We go back to normal: making money from patience

De Volkskrant
Robert Dur

In a recent article from De Volkskrant, Robert Dur, Professor of Economics of Incentives and Performances at Erasmus School of Economics, discusses the recurring normal of positive interest rates.

The idea of interest on loans has been around for centuries. After all, it also seems only logical that borrowing money costs money, or that you receive interest when you lend money. Yet this has been different in recent years, says Dur: ‘I see it with my own children aged 13 and 15. Getting interest on their savings account is totally new to them.’ There is also surprise among students: ‘I also see it among my students, who borrowed under the loan system. The interest rate on student loans was 0 per cent for the last five years and has recently risen to 0.46 per cent. They are reacting with shock,’ he adds.

The Professor also discusses whether or not to take risks. On this, he says that people often take their economic past into account when making new decisions. Those who are used to high interest rates, for example, will be surprised at a time when this is not the case: people often stick to their beliefs and experiences. Yet those people will soon see their beliefs become correct again: we are going back to 'normal', with positive interest rates.

More information

You can download the full article from De Volkskrant, 13 January 2023, above.

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