Robert E. Lucas Jr., a Nobel Prize-winning economist whose revolutionary theories transformed the field of macroeconomics and our understanding of economic policy, died May 15. He was 85.
A member of the University of Chicago faculty for four decades, Lucas, AB’59, PhD’64, was the John Dewey Distinguished Service Professor Emeritus in Economics and the College. He won the Nobel Prize in 1995 for developing and applying the hypothesis of rational expectations, which holds that people make economic choices based on their previous experiences and future expectations. In announcing the Nobel, the Swedish Academy of Sciences called Lucas “the economist who has had the greatest influence on macroeconomic research since 1970.”
Lucas’ pioneering research had a profound effect on the field of economics. His work has shown that because people make rational decisions about their economic welfare, their actions can alter the expected results of government policies. It had ripple effects in macroeconomic analysis and economic policy, because it gave governments and central banks a more critical way to think about fiscal intervention.
The idea that economists cannot sufficiently predict the effects of policy changes unless they incorporate individual decisions, especially expectations of the policy itself, is known as the “Lucas critique.” It is one of several major contributions Lucas made to economic theory over his field-defining career—from areas ranging from investment to unemployment, economic growth to monetary policy.
“Bob leaves behind a legacy of revolutionary research, teaching and leadership that transformed the field of economics and this department,” said Prof. Robert Shimer, chair of the Kenneth C. Griffin Department of Economics at UChicago. “Bob was always curious about new ideas—even ideas that seemed opposed to his fundamental contributions to economic thought. He could talk economics for hours, with insights informed by his deep knowledge of economic history, economic data and economic theory. I will miss him.”