Lars Peter Hansen

Lars Peter Hansen is the David Rockefeller Distinguished Service Professor in Economics and Statistics at the University of Chicago and a 2013 Nobel Laureate in Economic Sciences (shared with Eugene Fama and Robert Shiller). He is best known for developing the Generalized Method of Moments (GMM), a flexible statistical technique for estimating and testing economic models that does not require full specification of the probability distribution of errors — making it widely applicable in situations where other estimation methods fail. GMM became essential in empirical asset pricing, allowing economists to test asset pricing models against data without imposing restrictive distributional assumptions. Hansen also developed the Hansen-Jagannathan bounds, which impose theoretical constraints on the stochastic discount factor consistent with observed asset prices — a powerful diagnostic tool for evaluating asset pricing models. His research connects macroeconomics with financial markets through rigorous statistical methodology.