A Stanford University economist who was born in Palo Alto and lives in Menlo Park has won the 2026 Nobel Memorial Prize in Economic Sciences. The Royal Swedish Academy of Sciences announced Monday, Oct. 12, that Robert E. Hall will share the prize with Michael Woodford of Columbia University "for microeconomic foundations of macroeconomic stabilisation."
It is Stanford's second Nobel of the year. Last week Stanford's Dr. Karl Deisseroth shared the prize in physiology or medicine with Peter Hegemann and Georg Nagel for work that led to a light-based tool for studying how the brain works, the Associated Press reported.
What the prize recognizes
For decades, governments fought recessions with the approach laid out by John Maynard Keynes: cut interest rates and run bigger budget deficits when the economy slumps, and do the reverse when it overheats. The oil shocks and "stagflation" of the 1970s, when inflation and unemployment climbed together, made those older models look broken, and some economists argued governments should stop trying to steer the economy at all.
The Nobel committee said Hall and Woodford, working separately, rebuilt those models from the ground up. Instead of relying on statistical links between big numbers like inflation and output, their models start from how households and businesses actually decide to spend, save and set prices, and they assume people look ahead when they make those choices. That is why clear communication from central banks matters: what the Federal Reserve says about its plans can change behavior before rates move.
Hall's part focused on consumers. His work showed that household spending depends on what people expect to earn in the future. In a 1982 paper with economist Frederic Mishkin, he found that about 80% of households based spending on those expectations, while the rest lived hand to mouth, according to the committee.
"The laureates' work has provided us with a stable theoretical foundation for the models that are now used by central banks and governments around the world," committee chair John Hassler said in the academy's announcement.
A Bay Area career
Hall, 83, is a professor of economics at Stanford and the Robert and Carole McNeil Senior Fellow, Emeritus, at Stanford's Hoover Institution. According to Hoover, he went to school in Palo Alto and Los Angeles, earned his bachelor's degree at UC Berkeley and his Ph.D. at MIT in 1967, and was an assistant professor at Berkeley and later a professor at MIT before joining Stanford. He is married to economist Susan Woodward.
Outside academia, Hall is known for two things. He chairs the National Bureau of Economic Research committee that officially dates when U.S. recessions start and end. And with Hoover colleague Alvin Rabushka he championed the flat tax, starting with a 1981 Wall Street Journal article that became the book "The Flat Tax." He has advised the Justice Department, the Treasury and the Federal Reserve Board, and served on President-elect Ronald Reagan's task force on inflation policy.
"Robert Hall is one of the most distinguished economists of his generation," Hoover Director Condoleezza Rice said in a statement.
What comes next
The prize is worth 12 million Swedish kronor, about $1.2 million, split equally between Hall and Woodford. The economics award, funded by Sweden's central bank since 1968, was the last Nobel announced this year. It will be presented with the other Nobel prizes on Dec. 10.