The Nobel Prize

2013 Lars Peter Hansen (b. 1952)


Lars Peter Hansen is an internationally known leader in economic dynamics who works at the boundary of economics and statistics. He was recently awarded the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel for his early research.  Hansen shares this honor with Eugene Fama and Robert Shiller.
Hansen’s early research in econometrics was aimed at developing time series statistical methods to investigate one part of an economic model without having to fully specify and estimate all of the model ingredients. The applications he explored with several coauthors included systems that are rich enough to support models of asset valuation and to identify and clarify empirical puzzles, where real-world financial and economic data were at odds with prevailing academic models.
Hansen is recognized for making fundamental advances in our understanding of how economic agents cope with changing and risky environments. He has contributed to the development of statistical methods designed to explore the interconnections between macroeconomic indicators and assets in financial markets. These methods are widely used in empirical research in financial economics. 
Hansen’s recent work focuses on uncertainty and its relationship to long run risks in the macro economy. He explores how models that incorporate ambiguities, beliefs, and skepticism of consumers and investors can explain economic and financial data and reveal the long-term consequences of policy options. Hansen and coauthors have recently developed methods for modeling economic decision-making in environments in which uncertainty is hard to quantify.  They explore the consequences for models with financial markets and characterize environments in which the beliefs of economic actors are fragile.
Currently, Hansen is co-principal investigator on a research initiative with the Macro Financial Modeling Group (MFM) that works to develop macroeconomic models with enhanced linkages to financial markets, with the aim of providing better policy tools for monitoring so-called systemic risks to the economy. He is also contributing his expertise on decision-making under uncertainty to a collaborative effort as part of the Center for Robust Decision Making on Climate and Energy Policy (RDCEP) to develop dynamic economic models in which economic activity could influence the climate. 

Before receiving the Nobel Prize in Economic Sciences, he received several other awards and honors. Hansen won the 2010 BBVA Foundation Frontiers of Knowledge Award in the Economics, Finance and Management “for making fundamental contributions to our understanding of how economic actors cope with risky and changing environments.” He also received the CME Group-MSRI Prize in Innovative Quantitative Applications in 2008 and the Erwin Plein Nemmers Prize in Economics from Northwestern University in 2006.

He was selected to deliver the Princeton Lectures in Finance at the Bendheim Center for Finance in December 2010, the Tjalling C. Koopmans Memorial Lectures at Yale in September 2008, and the Third Toulouse Lectures in Economics at the Universit√© de Toulouse in May 2005.

Hansen joined the faculty of the University of Chicago's Department of Economics in 1981 and has served as department chairman and director of graduate studies. He is now David Rockefeller Distinguished Service Professor of Economics, Statistics, and the College. Hansen guides the scholarly direction of the Becker Friedman Institute and chairs the Institute Research CouncilHe was one of the forces, along with John Cochrane and John Heaton, behind the 2006 creation of the Joint PhD Program in Financial Economics which is run jointly by Chicago Booth School of Business and the Department of Economics.  
Hansen is a fellow of the National Academy of Sciences and the American Finance Association. He also is a member of the American Academy of Arts and Sciences and past president of the Econometric Society.
He holds a bachelor's degree in mathematics and political science from Utah State University and a doctorate in economics from theUniversity of Minnesota.  Hansen also received an honorary doctorate from Utah State University in 2012.
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