Robert Emerson Lucas Jr. (born September 15, 1937) is an American

economist An economist is a professional and practitioner in the social science discipline of economics. The individual may also study, develop, and apply theories and concepts from economics and write about economic policy. Within this field there are ...

at the

University of Chicago The University of Chicago (UChicago, Chicago, U of C, or UChi) is a private university, private research university in Chicago, Illinois. Its main campus is located in Chicago's Hyde Park, Chicago, Hyde Park neighborhood. The University of Chic ...

, where he is currently the John Dewey Distinguished Service Professor Emeritus in Economics and the College. Widely regarded as the central figure in the development of the new classical approach to macroeconomics, he received the

Nobel Prize in Economics The Nobel Memorial Prize in Economic Sciences, officially the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel ( sv, Sveriges riksbanks pris i ekonomisk vetenskap till Alfred Nobels minne), is an economics award administered ...

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". He has been characterized by

N. Gregory Mankiw Nicholas Gregory Mankiw (; born February 3, 1958) is an American macroeconomist who is currently the Robert M. Beren Professor of Economics at Harvard University. Mankiw is best known in academia for his work on New Keynesian economics. Mankiw h ...

as "the most influential macroeconomist of the last quarter of the 20th century." As of 2020, he ranks as the 11th most cited economist in the world.

Biography

Lucas was born in 1937 in

Yakima, Washington Yakima ( or ) is a city in and the county seat of Yakima County, Washington, and the state's 11th-largest city by population. As of the 2020 census, the city had a total population of 96,968 and a metropolitan population of 256,728. The uninc ...

, and was the eldest child of Robert Emerson Lucas and Jane Templeton Lucas. Lucas received his

B.A. Bachelor of arts (BA or AB; from the Latin ', ', or ') is a bachelor's degree awarded for an undergraduate program in the arts, or, in some cases, other disciplines. A Bachelor of Arts degree course is generally completed in three or four yea ...

History History (derived ) is the systematic study and the documentation of the human activity. The time period of event before the invention of writing systems is considered prehistory. "History" is an umbrella term comprising past events as well ...

in 1959 from the

. Lucas attended the

University of California, Berkeley The University of California, Berkeley (UC Berkeley, Berkeley, Cal, or California) is a public land-grant research university in Berkeley, California. Established in 1868 as the University of California, it is the state's first land-grant u ...

as a first-year graduate student, but he left Berkeley due to financial reasons and returned to Chicago in 1960, earning a PhD in

Economics Economics () is the social science that studies the production, distribution, and consumption of goods and services. Economics focuses on the behaviour and interactions of economic agents and how economies work. Microeconomics analyzes ...

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 Dale Weldeau Jorgenson (May 7, 1933 – June 8, 2022) was the Samuel W. Morris University Professor at Harvard University, teaching in the department of economics and John F. Kennedy School of Government. He served as chairman of the departmen ...

. 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. Following his graduation, Lucas taught at the

Graduate School of Industrial Administration The Tepper School of Business is the business school of Carnegie Mellon University. It is located in the university's campus in Pittsburgh, Pennsylvania, US. The school offers degrees from the undergraduate through doctoral levels, in addition t ...

(now

Tepper School of Business The Tepper School of Business is the business school of Carnegie Mellon University. It is located in the university's campus in Pittsburgh, Pennsylvania, US. The school offers degrees from the undergraduate through doctoral levels, in addition ...

) at Carnegie Mellon University until 1975, when he returned to the

. Lucas was elected to the

American Academy of Arts and Sciences The American Academy of Arts and Sciences (abbreviation: AAA&S) 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, a ...

in 1980, the National Academy of Sciences in 1981, and the

American Philosophical Society The American Philosophical Society (APS), founded in 1743 in Philadelphia, is a scholarly organization that promotes knowledge in the sciences and humanities through research, professional meetings, publications, library resources, and communit ...

in 1997. After his divorce from Rita Lucas, he married

Nancy Stokey Nancy Laura Stokey (born May 8, 1950) has been the Frederick Henry Prince Distinguished Service Professor of Economics at the University of Chicago since 1990 and focuses particularly on mathematical economics while recently conducting research a ...

