Robert Lucas Jr.

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Robert Lucas Jr.
La Revolucion Industrial Pasado y Futuro, Robert E. Lucas Jr. screenshot (cropped).jpg
Lucas in 1996
Born
Robert Emerson Lucas Jr.

(1937-09-15)September 15, 1937
DiedMay 15, 2023(2023-05-15) (aged 85)
Chicago, Illinois, U.S.
Education University of Chicago (BA, PhD)
Spouses
  • Rita Cohen
    (m. 1959,divorced)
  • Nancy Stokey
Children2
Academic career
Institution
Field Macroeconomics
School or
tradition
New classical macroeconomics
Doctoral
advisor
Doctoral
students
Contributions
Awards Nobel Memorial Prize in Economic Sciences (1995)
Information at IDEAS / RePEc

Robert Emerson Lucas Jr. (September 15, 1937 – May 15, 2023) was an American economist at the University of Chicago. Widely regarded as the central figure in the development of the new classical approach to macroeconomics, [1] he received the Nobel Prize in Economics in 1995 "for having developed and applied the hypothesis of rational expectations, and thereby having transformed macroeconomic analysis and deepened our understanding of economic policy". [2] [3] He was characterized by N. Gregory Mankiw as "the most influential macroeconomist of the last quarter of the 20th century". [4] In 2020, he ranked as the 10th most cited economist in the world. [5]

Contents

Early life and education

Lucas was born on September 15, 1937, in Yakima, Washington, as the eldest child of Robert Emerson Lucas and Jane Templeton Lucas. [6] His parents ran an ice creamery in Yakima. After the business failed during the Great Depression, the family moved to Seattle. His mother worked as a fashion designer and his father worked at shipbuilding yard and later worked as a welder with a refrigeration company. [7]

Lucas received his BA in History in 1959 from the University of Chicago. Lucas attended the University of California, Berkeley, as a first-year graduate student, but he left Berkeley due to financial reasons and returned to Chicago in 1960, where he earned a PhD in Economics in 1964. [8] His dissertation, Substitution Between Labor and Capital in U.S. Manufacturing: 1929–1958, was written under the supervision of H. Gregg Lewis and Dale Jorgenson. [9] Lucas studied economics for his PhD on "quasi-Marxist" grounds. He believed that economics was the true driver of history, and so he planned to immerse himself fully in economics and then return to the history department. [10]

Career

Following his graduation, Lucas taught at the Graduate School of Industrial Administration (now Tepper School of Business) at Carnegie Mellon University until 1975, when he returned to the University of Chicago. [11]

Lucas was elected to the American Academy of Arts and Sciences in 1980, [12] a Guggenheim Fellowship and the National Academy of Sciences in 1981, [13] [14] and the American Philosophical Society in 1997. [15] A collection of his papers is housed at the Rubenstein Library at Duke University. [16]

Lucas was awarded the Nobel Memorial Prize in Economic Sciences in 1995. The citation noted that the prize was "for having developed and applied the hypothesis of rational expectations, and thereby having transformed macroeconomic analysis and deepened our understanding of economic policy". [17]

Research contributions

Rational expectations

Lucas is well known for his investigations into the implications of rational expectations in macroeconomic theory. [6] Lucas (1972) incorporated the idea of rational expectations into a dynamic macroeconomic models. The agents in Lucas's model are rational: based on the available information, they form expectations about future prices and quantities, and based on these expectations they act to maximize their expected lifetime utility. He also provided sound theoretical foundations to Milton Friedman and Edmund Phelps's view of the long-run neutrality of money, and provided an explanation for the then observed correlation between output and inflation, depicted by the Phillips curve, while illustrating that the existence of this empirical relationship did not yield a possibility of a policy trade off. [18]

Lucas critique

In 1976, challenged the foundations of macroeconomic theory (previously dominated by the Keynesian economics approach), [19] arguing that a macroeconomic model should be built as an aggregated version of microeconomic models while noting that aggregation in the theoretical sense may not be possible within a given model. He formulated the "Lucas critique" of economic policymaking, which holds that relationships that appear to hold in the economy, such as an apparent relationship between inflation and unemployment, could change in response to changes in economic policy. The reformulation influenced the development of new classical macroeconomics and the drive towards microeconomic foundations for macroeconomic theory. [18] [20]

Other contributions

Lucas developed a theory of supply that suggests people can be tricked by unsystematic monetary policy; the Uzawa–Lucas model (with Hirofumi Uzawa) of human capital accumulation; and the "Lucas paradox", which considers why more capital does not flow from developed countries to developing countries. Lucas (1988) is a seminal contribution in the economic development and growth literature. [21] Lucas and Paul Romer heralded the birth of endogenous growth theory and the resurgence of research on economic growth in the late 1980s and the 1990s. [22] [23]

Lucas also contributed foundational contributions to behavioral economics, and provided the intellectual foundation for the understanding of deviations from the law of one price based on the irrationality of investors. [18] [24]

In 2003, he stated, about five years before the Great Recession, that the "central problem of depression-prevention has been solved, for all practical purposes, and has in fact been solved for many decades." [25]

Lucas also proposed the Lucas Wedge which tries to show how much higher GDP would be in the presence of proper policy. [26]

Personal life

Lucas married an undergraduate classmate from the University of Chicago Booth School of Business, Rita Cohen. The couple divorced in the 1980s. The divorce stipulation had a clause that entitled Cohen to half of his Nobel prize winnings if the prize were to be awarded before October 31, 1995, which ended up being the case. [7]

