Robert E. Lucas, Jr.

Robert E. Lucas, Jr., born in 1937, American economist, awarded the 1995 Nobel Prize in economics for applying the theory of rational expectations to monetary policy. The Royal Swedish Academy Committee cited Lucas as being “the economist who has had the greatest influence on macroeconomic research since 1970.”

The theory of rational expectations uses statistical methods to show that workers and businesses shape the economy by interpreting and updating information about the economy’s future. As a result government monetary policies can be anticipated, and this expectation may alter the predicted outcome of those policies. Lucas used the rational expectations theory to challenge many orthodox economic assumptions of the 1970s, particularly the theories of British economist John Maynard Keynes and the effectiveness of government intervention in the economy.

Lucas was born in Yakima, Washington, in 1937. His family moved to Seattle during World War II (1939-1945). After graduating from Roosevelt High School in Seattle in 1955, he attended the University of Chicago where he received a B.A. in history in 1959 and a Ph.D. in economics in 1964.

Lucas became a professor at the Carnegie Institute of Technology (now Carnegie-Mellon University) in Pittsburgh, Pennsylvania, from 1963 to 1974. In 1974 he returned to the University of Chicago as a visiting professor, and in 1975 he accepted an appointment there as a professor of economics. In 1980 the university named him the John Dewey Distinguished Service Professor of Economics. His publications include Studies in Business-Cycle Theory (1981), Models of Business Cycles (1985), and Recursive Methods in Economic Dynamics (1989).