Robert Lucas, economist, 1937-2023 | financial times

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Economists “have an image of practicality and worldliness,” Nobel laureate Robert Lucas told the students Graduated from the University of Chicago in 1988, “but we’re basically storytellers, creators of fictitious economic systems.”

Lucas, who died at age 85, embodied this description. One of the most influential economists of the last half-century, his work had a significant real-world impact, underpinning a shift from the expansionary Keynesian policies of the 1960s, toward the conservative view that fiscal or monetary adjustment was an effort. useless.

But Lucas himself was a theoretician, not a political adviser. He developed models that became the standard tools of modern macroeconomics, used by both those who shared his views and those who opposed them.

“Bob Lucas was really the master of model building,” said Esteban Rossi-Hansberg, a close colleague at the University of Chicago. Olivier Blanchard, former chief economist at the IMF, called him “a perfect example of destructive creation”, which “made our intellectual lives more difficult, but much more exciting”.

Born in 1937 in Yakima, Washington, Lucas grew up in Seattle, where his mother worked as a fashion artist and his father worked as a welder for a commercial refrigeration company. His parents were New Dealers in a Republican neighborhood eager to instill the idea, as later wrote — “that one can decide for oneself what kind of person to be”.

Lucas clung to these New Deal policies initially, when a scholarship offer landed him at the University of Chicago, where he was to spend most of his career. He majored in history and, after an interlude in Berkeley, California, began studying economics in a department where he, and many others who were to build an international reputation, were drawn to free-marketeer Milton Friedman. His first faculty position was at the Carnegie School of Technology, but he returned to Chicago in 1974.

By then, Lucas had already published one of the articles for which he is best known—applying the “rational expectations” hypothesis—in which he took the prevailing view that governments could reduce unemployment by pursuing expansionary policies that would also lead to higher earnings. inflation.

Lucas formulated a model showing that such attempts would fail because people adjust their behavior once they have learned to expect higher inflation. The idea, as his former colleague John Cochrane puts it, was that “you can [only] fool people once or twice.”

A later article, in 1976, introduced what is now known as the “Lucas critique,” arguing that macroeconomic models would fail if they were based on past behavior. Economists would not be able to predict the results of changes in the exchange rate, monetary or tax policies unless they took into account how behavior might change as a result.

By 1995, in the words of the committee that awarded Lucas the Nobel Prize in economics that year, these ideas had been “fully incorporated into current thinking.”

Not all of his contributions stood the test of time. In 2003, he argued that “the central problem of [economic] the prevention of depression has been solved, for all practical purposes, and indeed has been solved for many decades.

But Lucas brought his modeling toolkit to many other areas, including fiscal policy, urban economics, and international trade. Much of his later work focused on how to increase the growth rate of the poorest countries, where he described the consequences for human well-being as “simply staggering.”

Rossi-Hansberg says that the strength of Lucas’s models lies in their ability to make the right abstractions and in the clarity of their mathematical language. But he also wrote with surgical precision, and he tried to persuade his students to do the same, scribbling detailed editorial comments on his work in red ink.

Generous with his colleagues, he continued to mentor students long after he retired from teaching in 2015. But Lucas could also be intolerant of anything he considered careless or intellectually dishonest, Cochrane said, describing him as “an absolute arrow.”

When the economist won the Nobel Prize in economics, he had to share the financial reward with his then-ex-wife, Rita Cohen Lucas, who had secured a clause in their divorce agreement six years earlier that entitled her to “50 percent of any Nobel Prize winner.” But he said cheerfully at the time: “A deal’s a deal.”

She is survived by her partner Nancy Stokey, a Chicago economics professor and frequent co-author; for his two children with his first wife, and for five grandchildren.