The man who busted the inflation-employment myth

The Indicator from Planet Money

NPR

Business

4.7 • 9.2K Ratings

🗓️ 18 May 2023

⏱️ 9 minutes

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Summary

Nobel-winning economist Robert Lucas Jr. died on Monday. His revolutionary theories transformed the field of macroeconomics. His influential "Lucas critique" argued economic policy must take into account people's decisions in reaction to the policy itself, and just as importantly, their expectations. Not only is he remembered as a brilliant mind, but a supportive colleague as well. On today's episode, we remember Robert Lucas and his legacy.

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Transcript

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0:00.0	NPR.
0:03.0	The World of Economics lost a major force this week. Robert Lucas died on Monday aged 85.
0:19.0	We called his one time colleague, Senior Fellow at the Hoover Institution, John Cochran.
0:24.0	He was a giant in the field. He's not well-known outside economics, but a lot of us would put him as the most influential economist of the 20th century.
0:36.0	When you look at what economists do now, it's Lucas Lucas Lucas.
0:42.0	A lot of what economists do is build models of the world. These mathematical representations of how people or companies might respond to change.
0:51.0	So if you cut taxes, what might happen to inflation? Or economic growth?
0:57.0	These models are super important. Just think about the debate today over how much the Federal Reserve should be raising interest rates to try and control inflation.
1:07.0	Like how high is too high before you cause a recession?
1:11.0	But in the 1970s, Robert Lucas argued the economic models trying to answer those kinds of questions were too simplistic.
1:18.0	He challenged economists to think harder, and that changed the discipline forever.
1:25.0	This is the indicator from planet money. I'm Darian Woods.
1:28.0	And I'm Adrian Mah.
1:29.0	While many economists see Robert Lucas as one of the most influential in their field, he's not exactly a household name.
1:37.0	So today on the show, we try to change that.
1:44.0	Robert Lucas was one of the most important economists over the last 50 years. Born in Yakima, Washington, he went on scholarship to the University of Chicago.
1:54.0	He later won a Nobel Prize. He made economic forecasts better. And according to John Cochran, he was also a great colleague.
2:03.0	I showed up as a assistant professor in the University of Chicago fresh out of Berkeley.
2:10.0	Didn't know much about anything. And Bob treated me a brass-yong assistant professor who didn't know much of anything like a full colleague.
2:19.0	He gave me all sorts of comments on my papers and expected me to comment on his papers.
2:24.0	A truly great guy.
2:26.0	Also, he could be grumpy.
	...

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