New Janeway Institute to transform economic research

Based within the Faculty of Economics at the University of Cambridge, the new Weslie and William Janeway Institute for Economics launches on Tuesday 19th October 2021.

Disseminating research at the frontier of economics is just one of the roles of the new institute, which aims to help shape young minds and transform economic research.

The Janeway Institute will be primarily funded by Weslie and William Janeway. William Janeway is an alumnus of the PhD programme at Cambridge and has played an active role in the Faculty over the last decade.

The new Institute is set to focus on inequality, climate change, epidemics, gender, the digital economy, the impact of automation and machine learning, according to Janeway. “There is great research being done for example in behavioural economics, network economics and the influence of peer pressure,” he says.

“Macroeconomics and the polices that are developed have an impact on everyone’s day to day lives. The new Institute will ensure that theory is never decoupled in an abstract way from the real world.”

Overseeing the launch of the new Institute is Professor Vasco Carvalho, a Professor of Macroeconomics in the Faculty of Economics, and a Fellow of Jesus College.

Carvalho says the new institute will have three core missions: to produce frontier work in economics, to shape young minds by investing in the next generation of economists, and to act as a hub, bringing together researchers both in economics, and across the sciences. That hub will host hundreds of visitors over the years, and many conferences.

“Effectively, the Janeway Institute will take the place of Cambridge-INET,” says Carvalho. The aims and objectives of the new Institute will be similar, but it will benefit from being funded by an endowment rather than a grant. “A grant must deliver on what was promised at the beginning of the grant, which constrains research directions.”

Janeway was delighted to be involved in the evolution of the Institute, and largely fund it. “It struck my wife and me that it was an extremely high priority to perpetuate the work of INET at Cambridge," he says.

"It is also an extraordinarily exciting time to be an economist, and to be part of the reconstruction of a discipline which in recent decades I feel had reached such an abstract level of theory - particularly at the macro level - it had ‘decoupled itself’ from what is really going on in the markets, and the ‘real world’."

The previous institute, Cambridge-INET, which was formed a decade ago in partnership with the Institute for New Economic Thinking, a New York City-based non-profit think tank. It awarded a major grant which allowed the Faculty to investigate these issues.

“The Cambridge-INET was seen as a jewel in the INET crown,” says William Janeway. “It is these qualities I want to perpetuate in the new Janeway Institute and the Faculty of Economics.”

With research benefitting from the credibility of a well-established department with a long tradition of frontier thinking, the INET work will be continued by the new Institute, which will also be funded by an award from the Keynes Fund and the Cambridge Endowment for Research in Finance (CERF).

Janeway, a venture capitalist, has been part of the "core of the digital revolution".

“Digitalisation has seen extraordinary increases in the generation and capture of data. In particular, we now know much more about individuals’ behaviour – individual, group, elective, social behaviours, and most importantly market behaviours,” he says.

“Economics has always been the data rich social science. So now I want to see more and more powerful techniques for cutting through the sea of correlations, and the development of machine learning that can help us understand those correlations.”

He recently launched a new video series that explores economic growth and development, and how that growth has come through technological innovation. However, that growth has also seen much more disparity in wealthy than in previous generations.

“Another area I hope the new Institute will play a role in exploring is the recognition of the extreme increase in inequality and wealth that we have seen over the past few decades,” he adds.

“That has consequences for macroeconomics along with a number of industries and markets. What I really want to see is the exploration of these sources and causes of rising inequality over the past fifty years.”

The digital revolution, like previous societal changes from the rise of railways to electrification, has seen the rise of economic bubbles. Janeway feels this needs detailed research.

“Some bubbles seem to generate no benefits to society at all. Think of financial bubbles in tulip bulbs for example. They just caused immense damage. However, the railway mania, and now the digital mania, have built some hugely significant infrastructure, that would have been immensely difficult to build otherwise.”

Vasco Carvalho says research at the Institute will reflect key issues as they arise. “By taking an endowment, it will allow us to be much more flexible and agile, reflecting both the evolving academic strengths of the Faculty and societal concerns.”

He expects new research directions to emerge organically, covering diverse issues from climate change to epidemics, gender and the digital economy.

The Janeway Institute will build on the INET post-doc programme, and its hundreds of working papers and research contributions, by researching "fundamental questions ranging from monetary policy to behavioural norms, from trading in financial markets to supply chain disruptions" says Carvalho. "But also, by developing fundamental methods to analyse these questions."