Robert Lucas Jr.

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 11th most cited economist in the world.[5]

Robert Lucas Jr.
Born
Robert Emerson Lucas Jr.

(1937-09-15)September 15, 1937
Yakima, Washington, U.S.
DiedMay 15, 2023(2023-05-15) (aged 85)
Chicago, Illinois, U.S.
Spouses
  • Rita Cohen
    ​
    ​
    (m. 1959, divorced)​
  • Nancy Stokey
Children2
InstitutionCarnegie Mellon University
University of Chicago
FieldMacroeconomics
School or
tradition		New classical macroeconomics
Alma materUniversity of Chicago (BA, PhD)
Doctoral
advisor		H. Gregg Lewis
Dale W. Jorgenson
Doctoral
students		Marcel Boyer
Costas Azariadis
Jean-Pierre Danthine
Boyan Jovanovic
Paul Romer
Esteban Rossi-Hansberg
Benjamin Moll
ContributionsRational expectations
Lucas critique
AwardsNobel Memorial Prize in Economic Sciences (1995)
Information at IDEAS / RePEc
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Biography

Lucas was born on September 15, 1937, in Yakima, Washington, as the eldest child of Robert Emerson Lucas and Jane Templeton Lucas.[6]

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.[7] 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.[8] 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.[9]

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.[10]

Lucas was elected to the American Academy of Arts and Sciences in 1980,[11] a Guggenheim Fellowship and the National Academy of Sciences in 1981,[12][13] and the American Philosophical Society in 1997.[14]

After his divorce from Rita Cohen in the 1980s, he 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).[7]

A collection of his papers is housed at the Rubenstein Library at Duke University.[15]

Lucas died in Chicago on May 15, 2023, at the age of 85.[6][16]

Contributions

Rational expectations

Lucas is well known for his investigations into the implications of the assumption of the rational expectations theory.[6] Lucas (1972) incorporates the idea of rational expectations into a dynamic general equilibrium model. 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 theory fundamental to Milton Friedman and Edmund Phelps's view of the long-run neutrality of money, and provide an explanation of the correlation between output and inflation, depicted by the Phillips curve.

Lucas critique
Main article: Lucas critique

Lucas (1976) challenged the foundations of macroeconomic theory (previously dominated by the Keynesian economics 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 developed 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. That led to the development of new classical macroeconomics and the drive towards microeconomic foundations for macroeconomic theory.[17]

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 based on the irrationality of investors.

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."[18]

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

Bibliography
  • 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. "The History and Future of Economic Growth", The 4% Solution: Unleashing the Economic Growth America Needs, edited by Brendan Miniter. New York: Crown Business. 2012.
  • Lucas, Robert E. Jr. and Benjamin Moll, 2014, "Knowledge Growth and the Allocation of Time", Journal of Political Economy, University of Chicago Press, vol. 122(1), pages 1 - 51.[19]

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 August 2020".
  6. 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. Lucas, Robert E. Frängsmyr, Tore (ed.). "Robert E. Lucas Jr. – Biographical". Stockholm: Nobel Foundation. Retrieved November 16, 2016.
  8. 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. SSRN 2515932.
  9. Roberts, Russ (February 5, 2007). Bob Lucas on Growth, Poverty and Business Cycles. EconTalk. Library of Economics and Liberty. Retrieved May 18, 2023.
  10. Pressman, Steven (1999). Fifty Major Economists. London: Routledge. pp. 193–197. ISBN 9780415134811.
  11. "Robert Emerson Lucas". American Academy of Arts & Sciences. Retrieved December 10, 2021.
  12. "Robert E. Lucas Jr". John Simon Guggenheim Memorial Foundation. Retrieved May 18, 2023.
  13. "Robert E. Lucas, Jr". National Academy of Sciences. Retrieved December 10, 2021.
  14. "APS Member History". American Philosophical Society. Retrieved December 10, 2021.
  15. "Robert E. Lucas papers, 1960-2011 and undated". David M. Rubenstein Rare Book & Manuscript Library. Retrieved May 18, 2023.
  16. 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.
  17. "New Classical Macroeconomics: Robert Lucas | Policonomics". policonomics.com. October 8, 2012. Retrieved August 2, 2017.
  18. "Fighting Off Depression". The New York Times. January 4, 2009.
  19. Jucas, Robert E. Jr.; Moll, Benjamin (2014). "Knowledge Growth and the Allocation of Time". Journal of Political Economy. doi:10.3386/w17495. Retrieved April 9, 2019.

References
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