ROBERT E. LUCAS, Jr.

I was born in 1937, in Yakima, Washington, the oldest child of Robert Emerson Lucas and ane !em"leton Lucas# $% sister ene"her was born in 1939 and m% brother &eter in 19'(# $% "arents had mo)ed to Yakima from *eattle, to o"en a small restaurant, !he Lucas Ice +reamer%# !he restaurant was a casualt% of the 1937,3- downturn, and during World War II our famil% mo)ed to *eattle, where m% father found work as a steamfitter in the shi"%ards and m% mother resumed her earlier career as a fashion artist# $% brother .aniel was born in *eattle in 19'-# $% "arents were admirers of &resident Roose)elt and the /ew .eal# !heir "arents and most of our relati)es and neighbors were Re"ublicans, so the% were self conscious in their liberalism and took it as emblematic of their abilit% to think for themsel)es# !he idea that one could decide for oneself what kind of "erson to be, and that one ought to think about these decisions, was not limited to "olitics# I remember discussions, with m% mother es"eciall%, of religion 0she was a liberal "rotestant1, of decor 0she fa)ored hardwood floors and oriental rugs1, e)en on how to choose what kind of cigarette to smoke# 2fter the war, m% father found a 3ob as a welder at a commercial refrigeration com"an%, Lewis Refrigeration# 4e became a craftsman, then a sales engineer, then sales manager, and e)entuall% "resident of the com"an%# 4e had no college degree and no engineering training, and learned the engineering he needed from the "eo"le he worked with and from handbooks# I remember man% technical and managerial discussions with him, as well as our ongoing "olitical arguments# When I took calculus in high school, he enlisted m% hel" on a refrigeration design "roblem he was working on,and actuall% used m% calculations5 It was m% first taste of real a""lied mathematics, and an e6citing one# I attended *eattle &ublic *chools, graduating from Roose)elt 4igh *chool 0where m% "arents had graduated in 19771 in 1988# I was good at math and science, and it was e6"ected that I would attend the 9ni)ersit% of Washington in *eattle and become an engineer# :ut b% the time I was se)enteen I was read% to lea)e home, a decision m% "arents agreed to su""ort if I could obtain a scholarshi"# $I! did not grant me one but the 9ni)ersit% of +hicago did# *ince +hicago did not ha)e an engineering school, this ended m% engineering career# :ut when I began the '' hour train tri" ;back east; to +hicago, I was "rett% sure something interesting would turn u"# What to do instead< I took some mathematics at +hicago, but lost interest soon after m% courses got "ast the material I had half learned in high school# I did not ha)e the ner)e to ma3or in &h%sics, which is what %ou did at +hicago in those da%s if %ou thought %ou could make it# !he real e6citement for me was in the liberal arts core of the +hicago +ollege, courses from the 4utchins era with names like 4istor% of Western +i)ili=ation, and >rgani=ation, $ethods, and &rinci"les of ?nowledge# E)er%thing in these courses was new to me# 2ll of them began with readings from &lato and 2ristotle, and I wanted to learn all I could about the @reeks# I took a seAuence in 2ncient 4istor%, and became a histor% ma3or# !hough I had no real idea what a "rofessional historian does, I had learned that one can make a li)ing b% "ursuing oneBs intellectual interests and writing about them# I began to think about an academic career#

