My name sounds very Nordic. Seven of my great-great-grandparents were born in Denmark and two more in Sweden. My first name comes from
my Swedish great-great-grandfather, Lars Toolson, whose son also had the first name Lars. My middle name is from my great-grandfather Peter Hansen, who was born in Denmark. Fifteen of my sixteen great-great-grandparents, emigrating from Denmark, England, Sweden and Wales in the mid-nineteenth century, settled in Cache Valley, Utah.
My maternal grandfather George Rees was a country doctor who was accustomed to making house calls and often took payment in kind. Given his profession, he was one of the first owners of a car, a Ford Model A. My mother recently reminded us of that car: her first trip to Yellowstone National Park was made while riding in the rumble seat of that car, eighty years earlier. My grandfather attended the University of Chicago 70 years before I first worked there; he enrolled in a joint program between Rush Medical College and the university in 1911. During this time, my grandmother Veda Rees supported his medical training by working at Marshall Field’s, an iconic department store in downtown Chicago.
My paternal grandfather, Willard Hansen, was a proud farmer, committed to helping his sons launch their own successful farming ventures. When my father, R. Gaurth Hansen, told my grandfather Willard that he wanted to continue his studies beyond a four-year degree, my grandfather said, “If so, then be sure to study something useful, and become a doctor or a veterinarian.” My father was very close to his mother, Syble Toolson Hansen, and she quietly urged him to follow his academic and intellectual interests. Rather than a career in farming or animal care, my father became a biochemist and an expert in nutrition.
According to my maternal grandparents, my mother, Anna Lou Rees Hansen, knew my father from infancy. As the story goes, her father took her along when he made house calls to my grandmother Hansen and her infant son Gaurth. My mother grew up having the responsibility of taking important phone messages from patients who needed her father’s care from a very young age. Later, my mother and father were classmates in a one-room schoolhouse in Smithfield. Both of my parents went to college at Utah State University, my dad for three years before going on mission for the Mormon Church and my mother for four years and graduating in 1942. It was indeed a close-knit community in which everyone knew each other; both of my grandfathers served as mayor of the town of Smithfield, Utah.
My father received his bachelor’s degree from the University of Wisconsin, eventually leaving with a Ph.D. in 1948. His academic contributions included enzyme analysis of galactose metabolism in micro-organisms and animals, and painstakingly interviewing patients for family histories to seek clues to genetic transmission of galactosemia. In addition to applying his training to conducting nutrition surveys and consulting for the U.S. Department of Agriculture and the U.S. Public Health Service, he played a pivotal role in consolidating biochemistry at Michigan State University. I learned much about academic organization and management from dinner time conversations about my father’s administrative adventures.
The third of three sons, I was born in Urbana, Illinois. My oldest brother, Roger, is seven years my senior and has spent most of his professional career as a water resource engineer with the Bureau of Reclamation. My second brother, Ted, is five years my senior and is a geneticist and immunologist who just recently retired from Washington University in St. Louis. Ted took an active interest in my intellectual and athletic development at an early age. My athletic exploits ended after my second year in high school, but Ted’s interest in my studies had a long-lasting impact. Roger and I became closer later in life, when he came to Utah State University during my last years in college after serving in the Coast Guard.
In grade school, I developed a speech impediment, suffering from severe stuttering, especially in public. I still remember losing an election for class president in grade school in part because I had trouble speaking to the school. My reaction was to avoid public speaking for many years. Of course, as an academic one cannot really avoid speaking, so I have improved by practicing.
When I was almost 16, my parents moved back to Utah when my father was given the opportunity to become first Academic Vice President and later Provost of Utah State University. The university is in Logan, Utah, in Cache Valley and near Smithfield where they were born, so this was a return home for them. Although the move to Logan made it possible for me to get to know my grand-parents better, it was a difficult adjustment for me. I led an undistinguished academic career at Logan High School. Once I brought home double check marks under “does not respect authority.” In part, this reflected my independent thinking, but I was not an easy student for some of my teachers. My parents were patient with me, hoping I would eventually turn things around. My parents arranged for time off from school in order to work part time in a chemistry lab.
