Lars Peter Hansen

Lars Peter Hansen received his PhD in economics from the University of Minnesota and has been a professor at the University of Chicago since 1981. He received the 2013 Nobel Prize in Economics jointly with Eugene Fama and Robert Shiller for their empirical analysis of asset prices. Hansen's Nobel contribution was the invention of the Generalized Method of Moments (GMM), published in Econometrica in 1982. GMM is a flexible statistical estimation method that allows economists to estimate models using moment conditions derived from economic theory, without requiring a complete specification of the probability distribution of the data. This makes it extremely powerful for estimating asset pricing models, where data distributions are often complex. GMM has become arguably the most widely used statistical technique in empirical economics and finance over the past 40 years — virtually every empirical paper in macroeconomics and asset pricing uses it or builds on it. Hansen has also contributed to dynamic asset pricing theory, particularly the Stochastic Discount Factor approach which provides a unifying framework for understanding how risk is priced in financial markets. His work on robust control and model uncertainty has also been influential in finance and economics. He is a member of the National Academy of Sciences and the American Academy of Arts and Sciences.