Robert Lucas won the 1995 Nobel Prize in Economics for having developed and applied the theory of rational expectations, thereby transforming macroeconomic analysis and deepening understanding of economic policy.
The rational-expectations idea says that people use available information and their understanding of the economy when forming expectations about prices, income, and policy. Their responses can therefore change the effects of government actions.
Lucas used this insight to challenge policy evaluations based only on historical relationships. His critique argued that when policy rules change, households and firms may change their behavior, so old statistical patterns may no longer predict outcomes accurately.
Lucas is sometimes confused with Thomas Sargent, whose work also advanced rational-expectations macroeconomics. Lucas won the prize alone in 1995, while Sargent shared the 2011 prize with Christopher Sims for empirical research on cause and effect in macroeconomics.