Once I entered Utah State University in 1970, I began to really apply myself. To my parents’ surprise, I was able to pay my way through my undergraduate education. I worked various jobs, including one in an animal science lab, a political polling venture, and working my parents’ “hobby farm” of about eighty acres in Cache Valley. Our crops included barley, oats, and alfalfa, all requiring manual labor to redirect water from mountain streams to the crops. Academically, I pursued interests in social science, majoring in political science, along with mathematics. Many faculty members took an interest in me, and three stand out. Michael Windham helped me better understand and appreciate the field of mathematics. Doug Alder, who taught an honors European history class, gave me some advice that caught me by surprise. He told me, “Lars, do not just follow the course of others but find your unique talents and aim to do something different.” The idea that I even might have unique talents had not occurred to me. By the end of my sophomore year, I decided to try combining my interests in mathematics and political science with the field of economics. A third professor, Bartell Jensen, helped me design an accelerated economics curriculum allowing me to take essential undergraduate classes in economics during my junior year, and some graduate classes by the time I was a senior. The fast pace helped me prepare for a Ph.D. program in a short period of time. Obtaining some distinction in mathematics and political science with my college degree, along with an accelerated curriculum in economics, enabled me to proceed to the University of Minnesota for a Ph.D.
At Minnesota, I was lucky in two ways. First, I was allowed to augment my economics classes with those from the graduate mathematics department. I pursued an eclectic mix of analysis, probability theory, and statistics classes that has served me well. Second, at Minnesota I met my intellectual mentors Chris Sims and Tom Sargent, when they were young scholars. Both had launched their stellar academic careers and were becoming recognized as major contributors to macroeconomics and econometrics. While Tom and Chris have different research perspectives, there was also much complementarity between their approaches. My training and experience at the University of Minnesota in the 1970s helped to shape my research and nurtured my interest in economic dynamics and time series econometrics. I learned to think of macroeconomic models as restrictions on stochastic processes, random processes that evolve over time.
Influenced by some lectures by Chris, I also began working on large sample approximation arguments; some of this research grew into my paper on Generalized Method of Moments (GMM) estimation. I found Tom’s willingness to engage me in joint research while I was still a graduate student very stimulating, and this grew into a long-standing collaboration. Tom and I have written many papers on such topics as rational expectations econometrics, present-value budget balance and robustness in decision-making.
Leaving graduate school, Carnegie Mellon University was an ideal first job for me. The faculty there in the late 1970s was skewed demographically: there were few senior faculty, and the younger faculty members were given much responsibility for the Ph.D. program and for running research workshops. Looking back on those years, I see what a valuable environment it was. I had the opportunity to share ideas with many young scholars who went on to distinguished careers.
Carnegie was where I first learned about asset pricing theory and began to explore with co-authors how to study empirical implications of these models in novel ways. I learned much from my collaborations: Bob Hodrick helped me explore international finance, Scott Richard worked with me on testable implications of asset pricing models, and Marty Eichenbaum collaborated on preference parameter estimation for dynamic macroeconomic models. My work with Ken Singleton was particularly valuable, developing novel ways to study the consumption-based capital asset pricing models. Working on these papers helped me to better motivate and reinforce the development of GMM estimation.
I visited the University of Chicago in the fall of 1981, and have been there ever since. The research environment at the University of Chicago is uniquely rewarding. It has historically been a highly interactive environment in which economics is taken very seriously. When I arrived, I had Gary Becker, Jim Heckman and Bob Lucas as senior colleagues. Each went on to win Nobel prizes and each set incredible examples of scholarship along the way.
After arriving, José Scheinkman and I shared many students and collaborated on papers. I gained great insight from our interactions and was sorry when he left later for Princeton. José and I had complementary perspectives on the field of finance. Even after he left, José and I continued our collaborations and have recently been working on methods for characterizing the term structure of risk prices. Surprisingly to me, the eminent labor economist Sherwin Rosen was another great colleague, proving to have a substantive interest in economic time series. I always enjoyed our interactions. Jim Heckman and I have had many conversations over the years on an extremely wide variety of topics related to economics. Jim served as a continual reminder that the best econometrics is grounded in economic analysis and empirical evidence. I can easily expand the list of influential colleagues. At Chicago, criticism can be intense but also very valuable.
The nearby business school has strong intellectual roots in financial economics, proving to be a valuable place to exchange ideas. Scholars there, like John Cochrane and later John Heaton, share my appreciation for economic dynamics and time series econometrics as fundamental ingredients in the study of asset valuation. In 2007, I was asked to join the Statistics Department at the University, further broadening my interactions on campus. My interdisciplinary research interests have been bolstered greatly by these connections across campus and diverse interactions as I explored productive connections between macroeconomics, finance and statistics.
With my father as an example, I have served the department in various capacities, including as its department chair and in helping to launch the Milton Friedman Institute, which eventually became the Becker Friedman Institute for Research in Economics. Opportunities at other universities occasionally presented themselves, but I always decided to stay.
