An idealistic economist
The recent death of Robert Lucas marks the end of an era. Others have done a nice job describing his immense contributions to the field of macroeconomics. (See, for example, David Henderson and Tyler Cowen.). Here I’ll focus on a few personal observations, as Lucas probably influenced my career more than any other economist.
When I was just starting out, I assumed that economics was about ideas—that developing good ideas was the key to success. Over time, I became increasingly disillusioned with the field. There seemed to be too much focus on technique and too much weight put on credentials, reputation, connections, etc. One exception was Robert Lucas, who seemed genuinely interested in figuring out which ideas make the most sense.
Back in the late 1980s, Steve Silver and I wrote a paper on what would now be called “the fallacy of reasoning from a price change”. The paper was rejected from a prestigious journal for reasons that made no sense. We pointed this out to the editor, who then sent it out for a second review. This time it was accepted. Most editors would have replied to us with a letter saying something like “I see there’s a disagreement with the referee, and we must defer to his/her judgment.” In this case the editor was Robert Lucas, who actually took the time to evaluate our arguments and saw that we were correct. He didn’t discount the importance of our paper merely because it didn’t use any techniques more sophisticated than a simple regression.
Lucas was also the chair of my dissertation committee. My research was on currency hoarding and the underground economy, a topic that was completely unrelated to his much more cutting edge work on money and business cycles. Nonetheless, he was quite supportive of a project that I probably would have had difficulty getting approved by famous economists at almost any other top program. All of the statistical work was done on a 1970s-era pocket calculator. He found the ideas to be interesting, and that was enough. He was an idealistic economist.
Looking back on my career, the four economists that most shaped my thinking on macroeconomics were Irving Fisher, Milton Friedman, Bob Lucas and Bennett McCallum. Lucas was the only one of the four that I took classes from, and without his encouragement it is unlikely that I would have ever made it into academia.
PS. John Cochrane also found Lucas to be very supportive when he was just starting out.
May 17 2023 at 9:01am
In the paper, you argue that a demand shock with sticky wages means that real wages are counter-cyclical. What you’re basically saying is that if there is a positive demand shock and nominal wages are sticky, then rising inflation will result in lower real wages. Is that correct?
May 17 2023 at 10:37am
Yes, that is the typical pattern. BTW, rising inflation also tends to lower real wages when these is a negative supply shock.
But after a positive demand shock real incomes rise despite lower real hourly wages, as total hours worked rise.
May 21 2023 at 3:31pm
You became disappointed with the profession, because it relied too much on connections, etc. And then your write:
“Most editors would have replied to us with a letter saying something like “I see there’s a disagreement with the referee, and we must defer to his/her judgment.” In this case the editor was Robert Lucas, who actually took the time to evaluate our arguments and saw that we were correct. (…)
Lucas was also the chair of my dissertation committee.”
I have never met prof. Lucas, and he may well be as different from the rest as you describe him, but I am afraid there is a bit of a confound here…