Robert Emerson Lucas Jr. (September 15, 1937 – May 15, 2023) was an American economist at the
University of Chicago
The University of Chicago (UChicago, Chicago, or UChi) is a Private university, private research university in Chicago, Illinois, United States. Its main campus is in the Hyde Park, Chicago, Hyde Park neighborhood on Chicago's South Side, Chic ...
. Widely regarded as the central figure in the development of the
new classical approach to macroeconomics, he received the
Nobel Memorial Prize in Economic Sciences
The Nobel Memorial Prize in Economic Sciences, officially the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel (), commonly referred to as the Nobel Prize in Economics(), is an award in the field of economic sciences adminis ...
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".
N. Gregory Mankiw characterized him as "the most influential macroeconomist of the last quarter of the 20th century". In 2020, he ranked as the 10th most cited economist in the world.
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.
His parents ran an ice creamery in Yakima. After the business failed during the
Great Depression
The Great Depression was a severe global economic downturn from 1929 to 1939. The period was characterized by high rates of unemployment and poverty, drastic reductions in industrial production and international trade, and widespread bank and ...
, the family moved to Seattle. His mother worked as a fashion designer and his father worked at a shipbuilding yard and later worked as a welder with a refrigeration company.
Lucas received his BA in history in 1959 from the
University of Chicago
The University of Chicago (UChicago, Chicago, or UChi) is a Private university, private research university in Chicago, Illinois, United States. Its main campus is in the Hyde Park, Chicago, Hyde Park neighborhood on Chicago's South Side, Chic ...
. Lucas attended the
University of California, Berkeley
The University of California, Berkeley (UC Berkeley, Berkeley, Cal, or California), is a Public university, public Land-grant university, land-grant research university in Berkeley, California, United States. Founded in 1868 and named after t ...
, 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.
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. Lucas studied economics for his PhD on "quasi-
Marxist
Marxism is a political philosophy and method of socioeconomic analysis. It uses a dialectical and materialist interpretation of historical development, better known as historical materialism, to analyse class relations, social conflic ...
" 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.
Career
Following his graduation, Lucas taught at the
Graduate School of Industrial Administration (now
Tepper School of Business) at
Carnegie Mellon University
Carnegie Mellon University (CMU) is a private research university in Pittsburgh, Pennsylvania, United States. The institution was established in 1900 by Andrew Carnegie as the Carnegie Technical Schools. In 1912, it became the Carnegie Institu ...
until 1975, when he returned to the
University of Chicago
The University of Chicago (UChicago, Chicago, or UChi) is a Private university, private research university in Chicago, Illinois, United States. Its main campus is in the Hyde Park, Chicago, Hyde Park neighborhood on Chicago's South Side, Chic ...
.
Lucas was elected to the
American Academy of Arts and Sciences
The American Academy of Arts and Sciences (The Academy) is one of the oldest learned societies in the United States. It was founded in 1780 during the American Revolution by John Adams, John Hancock, James Bowdoin, Andrew Oliver, and other ...
in 1980, a
Guggenheim Fellowship
Guggenheim Fellowships are Grant (money), grants that have been awarded annually since by the John Simon Guggenheim Memorial Foundation, endowed by the late Simon Guggenheim, Simon and Olga Hirsh Guggenheim. These awards are bestowed upon indiv ...
and the
National Academy of Sciences
The National Academy of Sciences (NAS) is a United States nonprofit, NGO, non-governmental organization. NAS is part of the National Academies of Sciences, Engineering, and Medicine, along with the National Academy of Engineering (NAE) and the ...
in 1981, and the
American Philosophical Society
The American Philosophical Society (APS) is an American scholarly organization and learned society founded in 1743 in Philadelphia that promotes knowledge in the humanities and natural sciences through research, professional meetings, publicat ...
in 1997. A collection of his papers is housed at the Rubenstein Library at
Duke University
Duke University is a Private university, private research university in Durham, North Carolina, United States. Founded by Methodists and Quakers in the present-day city of Trinity, North Carolina, Trinity in 1838, the school moved to Durham in 1 ...
