Lars Peter Hansen

Hansen is the inaugural director and of the Becker Friedman Institute and the current director of BFI's Macro Finance Research Program (MFR). He was founding director of the Milton Friedman Institute, the predecessor of the Becker Friedman Institute. In 2018, Hansen wrote a retrospective essay reflecting on the Beginnings of the Becker Friedman Institute for Research in Economics, With M.I.T. economist Andrew Lo, Hansen leads the Macro Financial Modeling Group, a network of macroeconomists working to develop improved models of the linkages between the financial and real sectors of the economy in the wake of the 2008 financial crisis. He also is co-principal investigator on a research initiative studying the costs of uncertainty about economic policy.

He is the co-winner of the Frisch Medal with Kenneth Singleton in 1984 for his paper, "Generalized Instrumental Variables Estimation of Nonlinear Rational Expectations Models". For his work in studying the properties of financial markets and macroeconomics, he was the 2006 Erwin Plein Nemmers Prize in Economics recipient. He was recognized for his use of statistical methods in economics by receiving the CME Group-MSRI Prize In Innovative Quantitative Applications in 2008. In 2011, he was awarded the BBVA Foundation Frontiers of Knowledge Award in Economics, Finance, and Management "for making fundamental contributions to our understanding of how economic actors cope with risky and changing environments." He holds honorary doctorates from Utah State University and honorary professorships from HEC Paris and Universidad del Pacífico awarded in 2015. On May 22, 2016, Hansen received an honorary degree from Colby College in Waterville, Maine.

His contributions and current research interests are outlined in a December 2015 interview appearing in The Region, a publication of the Federal Reserve Bank of Minneapolis.

With several coauthors such as Kenneth J. Singleton, Scott F. Richard, and Robert Hodrick, Hansen applied GMM to study models of asset valuation. Together with Ravi Jagannathan he showed that the ratio of any stochastic discount factor's standard deviation to its mean is at least as great as any asset's Sharpe ratio; this result is known as the Hansen–Jagannathan bound. The fact that this often fails in practice due to the Sharpe ratio of risky assets exceeding the ratio of the volatility of the stochastic discount factor to its expectation is known as the equity premium puzzle. Later work focused on the long-run risk-return tradeoff with José Scheinkman and the examination of the term structure of pricing risk shocks in dynamic macroeconomic models through the use of "dynamic valuation decomposition."

On October 14, 2013, Hansen, with Eugene Fama and Robert Shiller, was awarded the Nobel Memorial Prize in Economic Sciences. The award cited their "empirical analysis of asset prices." His Nobel lecture, "Uncertainty Inside and Outside Economic Models," was delivered on December 8, 2013.

Among other honors, he received the 2010 BBVA Foundation Frontiers of Knowledge Award in the category of Economy, Finance and Management.

Hansen has focused on the difference between risk and uncertainty (also known as Knightian uncertainty) and on the measurement of so-called systemic risk," its role in the 2008 financial crisis, and how it should be contained during the post-Great Recession recovery. He frequently speaks publicly on the need to address uncertainty in the policy-making process.

After graduating from Utah State University (B.S. Mathematics, Political Science, 1974) and the University of Minnesota (Ph.D. Economics, 1978) he served as assistant and associate professor at Carnegie Mellon University before moving to the University of Chicago in 1981. He is currently the David Rockefeller Distinguished Service Professor in Economics, Statistics and the College at the University of Chicago. He is married to Grace Tsiang (Chinese: 蒋人瑞 ; pinyin: Jiǎng Rénruì ), who is the daughter of the famous economist Sho-Chieh Tsiang. Together, Hansen and Tsiang have one son named Peter. He has two brothers, Ted Howard Hansen, an immunologist at Washington University in St. Louis and Roger Hansen, an engineer in water resource management. His father, Roger Gaurth Hansen, served as provost of Utah State University and was a professor of biochemistry.

Lars Peter Hansen (born 26 October 1952 in Urbana, Illinois) is an American economist. He is the David Rockefeller Distinguished Service Professor of economics at the University of Chicago and a 2013 recipient of the Nobel Memorial Prize in Economics.