NEW YORK — Robert E. Hall, 83, professor emeritus of economics at Stanford University and this year's winner of the Nobel Prize in economics, said the honor came from a life spent following interesting questions and new ideas.
Hall called the award a "wonderful surprise" shortly after it was announced, according to Stanford University on the 12th. "I have devoted my research career to understanding how the economy works, and I have followed interesting questions wherever they led," Hall said. "When I thought I had a new idea, I moved on to the stage of finding out whether it was actually new, whether it was right and whether it mattered." He added that he had been fortunate to meet outstanding colleagues and co-authors who helped him solve problems, calling the work with them the greatest joy of his career. "I am grateful to my family, especially my wonderful wife and co-author Susan Woodward, chair of the board of Sand Hill Econometrics, and I offer my congratulations to Michael Woodford, professor of economics at Columbia University, who taught me so much," Hall said. He also said the Stanford economics department and the Hoover Institution had given him the freedom and time to pursue the research he wanted, describing it as a dream job. "California taxpayers provided me with an excellent education at public schools and at the University of California, Berkeley, and the federal government supported my graduate education at the Massachusetts Institute of Technology," he said. "I hope they will regard this as a satisfying return on that investment."
The Royal Swedish Academy of Sciences' prize committee in economic sciences named Hall and Woodford joint winners of this year's Nobel Prize in economics for research on business cycles and price stability that laid the foundations of modern theory on macroeconomic stabilization. The committee said their work "provided a solid theoretical foundation for the economic models used by central banks and governments around the world," adding that it had made it possible to respond better to economic shocks such as energy crises or abrupt shifts in household consumption.
Hall, a macroeconomist, was recognized for developing a new approach to macroeconomic analysis grounded in how consumers decide what to spend and how firms set prices. He sought to explain how changes in interest rates or government spending affect consumption, output and prices, starting from the choices of individual economic actors. Combining Milton Friedman's permanent income hypothesis with rational expectations theory, Hall established the random walk hypothesis of consumption in a 1978 paper. Its core argument was that if information about future income is already reflected in current consumption, subsequent changes in consumption are difficult to predict from existing information alone. In other words, an anticipated pay raise is already built into spending plans, while an unexpected promotion or job loss can alter consumption anew. The hypothesis became the theoretical basis for analyzing whether tax cuts or cash handouts actually translate into spending. Hall earned his bachelor's degree at UC Berkeley and his doctorate at MIT. He is currently a chaired professor of economics at Stanford, a senior fellow emeritus at the Hoover Institution, a public policy think tank, and professor emeritus of economics in the School of Humanities and Sciences. Woodward, his wife, is a financial economist who served as chief economist at the Department of Housing and Urban Development and at the Securities and Exchange Commission.
Stanford President Jonathan Levin said in a statement that day that Hall's "creative and influential research shows the connections between how households and businesses behave and the economy as a whole," adding that "his insights have changed the way governments and central banks respond to economic volatility." Condoleezza Rice, director of the Hoover Institution, said Hall "is one of the finest economists of his generation," adding that "his research has broadened our understanding of economic growth, employment and the forces driving the U.S. economy."