Robert Lucas Jr.

Robert Lucas Jr.
Lucas in 1996
Born	Robert Emerson Lucas Jr. (1937-09-15)September 15, 1937 Yakima, Washington, U.S.
Died	May 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
Children	2
Academic career
Field	Macroeconomics
Institution	Carnegie Mellon University University of Chicago
School or tradition	New classical macroeconomics
Doctoral advisor	H. Gregg Lewis Dale W. Jorgenson
Doctoral students	Marcel Boyer [fr] Costas Azariadis Jean-Pierre Danthine Boyan Jovanovic Paul Romer Esteban Rossi-Hansberg Benjamin Moll
Contributions	Rational expectations Lucas critique
Awards	Nobel Memorial Prize in Economic Sciences (1995)
Information at IDEAS / RePEc

Part of a series on the
Chicago school of economics
Movements Libertarianism Neoliberalism Positive non-interventionism
Organizations Cato Institute George Mason University Library of Economics and Liberty Reason Foundation
Beliefs Consequentialist libertarianism Monetarism Neoclassical economics
People Becker Coase Fogel Sowell David Friedman Milton Friedman Knight Lucas Jr. Schultz Stigler
Theories Comparative advantage CPI Economic growth Economic rationalism Efficient market Friedman rule k-percent rule Game theory GDP Homo economicus International economics, finance, trade Laffer curve Monetary economics Public choice Quantity of money Rational agent, choice, expectations Symmetrical inflation target
Ideas Central banks Denationalization Deregulation Economic freedom Economic integration, interdependence Economic liberalization Exchange rate Fiat money Foreign exchange reserves Free markets Free trade Globalization Inflation adjustment Inflation targeting Intellectual property Laissez-faire Marketization Negative income tax Open market operations Private property Privatization School vouchers Single market Tax cuts Tax reform
Related topics Alter-globalization Anti-capitalism Anti-globalization Perspectives on capitalism
Business portal Capitalism portal Libertarianism portal Politics portal
v t e

Part of a series on
Macroeconomics
Basic concepts Aggregate demand Aggregate supply Business cycle CAGR Deflation Demand shock Disinflation Effective demand Expectations Adaptive Rational Financial crisis Growth Inflation Demand-pull Cost-push Interest rate Investment Liquidity trap Measures of national income and output GDP GNI NNI Microfoundations Money Endogenous Money creation Demand for money Liquidity preference Money supply National accounts SNA Nominal rigidity Price level Recession Shrinkflation Stagflation Supply shock Saving Unemployment
Policies Fiscal Monetary Commercial Central bank Universal basic income
Models IS–LM AD–AS Keynesian cross Multiplier Accelerator Phillips curve Arrow–Debreu Harrod–DomarНмиф Solow–Swan Ramsey–Cass–Koopmans Overlapping generations General equilibrium DSGE Endogenous growth Matching theory Mundell–Fleming Overshooting NAIRU
Related fields Econometrics Economic statistics Monetary economics Development economics International economics
Schools Mainstream Keynesian Neo- New Monetarism New classical Real business-cycle theory Stockholm Supply-side New neoclassical synthesis Saltwater and freshwater Heterodox Austrian Chartalism Modern monetary theory Ecological Post-Keynesian Circuitism Disequilibrium Marxian Market monetarism
People François Quesnay Adam Smith Thomas Robert Malthus Karl Marx Léon Walras Knut Wicksell Irving Fisher Wesley Clair Mitchell John Maynard Keynes Alvin Hansen Michał Kalecki Gunnar Myrdal Simon Kuznets Joan Robinson Friedrich Hayek John Hicks Richard Stone Hyman Minsky Milton Friedman Paul Samuelson Lawrence Klein Edmund Phelps Robert Lucas Jr. Edward C. Prescott Peter Diamond William Nordhaus Joseph Stiglitz Thomas J. Sargent Paul Krugman N. Gregory Mankiw
See also Macroeconomic model Publications in macroeconomics Economics Applied Microeconomics Political economy Mathematical economics
Money portal Business portal
v t e