:oth the mathematics and the economics in Coundations were wa% o)er m% head. but it was far more e6citing than an%thing I had imagined# What made it so< $an% +hicago students ha)e tried to answer this Auestion# +ertainl% CriedmanBs brilliance and intensit%. whose account of the end of the Roman era stressed the continuit% of economic life in the face of ma3or "olitical disru"tions# Cor me. and ga)e )aluable encouragement to technicall% inclined students# 2rnold 4arbergerBs seAuence in "ublic finance was a lasting influence on me too# $% thesis. but also a lot of time to "ursue what I found interesting# I took m% first rigorous anal%sis courses. I was in no "osition to "ursue m% classical interests.e"artment. so I began work at :erkele% with little more than an o"en mind# !he most e6citing modern historian I had read at +hicago had been the :elgian historian 4enri &irenne. and fit m% sense of what was im"ortant# 2t :erkele%.onald :ear. I began $ilton CriedmanBs "rice theor% seAuence# I had been looking forward to this famous course all summer.the most im"ortant book in economics since the war#. and was in a "osition to take charge of m% own economic education# In the fall of 19D(. 3ust for the "leasure of the authorBs com"an%# !here was also "lent% of interesting economics going on at +hicago# $% interest in "robabilit% and statistics stemmed from an interest in econometrics. as I do *amuelsonBs. s%stematic wa% for a""roaching economic "roblems I would end u" at the right "lace# CriedmanBs course ended m% long career as a conscientious. near. to "re"are for m% real start as a graduate student the ne6t fall# It was luck% for me that one of m% undergraduate te6ts referred to &aul *amuelsonBs Foundations of Economic Analysis as . and entered the graduate "rogram in 4istor% at the 9ni)ersit% of +alifornia# With no @reek or Crench and minimal Latin and @erman. since there a""eared to be no ho"e of financial su""ort from :erkele%Bs Economics . but I was too ambitious to s"end m% summer on the second most im"ortant book in economics. I had internali=ed *amuelsonBs standards for when an economic Auestion had been "ro"erl% "osed and when it had been answered. I returned to +hicago# . and a statistics course using Eolume I of Willam CellerBs An Introduction to Probability Theory and Its Applications# I still "ick u" CellerBs book from time to time.octoral Cellowshi".straight 2 student# /ow if a course did not "romise to be a life. line b% line. stimulated b% courses of F)i @riliches and @regg Lewis# . going back to m% calculus books when I needed to# :% the beginning of fall Auarter I was as good an economic technician as an%one on the +hicago facult%# E)en more im"ortant. which used data from 9#*# manufacturing to estimate elasticities of . but it was ob)ious that to a""l% it with an% confidence I would need to know much more than I could "ick u" on the side as a histor% student# I decided to mo)e into economics and.uring the rest of that academic %ear I took some undergraduate economics at +hicago and one or two graduate courses. I took courses in Economic 4istor% and audited an economic theor% course# I liked economics at once. a new 2ssistant &rofessor from *tanford. I lost interest and attended onl% s"oradicall%# I accumulated man% +Bs. &irenneBs shift of focus awa% from em"erors and drear% $ero)ingian kings and on to the dail% li)es of "ri)ate citi=ens was no)el and e6citing. but I also knew that if I de)elo"ed a reliable. I tried to translate what Criedman had done into the mathematics I had learned from *amuelson# I knew I would ne)er be able to think as fast as Criedman. and his willingness to follow his economic logic where)er it led all "la%ed a role# 2fter e)er% class.I obtained a Woodrow Wilson .changing e6"erience. and *amuelsonBs confident and engaging st%le ke"t me going# 2ll m% s"are time that summer went in to working through the first four cha"ters. taught a )aluable mathematical economics course.

ean of the @raduate *chool of Industrial 2dministration at +arnegie Institute of !echnolog% 0now+arnegie. the shock wa)e of CriedmanBs libertarian. CriedmanBs students came awa% with the sense that we had acAuired a "owerful a""aratus for thinking about economic and "olitical Auestions# In 19D3 Richard +%ert. the new . brought the ideas of efficient market theor% to @*I2# !homas *argent came to +arnegie. and tr%ing to see how these methods could best be a""lied to economic Auestions# Economists of m% cohort all o)er the world were engaged in this enter"rise in the 19D(s. and I remember the discussions he and Roll had about interest rates 0that none of the rest of us could follow1# $orris .ick Roll. both of which bore immediate fruit and also influenced m% thinking for %ears afterward# >ne of these was a "ro3ect with Leonard Ra""ing. and I knew @*I2 would be a stimulating and congenial "lace for me# @*I2Bs leading intellectual figure was 4erbert *imon# 2lthough *imon was no longer working in economics when I came to +arnegie. of course.$ellon from 4ar)ard in the middle of writing his thesis. gi)en m% interests in economic d%namics# 2t +arnegie I became in)ol)ed in two collaborations. and @#*# $addala. /eil Wallace.uring m% %ears there. and through Ed.substitution between ca"ital and labor. and the .eal "olitics I had grown u" with. and there were man% others who now ha)e international re"utations# Cor man% of us.conser)ati)e ideas forced a rethinking of our whole social "hiloso"h%# Intense student discussions ranged far be%ond technical economics# I tried to hold on to the /ew . *herwin Rosen. and was "art of a larger "ro3ect of 4arbergerBs anal%=ing the effects of )arious changes in the 9#*# ta6 structure# !here was a terrific collection of students at +hicago in the earl% 19D(s# $% closest friends were @len +ain. was ohn $uth. he was alwa%s read% to talk about economics 0or an% other area of social or management science1 at lunch or coffee# 4e ga)e all of us at @*I2 the feeling of being in the ma3or leagues. %ou couldnBt. and his work on in)estment had stimulated me# I s"ent a lot of time in m% first %ears at +arnegie !ech learning the mathematics of d%namical s%stems and o"timi=ation o)er time. and remember )oting for ?enned% in 19D(# . I began theoretical work on the decisions of business firms to in)est in "h%sical ca"ital and in im"ro)ed technolog%# .$ellon had a remarkable grou" of economists interested in d%namics and the formation of e6"ectations# Coremost. +arnegie. offered me a facult% "osition# I had met 2llan $elt=er and Leonard Ra""ing at m% 3ob seminar there. m% sister had said.ale orgenson had ser)ed on m% +hicago thesis committee. in which we undertook to "ro)ide a neoclassical account of the beha)ior of 9#*# wages and em"lo%ment from 1979 to 198-# !he "a"er was a bolder ste" into new territor% than I would ha)e taken then on m% own./i6on< :ob. m% closest friend and colleague at that time. led b% 4irofumi 9=awa# .. was written under 4arberger and Lewis. a student of Eugene CamaBs at +hicago.e@root taught a course in statistical decision theor% that influenced Edward &rescott. me# ohn :ossons and later $ichael Lo)ell studied direct e)idence on e6"ectations# It would be hard to think of a better grou" of colleagues. m% colleague in m% first three %ears there# $orton ?amien and /anc% *chwart= had come from &urdue about the time I came from +hicago# . and hel"ed us to outgrow the sense that all the im"ortant work was going on at +hicago or +ambridge# >nce m% thesis was finished. and she was right 0for then51# :ut howe)er we )oted. and I remember e6citing conferences on this theme at +hicago and Yale.$ellon 9ni)ersit%1.

