To those who know Lars Peter Hansen, today’s announcement in Stockholm of him winning the 2013 Nobel Prize in Economic Sciences comes as little surprise.
Hansen, the David Rockefeller Distinguished Service Professor of Economics at the University of Chicago and former faculty member at Carnegie Mellon University (1978-1981), shares the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel with two distinguished research colleagues, Eugene F. Fama, the Robert R. McCormick Distinguished Service Professor of Finance at the University of Chicago, and Robert J. Shiller, the Sterling Professor of Economics at Yale University, “for their empirical analysis of asset prices.”
“The Economic Sciences Prize Committee recognized the importance of Hansen’s research in advancing our understanding of the behavior of asset prices. Moreover, research throughout his career has had far-reaching impacts in economics through providing new, groundbreaking methods for testing the practical relevance of economic theories,” said Dennis Epple, the Thomas Lord University Professor of Economics and head of economics at the Tepper School of Business. “Today, research in virtually every area of economics uses methods that he has developed. For example, in addition to research on financial markets, Hansen's methods have been used to study consumer behavior, labor markets, markets for energy and exhaustible resources, and the effects of taxes on the economy.
Those of us who were here at CMU during his early career, and that had the opportunity to interact with him, knew Hansen as a friendly, generous and modest person — and it was easily apparent that he was a brilliant individual. We were all eagerly studying the research that he was conducting and working to grasp the new methods that he was developing. His research achievements include many ties to CMU,” Epple said.
In 1982, Hansen published his first major work, “Generalized Instrumental Variables Estimation of Nonlinear Rational Expectations Models,” co-authored by faculty member (1980-1987) Kenneth J. Singleton. This research was celebrated in 2007 at CMU at a special conference on its 25th anniversary, titled “Advances in Theory-Based Estimation” (video interview). He also has been recognized for work with Ravi Jagannathan, (Ph.D. ’83) that created the “Hansen–Jagannathan Bound,” an important theorem in financial economics.
At today’s press conference (video) the overview of Nobel Prize was presented by Per Stromberg, who received his Ph.D. at the Tepper School in 1997. Additionally, the Scientific Background on the Prize published by the Economic Sciences Prize Committee cites research, “Generalized Disappointment Version and Asset Prices (2010),” co-authored by current Tepper School faculty member Bryan R. Routledge, associate professor of finance, and former faculty member Stanley Zin, currently of New York University.
In addition to Professor Hansen, the Nobel Prize in Economic Sciences has been awarded to eight graduates and/or former faculty members of the Tepper School of Business: Herbert A. Simon (1978), Franco Modigliani (1985), Merton H. Miller (1990), Robert E. Lucas, Jr. (1995), Finn E. Kydland (2004), Edward C. Prescott (2004), Oliver Williamson (2009), and Dale Mortensen (2011). Hansen is the 19th
Nobel Prize winner affiliated with CMU.