Lars Peter Hansen

Lars Peter Hansen received his undergraduate degrees in mathematics and political science from Utah State University, and his Ph.D. in economics from the University of Minnesota. After teaching at Carnegie Mellon University, he joined the University of Chicago in 1981, where he holds the David Rockefeller Distinguished Chair and is Professor of Economics and Statistics. His work focuses on understanding how economic agents make decisions in environments of changing risk and uncertainty.

The contribution that won him the Nobel Prize, and which has revolutionized econometrics, is the development of the Generalized Method of Moments (GMM) in the 1980s. The GMM is a statistical technique that allows researchers to test economic theories involving rational expectations and financial markets without the need to fully specify the probability distribution of the data, making it particularly robust and adaptable to complex models. This methodology is today one of the dominant empirical tools in economic and financial research.

One of the key application areas of his work is the analysis of asset prices, seeking to understand the complex interconnections between financial markets and the real economy in a macroeconomic perspective. In this field, Hansen has focused on modeling the fundamental difference between risk (situations with known probabilities) and uncertainty (situations with unknown probabilities, often called Knightian uncertainty). This approach has provided crucial insights into how expectations and uncertainty aversion affect market fluctuations.

Hansen is currently Research Director of the Friedman-Becker Institute at the University of Chicago, and co-director of the Macro Financial Modeling Group. His most recent research has been oriented towards the measurement of "systemic risk" and its role in financial crises, such as the 2008 crisis, advocating the need to design robust and simple policies that avoid adding more uncertainty to the economic environment. Their work is fundamental to the design of improved models that explain the dynamic linkages between the financial and real sectors of the global economy.