with Jukka Pirttilä (JP) about his goals during his tenure at the Institute and asked him about the source of his inspiration for research. 

JP: I suppose it is a combination of academic curiosity and interest in, if I can in my own small way, trying to help matters in poor countries. Since I am also fostering the nascent development economics research here in my home country, then working for UNU-WIDER is an obvious choice because of the strength of the Institute and its presence here in Finland. It is a great opportunity for a person like me.

CGL: In what way is UNU-WIDER a different environment for research compared to the University of Tampere?

JP: In many ways. Although Tampere is a large university the economics unit is really small. So if you take account of the researcher network of UNU-WIDER, it is obviously much larger. Then it is international. It asks somewhat different questions because people here are involved in policy advice and policy-oriented research. Academic research can be, as you know, academic for its own sake. And we don't have undergraduate students at UNU-WIDER, only PhD interns. We do teach a couple of courses here in Helsinki, at the Helsinki Center of Economic Research (HECER), so there is some interaction with students, but less than in a typical university.

CGL: You’ll be here at UNU-WIDER for the next two years, what do you hope to achieve?

JP: My hope is to utilize my knowledge from public economics and bring it to use in development economics research. So it would be great to have, for example, a bigger research project on building up revenue-raising capacity in poor countries.

Many poor countries are now graduating from low-income status to middle-income status. This means development aid is gradually going to be reduced. Therefore these countries need to build their own revenue-raising capacity to finance public spending, something Jukka is looking into as well as at the social protection side of development.

CGL: If you look at UNU-WIDER as a research institute, what do you see as its strengths?

JP: The strengths are manyfold. It is part of the UNU [United Nations University] system, and I believe that this has special advantages in many developing countries as it is not a Bretton Woods institution. Then it is also focusing on a very policy-oriented type of development of economic research. So it is a combination of academic rigor and policy-oriented research. And then, of course, there is the Institute’s large international research network. So although there are not so many researchers here in Helsinki, UNU-WIDER is much bigger than the staff.

CGL: How do you think UNU-WIDER could be further developed?

JP: That is a tough question for somebody who has been working here for only two weeks. As a Finn, I would aim for building bridges to the Finnish academic community. We already work quite closely, but the linkages could be stronger. There is now a development economic research community emerging, for example in HECER, and there are more people getting involved in development economics research on the Finnish academic side. It would be good to integrate them as closely as possible within UNU-WIDER’s research work.

CGL: When you look at yourself as a researcher, what is your main inspiration? What drives your research?

JP: This is the type of question one doesn't ponder on a day-to-day basis. Fundamentally, this is a deeper philosophical question. But I think I would like to use academic methods to improve the way government bureaucracy and tax systems work. So I try to draw out useful evidence on how, for example, to build up good tax systems that are easy to implement, do not interfere too much with economic activities, and are also socially equitable.

Recently Jukka co-edited a special issue of the Review of Income and Wealth with Ravi Kanbur and Markus Jäntti. The authors focus on the analysis of development economics from a behavioural economics point of view. The issue is based on the research findings from a UNU-WIDER conference, held in 2011 in Helsinki, on new approaches to measuring poverty and vulnerability.

CGL: What new insights are you bringing to the discussion?

JP: The main idea is that early on development economists saw people (‘agents’ as we economists call them) living and working in developing countries, as being fully ‘rational’. And if they did something in a different way than people or firms in wealthier countries it was said that it was mainly due to different institutional constraints, tighter budget constraints, and so on. Nowadays, during the last decade or so, academic economic research has acknowledged that we are not always fully 100% rational all the time, and that all decision-making is affected by emotions—such as fairness towards each other. Whereas now it is the view that people in both developing and developed countries are similarly affected by these behavioural constraints.

CGL: What is your position when it comes to new research methods, such as experiments, and new theorizing?

JP: Experiments, especially randomized control experiments, have had a major influence on behavioural development economics research because people have tested new theories based on those. I think that they certainly have been useful, but they are not the only acceptable way to do research. So other methods also need to be utilized because not all interesting research topics are such that one could build up a randomized control trial to test the theories. That said, they have become part of the toolbox nowadays. With respect to theorizing, I think there is still room to build more insights into theory based on psychological research and social psychology.

Carl-Gustav Linden is Senior Communications Consultant at UNU-WIDER

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