. They have collaborated in papers on

growth theory Economic growth can be defined as the increase or improvement in the inflation-adjusted market value of the goods and services produced by an economy in a financial year. Statisticians conventionally measure such growth as the percent rate of ...

public finance Public finance is the study of the role of the government in the economy. It is the branch of economics that assesses the government revenue and government expenditure of the public authorities and the adjustment of one or the other to achiev ...

, and

monetary theory Monetary economics is the branch of economics that studies the different competing theories of money: it provides a framework for analyzing money and considers its functions (such as medium of exchange, store of value and unit of account), and it ...

. Lucas has two sons: Stephen Lucas and Joseph Lucas. A collection of his papers is housed at the Rubenstein Library at Duke University.

Contributions

Rational expectations

Lucas is well known for his investigations into the implications of the assumption of the

rational expectations In economics, "rational expectations" are model-consistent expectations, in that agents inside the model are assumed to "know the model" and on average take the model's predictions as valid. Rational expectations ensure internal consistency i ...

theory. 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 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 the ...

and

Edmund Phelps Edmund Strother Phelps (born July 26, 1933) is an American economist and the recipient of the 2006 Nobel Memorial Prize in Economic Sciences. Early in his career, he became known for his research at Yale's Cowles Foundation in the first half of ...

'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 The Phillips curve is an economic model, named after William Phillips hypothesizing a correlation between reduction in unemployment and increased rates of wage rises within an economy. While Phillips himself did not state a linked relationship ...

Lucas critique

Lucas (1976) 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 macroeconomic theories and models of how aggregate demand (total spending in the economy) strongly influences economic output a ...

approach), arguing that a

macroeconomic model A macroeconomic model is an analytical tool designed to describe the operation of the problems of economy of a country or a region. These models are usually designed to examine the comparative statics and dynamics of aggregate quantities such a ...

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 The Lucas critique, named for American economist Robert Lucas's work on macroeconomic policymaking, argues that it is naive to try to predict the effects of a change in economic policy entirely on the basis of relationships observed in historica ...

" 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 New classical macroeconomics, sometimes simply called new classical economics, is a school of thought in macroeconomics that builds its analysis entirely on a neoclassical framework. Specifically, it emphasizes the importance of rigorous founda ...

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 was a Japanese economist. Biography Uzawa was born on July 21, 1928 in Yonago, Tottori to a farming family. He attended the Tokyo First Middle School (currently the Hibiya High School ) and the First Higher School, Japan (now the University ...

) 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. He also contributed foundational contributions to behavioral economics, and provided the intellectual foundation for the understanding of deviations from the

law of one price 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 manipulate prices ...

based on the irrationality of investors. In 2003, he stated, about 5 years before the

Great Recession The Great Recession was a period of marked general decline, i.e. a recession, observed in national economies globally that occurred from late 2007 into 2009. The scale and timing of the recession varied from country to country (see map). At ...

, that the "central problem of depression-prevention has been solved, for all practical purposes, and has in fact been solved for many decades." He also proposed the

Lucas Wedge The Lucas wedge is an economic measure of how much higher the gross domestic product would have been if it grew as fast as it should have. It shows the loss from deadweight caused by poor or inefficient economic policy choices. A Lucas wedge was na ...

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

Bibliography

* * * * * * 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, . *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.

Notes

References

* *

External links

Robert E. Lucas Jr.'s website at University of Chicago
* includes the Prize Lecture on December 7, 1995 ''Monetary Neutrality''

Interview on

Channel 4 Channel 4 is a British free-to-air public broadcast television network operated by the state-owned Channel Four Television Corporation. It began its transmission on 2 November 1982 and was established to provide a fourth television service ...

Chicago Economics on Trial
*

{{DEFAULTSORT:Lucas, Robert E. Jr. 1937 births Living people Carnegie Mellon University faculty Members of the United States National Academy of Sciences 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 Earhart Foundation Fellows 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) Nancy L. Schwartz Memorial Lecture speakers Members of the American Philosophical Society Chicago School economists Journal of Political Economy editors