which was com"leted in 197( and "ublished in 1977# !he role of this "a"er. had earlier aroused m% interest in *amuelsonBs o)erla""ing generations model of a monetar% econom%# 2t about the same time. the "osition I hold toda%# +hicago has been a mar)ellous "lace for me. is one of the sub3ects of m% /obel lecture# In $a%. was "ublished in 19-9# *ince then.a)id +ass. 3ust before I began graduate studies at :erkele%# >ur son *te"hen was born in +hicago in *e"tember. but in the course of failing to sol)e it we found oursel)es talking and corres"onding about e)er%thing in economic d%namics# In a cou"le of %ears we learned large chunks of modern general eAuilibrium theor%. 19D(# >ur son ose"h was born in &ittsburgh in anuar%. . also an undergraduate at +hicago. in a wa% that has ser)ed me well e)er since# . and I ha)e been stimulated b% colleagues and graduate teaching into research on monetar% theor%.. as I knew it would be from m% student e6"eriences."ro3ect ne)er would ha)e been undertaken or com"leted without LeonardBs confidence and his e6"ertise in labor economics# Edward &rescott had come to @*I2 as a doctoral student in the same %ear I 3oined the facult%. Wisconsin# . and di)orced se)eral %ears later# *ince 19-7 I ha)e li)ed with /anc% *toke%. so it is these influences I ha)e focused on here# I ha)e had a rewarding "ersonal life. and m% %ears at +arnegie $ellon were critical. 1989. and economic growthG all the basic to"ics in macroeconomics# :ut the main features of oneBs a""roach to science. when Ed had become a facult% member at &enn. m% undergraduate and graduate %ears at +hicago. the influences of m% "arents. that reformulated ohn $uthBs idea of rational e6"ectations in a useful wa% # .uring this brief "eriod m% whole "oint of )iew of economic d%namics took form 0along with EdBs1. functional anal%sis. Rao 2i%agari organi=ed a 78th 2nni)ersar% +onference for this "a"er.istinguished *er)ice &rofessor at +hicago.. I enlisted his hel" on a theoretical "ro3ect I had begun on the d%namics of an im"erfectl% com"etiti)e industr%# !hat "roblem defeated us. and monetar% theor%# >ur monogra"h. our collaboration has been a domestic one onl% # We ha)e an a"artment on +hicagoBs north side. international. like the main features of oneBs "ersonalit% more generall%. combined with much that I had learned working with &rescott.In)estment under 9ncertaint%. Edmund &hel"s con)inced me that Ra""ingBs and m% model of labor su""l% needed to be situated in a general eAuilibrium conte6t# !hese influences. 1998. certainl% the most influential of m% writings. s"onsored b% the Cederal Reser)e :ank of $innea"olis# !his occasion ranks high among the "rofessional "leasures and honors I ha)e recei)ed# In 197' I returned to +hicago as a facult% member# In 19-( I became the ohn .$ellon in 1971. and a summer house on Lake $ichigan. and wrote a "a"er.trade. came together in m% "a"er. and "robabilit% theor%. and I were married in /ew York in 2ugust. are set earl% on# Cor me. who is now a colleague of mine at +hicago# We ha)e collaborated in "a"ers on growth theor%. and we were immediate friends# 2 few %ears later. "ublic finance.E6"ectations and the /eutralit% of $one%. and his wife !an%a is a resident at :eth Israel 4os"ital in :oston# Rita and I were se"arated in 19-7. Recursi)e $ethods in Economic . who came to +arnegie. intertwined with the intellectual life that I ha)e described in these notes# Rita +ohen.%namics.oor +ount%. fiscal "olic%. .ewe% . in . 19DD# *te)e is now a securities trader at the +hemical :ank in /ew York# oe is a graduate student in 4istor% at :oston 9ni)ersit%.

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