Robert E. Lucas Jr., Nobel laureate conservative economist, dies at 85

Robert E. Lucas Jr., a Nobel laureate in economics who supported conservative arguments that government intervention in fiscal policy is often suicidal, died Monday in Chicago. He was 85 years old.

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. The announcement did not state the reason.

In awarding the Nobel Prize in Economic Sciences in 1995 to Professor Lucas, the fifth laureate in economics from the University of Chicago in six years, the Royal Swedish Academy of Sciences described him as “the economist who has had the greatest impact on macroeconomic research since the 1970s.”

While he introduced a number of groundbreaking, if sometimes controversial, theories, Professor Lucas was best known for his “rational expectations” hypothesis, put forward in the early 1970s in a critique of macroeconomics.

In this critique, he challenged John Maynard Keynes’s long-established doctrine that the government could manipulate the economy to achieve certain outcomes through reflective intervention policies such as changing interest rates or taking other steps to increase or reduce inflation or reduce unemployment.

Professor Lucas argued that in the real world, consumers and businesses make decisions based on rational expectations based on their own past experiences.

“His idea was that multi-equation macroeconomic models rely heavily on past behavior,” said David R. Henderson, a research associate at the Hoover Institution at Stanford University in California and professor of economics at the Naval Postgraduate School in Monterey. “But if people learn from what the government does” and respond accordingly in their own interests, “these models will make poor predictions of future behavior.”

As a result, as Professor Lucas said, government economic policies can be self-defeating because they fail to achieve the intended results.

As economic columnist Leonard Silk wrote in The New York Times in 1983, “If people understand and anticipate what the government is doing – for example, trying to accelerate economic growth by accelerating the growth of the money supply – workers will raise their wage demands and firms will raise prices, to hedge against future inflation, thus negating the government’s intention to increase real growth.

In a program with conservative economic policy implications, Professor Lucas argued that government spending replacing private investment is counterproductive; that the money supply is paramount; and that policies to reduce inequality through income redistribution, while “tempting”, are “in my view the most poisonous” to a healthy economy.

He also advocated the abolition of taxes on capital gains or any income derived from capital. And he embraced supply-side economics, which calls for increasing the supply of goods and services while lowering taxes to promote job creation, business expansion, and entrepreneurial activity.

“Supply-side economists,” said wa Interview from 1993“they provided the biggest truly free lunch I’ve seen in 25 years of this business, and I believe we would be a better society if we followed their advice.”

In 1995, shortly after eight years under supply-side President Ronald Reagan and four years under another Republican, George HW Bush, Professor Lucas concluded that “the U.S. economy is in excellent shape,” in part because that “the government does not try to do things with economic policy that it is unable to do.”

He said the same principles that fostered economic growth in rich countries could be applied to economic development in poorer ones.

In 1988 lecture titled ‘What economists do’, Professor Lucas explained: ‘We economists have to tell stories. We do not consider the realm of imagination and ideas to be an alternative or an escape from practical reality. On the contrary, it is the only way we have found to think seriously about reality.”

Robert EmersonLucas 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 Great Depression, after which the family moved to Seattle, where Robert Sr. he became a steam fitter in shipyards, and then, after World War II, a welder in a commercial refrigerator company. Years later, though he had no college or engineering background, he became the company’s president.

However, before his father’s fortunes changed, Robert Jr., wanting to become an engineer, needed a scholarship to attend college and received one from the University of Chicago, although he did not have an engineering school. He said he didn’t dare to study physics, so he became a history major. He graduated in 1959.

He then enrolled in graduate studies in economics at the University of California, Berkeley. But again in need of financial support, he returned to the University of Chicago, where he studied with the conservative economist Milton Friedman, who in 1976 received the Nobel Prize in Economics. Professor Lucas received his PhD in economics in 1964.

He taught at what is now Carnegie Mellon University from 1963 to 1974, then returned to the University of Chicago as a professor in 1975.

In 1959, he married Rita Cohen, a fellow student from Chicago. They separated in 1982 and divorced a few years later. Among his survivors are their sons, Stefan and Józef; his partner, Prof. Nancy L. Stokey, with whom he collaborated on some of his research at the University of Chicago; sister of Jennifer Spurr; brother Peter; and five grandchildren.

Four years before Mr. Lucas won the Nobel Prize, his estranged wife expressed great faith in his future. Her lawyer had inserted a clause in their divorce agreement that she would receive half of all the Nobel prizes he would have received if the honor had been awarded before October 31, 1995. He received the prize just three weeks before that date.

Professor Lucas was philosophical about raising $300,000 instead of the full $600,000. He said he might have objected during divorce negotiations had he had more rational expectations of being a Nobel laureate.

“A deal is a deal,” he said at the time. “He has a whole house. Getting half the prize was better than nothing.”

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