Robert Lucas was a giant of macroeconomics

Economics is full of equations named after their inventor. Robert Lucas, who died on May 15th aged 85, was different. His name graces something edgier: a “critique”. When he presented an early version, a young economist despaired: “You just explained why everything I’ve done in the last few years is worthless.”The Lucas critique can be explained with the help of an analogy—one he offered to students graduating from the University of Chicago, where he spent many years as both a student and professor. Imagine a fairground that sells tokens at the entrance for the rides inside, all of which are independently run. Suppose the cashier abruptly doubles the number of tokens per dollar. Fairgoers, flush with tokens, will flock to the rollercoaster, fun house and other attractions. Some ride operators will assume their rides are more popular than they thought. They might even extend workers’ hours in order to handle the additional custom.