.
Lucas was awarded the
Nobel Memorial Prize in Economic Sciences
The Nobel Memorial Prize in Economic Sciences, officially the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel (), commonly referred to as the Nobel Prize in Economics(), is an award in the field of economic sciences adminis ...
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".
Research contributions
Rational expectations
Lucas is well known for his investigations into the implications of
rational expectations in macroeconomic theory.
John Muth had published "Rational Expectations and the Theory of Price Movements" in 1961 at the same faculty in Carnegie Tech. 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
Milton Friedman (; July 31, 1912 – November 16, 2006) was an American economist and statistician who received the 1976 Nobel Memorial Prize in Economic Sciences for his research on consumption analysis, monetary history and theory and ...
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.
Lucas critique
In 1976, Lucas challenged the foundations of macroeconomic theory (previously dominated by the
Keynesian economics
Keynesian economics ( ; sometimes Keynesianism, named after British economist John Maynard Keynes) are the various macroeconomics, macroeconomic theories and Economic model, models of how aggregate demand (total spending in the economy) strongl ...
approach),
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.
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.
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.
Lucas also contributed foundational contributions to behavioral economics, and provided the intellectual foundation for the understanding of deviations from the
law of one price
In economics, the law of one price (LOOP) states that in the absence of trade frictions (such as transport costs and tariffs), and under conditions of free competition and price flexibility (where no individual sellers or buyers have power to m ...
based on the irrationality of investors.
In 2003, he stated, about five years before the
Great Recession
The Great Recession was a period of market decline in economies around the world that occurred from late 2007 to mid-2009. , that the "central problem of depression-prevention has been solved, for all practical purposes, and has in fact been solved for many decades."
Lucas also proposed the
Lucas Wedge which tries to show how much higher GDP would be in the presence of proper policy.
Personal life
Lucas married an undergraduate classmate from the
University of Chicago
The University of Chicago (UChicago, Chicago, or UChi) is a Private university, private research university in Chicago, Illinois, United States. Its main campus is in the Hyde Park, Chicago, Hyde Park neighborhood on Chicago's South Side, Chic ...
, Rita Cohen. The couple had two sons, Stephen (born 1960) and Joseph (born 1966).
Lucas and Cohen 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.
After his divorce from Cohen, Lucas married
Nancy Stokey.
The couple collaborated on papers on
growth theory,
public finance, and
monetary theory.
Lucas died in Chicago on May 15, 2023, at the age of 85.
Bibliography
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* 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, .
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See also
*
List of economists
*
Lucas critique
The Lucas critique argues that it is naïve to try to predict the effects of a change in economic policy entirely on the basis of relationships observed in historical data, especially highly aggregated historical data. More formally, it states t ...
*
Lucas islands model
*
Lucas wedge
*
Uzawa–Lucas model
*
Welfare cost of business cycles
Notes
References
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External links
Robert E. Lucas Jr.'s website at University of Chicago* includes the Prize Lecture on December 7, 1995 ''Monetary Neutrality''
Interview onChannel 4
Channel 4 is a British free-to-air public broadcast television channel owned and operated by Channel Four Television Corporation. It is state-owned enterprise, publicly owned but, unlike the BBC, it receives no public funding and is funded en ...
Chicago Economics on Trial *
{{DEFAULTSORT:Lucas, Robert E. Jr.
1937 births
2023 deaths
Carnegie Mellon University faculty
Members of the United States National Academy of Sciences
American macroeconomists
New classical economists
20th-century American economists
21st-century American economists
Nobel laureates in Economics
American Nobel laureates
University of Chicago alumni
University of Chicago faculty
People from Yakima, Washington
Fellows of the Econometric Society
Presidents of the Econometric Society
Presidents of the American Economic Association
Fellows of the Earhart Foundation
Growth economists
Fellows of the American Academy of Arts and Sciences
Distinguished fellows of the American Economic Association
National Bureau of Economic Research
Economists from Washington (state)
Members of the American Philosophical Society
Chicago School economists
Journal of Political Economy editors