I have also had the opportunity to advise many excellent students. Starting with Ravi Jagannathan at Carnegie Mellon, I’ve advised sixty students and served on committees for many more. These former students now hold a wide range of posts in academia, the private sector, and government, with an equally wide range of accomplishments and interests. I greatly benefited and learned from my interactions with them while they were students; it has been rewarding to watch their careers flourish over the years.
Shortly after moving to Chicago, I met my future wife Grace Tsiang, a graduate student in economics at the time. I asked her out in part because she understood my unique sense of humor. We were married in 1984. It is impossible to explain adequately her influence on my life in a short space; she has been a continual source of support and encouragement. With her Chicago price-theoretic training, she has often pushed me hard to write better and think more broadly. She challenges me to explain why my seemingly abstract approaches to economic analysis deliver important practical insights. It has been a joy to watch how Grace has played a lead role in building the undergraduate program, the most popular major at the University of Chicago. Grace has helped many students discover their personal path to success by helping to design a curriculum to suit their personal interests, goals, and strengths. This example has helped me in my own student advising.
Grace’s influence in my life is far-reaching. We introduced Grace’s parents to the scenery and wildlife of Yellowstone and Grand Teton National Parks on a summer driving tour. While we were walking by Old Faithful, we passed other tourists on the narrow wooden walkways who recognized my father-in-law. A young couple from Taiwan had seen news stories there in which Grace’s father, Sho-Chieh Tsiang, discussed his economic policy recommendations. While I was initially surprised, in retrospect I should not have been. Grace’s father, along with Ta-Chung Liu, both Cornell University economists, were key economic advisors to the Taiwanese government in advance and during the “Taiwan Miracle,” a time period of rapid economic growth. This set quite an example for how to use economic analysis in the policy sphere.
My parents’ interest in farming and projects influenced how I spent time away from the office. Shortly after Grace and I were married, we acquired a log cabin in the countryside where we could relax and our son Peter and our energetic dog Rufus could run around endlessly on the weekends. The log cabin was on ten acres of wooded land near Harvard, Illinois, and provided many opportunities for outdoor projects. My father helped us build a garden, and our property included two ponds stocked with fish that provided food and habitat for wood ducks, blue herons, and snapping turtles. Near the end of the century, with considerable reluctance, Grace and I sold the property; we decided to spend future vacations in the mountains and national parks of western Wyoming, hiking, skiing and participating in other outdoor activities. While time away from Chicago includes fun activities with the family, it also serves as a valuable opportunity to regroup, recharge, and rethink whatever problems occupy my mind at the time. I have made progress on many research projects by having these blocks of time to think and write.
We have lived in Hyde Park all of our time together in Chicago. Hyde Park is a local community in Chicago that includes the University of Chicago and home for many of its faculty. Over the years we have enjoyed many interactions with others in this community, getting to know other families – many with ties to the University of Chicago. Our son Peter was born in 1992 in Hyde Park. It has been rewarding to watch him grow and thrive. The three of us have traveled all over the world and have I enjoyed these trips and our long conversations together. Peter will graduate as a mathematics major at the University of Chicago in the spring of 2014. Grace, Peter and I will march in the academic procession to honor the occasion.
Over the years, I have received some recognition for my professional accomplishments. I remember my dad, the biochemist, attending the ceremony when I was inducted into the National Academy of Sciences. He was proud, but was also still coming to grips with the notion that social sciences – including economics – should be part of the National Academy. I tried to convey that the scientific method can be applied even when it is difficult to verify models with testing and experimentation. I still jokingly refer to the social sciences as the truly “hard” sciences for exactly this reason when talking to biological and physical scientists about the issue. My two brothers, a sister-in-law and my mother-in-law joined our family in Madrid when I was recognized by the BBVA Foundation in 2010. In 2012, Utah State University gave me an honorary Doctor of Science degree. My mother, a USU alum, and many other family members were able to come to the ceremony – making this a very special event. Although my father was no longer living, this was all the more gratifying because my father received this same degree in 1991. I tend to shy away from the spotlight, but sharing these honors with family has always meant a lot to me.
Looking ahead, I will continue to investigate a variety of research related to the implications of uncertainty – both as a modeler of dynamic economies and as an econometrician. The real consequences of uncertainty are important for a variety of questions in economics with policy relevance. I look forward to advising more students and learning from them. I hope I can encourage young scholars to advance research in fields to which I have contributed.
This autobiography/biography was written at the time of the award and later published in the book series Les Prix Nobel/ Nobel Lectures/The Nobel Prizes. The information is sometimes updated with an addendum submitted by the Laureate.