The 2013 Winners for the most recent Nobel Prize in Economics were three men. Two for Chicago and one from Yale. All three with an equally valid claim to one of Economics' most acclaimed prizes. Robert Shiller, Eugene Fama and Lars Peter Hansen, two of which gain significant media attention for their vastly contradicting views on how markets work. One an advocate for efficient markets, Fama, and one strongly against, all the while leaving Lars Peter Hansen behind.
Born 1952, Hansen is the David Rockerfeller Distinguished Service Professor at the University of Chicago, and was awarded his prize for his Generalized Method of Moments (GMM) and is in truth a journalists worst nightmare, with even the great John Cassidy, former editor for the Sunday Times, saying 'Hansen's...contributions are above my pay grade'. But nevertheless I am going to soldier on and attempt to provide my own analysis of his work. Hansen's work revolves around dealing with imperfect and incomplete data, so one can do something without having everything, after all it's impossible to create a perfectly complete and coherent model for an economy or a market, which is why Hansen's GMM is so use full. His method allows and economist to study elements and connections both in and between market, in a statistically valid way withn few assumptions, which economists like, and so too it seems other disciplines, which too use the GMM, showing the true applications of Hansen's groundbreaking GMM.
Hopefully, despite not being very deep, nor through, your understanding of Hansen's complicated, yet vital GMM has increased so you now possess at least a basic understanding of what this great man contributed to economics.