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 Memorial Prize in Economic Sciences 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] N. Gregory Mankiw characterized him 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]

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]

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]

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]

In 1976, Lucas 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]

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]

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]

• Lucas, Robert (1972). "Expectations and the Neutrality of Money". Journal of Economic Theory. 4 (2): 103–24. CiteSeerX 10.1.1.592.6178. doi:10.1016/0022-0531(72)90142-1.
• Lucas, Robert (1976). "Econometric Policy Evaluation: A Critique". Carnegie-Rochester Conference Series on Public Policy. 1: 19–46. CiteSeerX 10.1.1.726.1610. doi:10.1016/S0167-2231(76)80003-6.
• Lucas, Robert (1988). "On the Mechanics of Economic Development". Journal of Monetary Economics. 22 (1): 3–42. doi:10.1016/0304-3932(88)90168-7. S2CID 154875771.
• Lucas, Robert (1990). "Why Doesn't Capital Flow from Rich to Poor Countries". American Economic Review. 80 (2): 92–96. JSTOR 2006549.
• Lucas, Robert (1981). Studies in Business-Cycle Theory. MIT Press. ISBN 978-0-262-62044-4.
• Lucas, Robert (1995). "Monetary Neutrality". Prize Lecture, 1995 Nobel Prize in Economics, December 7, 1995,
• Stokey, Nancy; Robert Lucas; and Edward Prescott (1989), Recursive Methods in Economic Dynamics, Harvard University Press, ISBN 0-674-75096-9.
• Lucas, Robert E. Jr. (2012). "The History and Future of Economic Growth". In Miniter, Brendan (ed.). The 4% Solution: Unleashing the Economic Growth America Needs. New York: Crown Business. pp. 27–41. ISBN 978-0-307-98614-6.
• Lucas, Robert E. Jr.; Moll, Benjamin (October 2011). "Knowledge Growth and the Allocation of Time". Working Paper Series no. 17495. National Bureau of Economic Research. doi:10.3386/w17495. Retrieved April 9, 2019. {{cite journal}}: Cite journal requires |journal= (help)
  • Lucas, Robert E. Jr.; Moll, Benjamin (February 2014). "Knowledge Growth and the Allocation of Time". Journal of Political Economy. 122 (1): 1–51. doi:10.1086/674363. S2CID 6319313.

• List of economists
• Lucas critique
• Lucas islands model
• Lucas wedge
• Uzawa–Lucas model
• Welfare cost of business cycles

• Galbács, Peter (2015). The Theory of New Classical Macroeconomics: A Positive Critique. Contributions to Economics. Heidelberg/New York/Dordrecht/London: Springer. doi:10.1007/978-3-319-17578-2. ISBN 978-3-319-17578-2.
• Kasper, Sherryl (2002). "Robert E. Lucas, Jr and new classical economics". The Revival of Laissez-Faire in American Macroeconomic Theory: A Case Study of Its Pioneers. Edward Elgar. ISBN 9781843765608.

• Robert E. Lucas Jr.'s website at University of Chicago
• Robert Lucas Jr. on Nobelprize.org includes the Prize Lecture on December 7, 1995 Monetary Neutrality
• Robert E. Lucas Jr. – Autobiography
• Nobel Prize Press Release
• IDEAS/RePEc
• Interview on Channel 4
• Chicago Economics on Trial
• "Robert E. Lucas Jr. (1937– )". The Concise Encyclopedia of Economics. Library of Economics and Liberty (2nd ed.). Liberty Fund. 2008.
• Interviews with Robert Lucas as part of the Nobel Perspectives project

Awards
Preceded by John C. Harsanyi John F. Nash Jr. Reinhard Selten	Laureate of the Nobel Memorial Prize in Economics 1995	Succeeded by James A. Mirrlees William Vickrey
Academic offices
Preceded by Roger Guesnerie	President of the Econometric Society 1997	Succeeded by Jean Tirole
Preceded by Sherwin Rosen	President of the American Economic Association 2002–2003	Succeeded by Peter Diamond