After his divorce from Cohen, Lucas married Nancy Stokey. [6] The couple collaborated on papers on growth theory, public finance, and monetary theory. Lucas had two sons with Cohen: Stephen (born 1960) and Joseph (born 1966). [8]

Lucas died in Chicago on May 15, 2023, at the age of 85. [6] [27]

Bibliography

See also

Notes

  1. Snowdon, Brian; Vane, Howard R. (2005). Modern Macroeconomics: Its Origin, Development and Current State. Cheltenham: Edgar Elgar. pp. 220–223. ISBN   978-1-84542-208-0.
  2. "Robert E. Lucas, Jr. | American economist". Encyclopedia Britannica. Retrieved August 2, 2017.
  3. "The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 1995". Nobel Foundation. Retrieved October 14, 2008.
  4. Mankiw, N. Gregory (September 21, 2009). "Back In Demand". Wall Street Journal.
  5. "Top 10% Authors, as of July 2020". IDEAS/RePEc. Archived by the Wayback Machine: Research Papers in Economics. Archived from the original on August 23, 2020. Retrieved May 21, 2023.
  6. 1 2 3 4 Roberts, Sam (May 17, 2023). "Robert E. Lucas Jr., Nobel-Winning Conservative Economist, Dies at 85" . The New York Times . Retrieved May 17, 2023.
  7. 1 2 Langer, Emily (May 19, 2023). "Robert E. Lucas Jr., Nobel Prize–winning economist, dies at 85". The Washington Post. ISSN   0190-8286 . Retrieved May 20, 2023.
  8. 1 2 Lucas, Robert E. Frängsmyr, Tore (ed.). "Robert E. Lucas Jr. – Biographical". Stockholm: Nobel Foundation . Retrieved November 16, 2016.
  9. Andrada, Alexandre F. S. (May–August 2017). "Understanding Robert Lucas (1967–1981): His Influence and Influences". EconomiA. 18 (2): 212–228. doi: 10.1016/j.econ.2016.09.001 . hdl: 10419/179646 . SSRN   2515932.
  10. Roberts, Russ (February 5, 2007). Bob Lucas on Growth, Poverty and Business Cycles. EconTalk . Library of Economics and Liberty . Retrieved May 18, 2023.
  11. Pressman, Steven (1999). Fifty Major Economists . London: Routledge. pp. 193–197. ISBN   9780415134811.
  12. "Robert Emerson Lucas". American Academy of Arts & Sciences. Retrieved December 10, 2021.
  13. "Robert E. Lucas Jr". John Simon Guggenheim Memorial Foundation . Retrieved May 18, 2023.
  14. "Robert E. Lucas, Jr". National Academy of Sciences . Retrieved December 10, 2021.
  15. "APS Member History". American Philosophical Society . Retrieved December 10, 2021.
  16. "Robert E. Lucas papers, 1960–2011 and undated". David M. Rubenstein Rare Book & Manuscript Library . Retrieved May 18, 2023.
  17. "The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 1995". NobelPrize.org. Retrieved May 20, 2023.
  18. 1 2 3 Svensson, Lars E. O. (1996). "The Scientific Contributions of Robert E. Lucas, Jr". The Scandinavian Journal of Economics. 98 (1): 1–10. doi:10.2307/3440576. ISSN   0347-0520. JSTOR   3440576.
  19. Lucas, Robert (1976). "Econometric Policy Evaluation: A Critique" (PDF). In Brunner, K.; Meltzer, A. (eds.). The Phillips Curve and Labor Markets. Carnegie-Rochester Conference Series on Public Policy. Vol. 1. New York: American Elsevier. pp. 19–46. ISBN   0-444-11007-0. Archived (PDF) from the original on November 5, 2021.
  20. "New Classical Macroeconomics: Robert Lucas". policonomics.com. October 8, 2012. Retrieved August 2, 2017.
  21. Blanchard, Olivier Jean; Fischer, Stanley (1989). "The Lucas Model". Lectures on Macroeconomics. Cambridge: MIT Press. pp. 356–360 [p. 358]. ISBN   978-0-262-02283-5.
  22. "Paul Romer: Ideas, Nonrivalry, and Endogenous Growth" (PDF). Archived (PDF) from the original on May 3, 2020.
  23. Barseghyan, Levon (2016), "Lucas, Robert (Born 1937)", The New Palgrave Dictionary of Economics, London: Palgrave Macmillan UK, pp. 1–6, doi:10.1057/978-1-349-95121-5_2728-1, ISBN   978-1-349-95121-5 , retrieved May 20, 2023
  24. "The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 1995". NobelPrize.org. Retrieved May 20, 2023.
  25. "Fighting Off Depression". The New York Times. January 4, 2009.
  26. "What Is a Lucas Wedge?". Investopedia. Retrieved May 20, 2023.
  27. Lee, Tori; Witynski, Max (May 16, 2023). "Robert E. Lucas Jr., Nobel laureate and pioneering economist, 1937–2023". University of Chicago . Retrieved May 18, 2023.

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References

Awards
Preceded by Laureate of the Nobel Memorial Prize in Economics
1995
Succeeded by
Academic offices
Preceded by President of the Econometric Society
1997
Succeeded by
Preceded by President of the American Economic Association
2002–2003
Succeeded by