Robert E. Lucas Jr., a controversial Nobel laureate in economics who bolstered conservative arguments that government intervention in fiscal policy is often self-destructive, died Monday in Chicago. He was 85.
His death was announced by the University of Chicago, where he began teaching as a professor in 1975 and remained Professor Emeritus until his death. No reason was given in the announcement.
When the Swedish Royal Academy of Sciences awarded the 1995 Nobel Prize in Economics to Professor Lucas, the fifth winner in economics at the University of Chicago in six years, the Swedish Royal Academy of Sciences described him as “the economist who has had the greatest impact on the world economy.” macroeconomic research had”. since 1970.”
While presenting a number of groundbreaking if sometimes controversial theories, Professor Lucas is best known for his ‘rational expectations’ hypothesis, which he advanced in a Critique of Macroeconomics in the early 1970s.
In this critique, he challenged John Maynard Keynes’ long-established doctrine that government could manipulate the economy to achieve specific outcomes through reflexive interventionist measures, such as changing interest rates or taking other steps to increase or contain inflation or to reduce unemployment.
In the real world, says Professor Lucas, consumers and businesses make decisions based on rational expectations derived from their own past experiences.
“His idea was that macroeconomic models, which are based on many equations, are primarily based on past behavior,” said David R. Henderson, a research associate at Stanford University’s Hoover Institution in California and an economics professor at the Naval Postgraduate School in Monterey. “But if people learn from what the government is doing” and act accordingly in their own best interests, “these models will be poorly predictive of future behavior.”
As a result, according to Professor Lucas, the government’s economic policies can be self-defeating because they do not achieve the intended results.
As economics columnist Leonard Silk wrote in The New York Times in 1983: “If people understand and anticipate what the government is doing — for example, by trying to accelerate economic growth by accelerating the increase in the money supply — workers will raise their wages. “Demand and firms will raise prices to protect themselves from future inflation, defeating the government’s intention to boost real growth.”
In an agenda with conservative implications for economic policy, Professor Lucas argued that government spending replacing private investment is counterproductive; that the money supply is the most important thing; and that policies to reduce inequality through income redistribution, while “seductive”, are “in my opinion the most toxic” to a sound economy.
He also advocated the abolition of taxes on capital gains or capital gains. And he advocated supply-side economics, which calls for increasing the supply of goods and services while lowering taxes to encourage job creation, business expansion and entrepreneurial activity.
“Supply-side economists,” he said in a 1993 interview, “have delivered the biggest truly free lunch I’ve seen in this business in 25 years, and I think we’d be a better society if we followed their advice.” .”
In 1995, not long after eight years under President Ronald Reagan, a pro-supply-side advocate, and four years under another Republican, George HW Bush, Professor Lucas concluded that “the US economy is in excellent shape.” due in part to “the government” not trying to do things with economic policy that it is unable to do.”
And he said the same principles that fueled economic growth in rich countries could be applied to economic development in poorer countries.
In a 1988 lecture entitled What Economists Do, Professor Lucas declared, “We economists must be storytellers.” We do not believe that the realm of imagination and ideas represents an alternative or a retreat from practical reality. On the contrary, it’s the only way we’ve found to seriously think about reality.”
Robert Emerson Lucas Jr. was born on September 15, 1937 in Yakima, Washington. His mother, Jane (Templeton) Lucas, was a fashion artist. His father ran an ice cream parlor that went bankrupt during the Depression. The family then moved to Seattle, where Robert Sr. worked as a steam mechanic in the shipyards and after World War II as a welder in a commercial refrigerator company. Years later, he rose to become president of the company, despite having neither a college degree nor an engineering education.
Before his father’s fate changed, however, Robert Jr., who wanted to be an engineer, needed a scholarship to attend college and was offered a scholarship by the University of Chicago, even though there was no engineering school there. Lacking the courage to study physics, he decided to study history. He graduated in 1959.
He then enrolled in a graduate program in economics at the University of California, Berkeley. However, needing financial support again, he returned to the University of Chicago, where he studied under conservative economist Milton Friedman, who received the 1976 Nobel Prize in Economics. Professor Lucas received his doctorate in economics in 1964.
From 1963 to 1974 he taught at what is now Carnegie Mellon University and returned to the University of Chicago as a professor in 1975.
In 1959 he married Rita Cohen, a fellow student in Chicago. They separated in 1982 and divorced a few years later. His survivors include their sons Stephen and Joseph; his partner, Prof. Nancy L. Stokey, with whom he collaborated on some of his research at the University of Chicago; one sister, Jenepher Spurr; a brother, Peter; and five grandchildren.
Six years before Professor Lucas received his Nobel Prize, his estranged wife expressed great confidence in his future. Her attorney included a clause in the divorce settlement stating that if the award were presented before October 31, 1995, she would receive half of any Nobel prizes he might receive. He received the award just under three weeks before the end of this period.
Professor Lucas was philosophical about raising $300,000 instead of the full $600,000. He might have resisted the divorce negotiations, he said, if he had had a more rational expectation that he would become a Nobel Prize winner.
“A deal is a deal,” he said at the time. “She got the whole house. Getting half the price was better than nothing.”