Alvin Hansen
American economist who brought Keynesian ideas to the United States.
Alvin Harvey Hansen (August 23, 1887 – June 6, 1975) was an American economist who taught at the University of Minnesota and was later a chair professor of economics at Harvard University. Often referred to as "the American Keynes", he was a widely read popular author on economic issues, and an influential advisor to the government on economic policy. Hansen helped create the Council of Economic Advisors and the Social Security system. He is best remembered today for introducing Keynesian economics in the United States in the 1930s and 40s. More effectively than anyone else, he explicated, extended, domesticated, and popularized the ideas embodied in Keynes's The General Theory.
- known_for
- Introducing Keynesian economics to the U.S.; jointly developing the Hicks–Hansen
Verified Timeline
Lore & Background
Hansen was born in Viborg, South Dakota on August 23, 1887, the son of Niels Hansen, a farmer, and Marie Bergitta Nielsen. He graduated from Yankton College in 1910 with a major in English, then enrolled at the University of Wisconsin-Madison in 1913 to study economics under Richard Ely and John R. Commons. He completed coursework for his PhD in 1916 and married Mabel Lewis; they had two children. He taught at Brown University while writing his dissertation, "Cycles of Prosperity and Depression," completed in 1918 and published in 1921. In 1919 he moved to the University of Minnesota, becoming a full teacher in 1923. His books *Business Cycle Theory* (1927) and *Principles of Economics* (1928, with Frederic Garver) brought him to the attention of the wider economics profession. A Guggenheim grant funded travel in Europe during 1928–1929, leading to *Economic Stabilization in an Unbalanced World* (1932). He was elected a Fellow of the American Statistical Association in 1932 and worked for the Economic and Financial Organization of the League of Nations. In 1937 he received an invitation to occupy the new Lucius N. Littauer Chair of Political Economy at Harvard University.
Reader's Guide
Alvin Hansen's significance lies in his role as the primary conduit for Keynesian economics in the United States. More effectively than anyone else, he explicated, extended, domesticated, and popularized the ideas in Keynes's *The General Theory*. With John Hicks, he developed the IS–LM model (or Hicks–Hansen model), a mathematical representation of Keynesian macroeconomic theory. His 1938 book *Full Recovery or Stagnation?* sketched the outlines of what came to be called the "secular stagnation thesis," arguing that without government demand-side intervention, the American economy would face long-term stagnation. This thesis was highly controversial, with critics like George Terborgh attacking Hansen as a "pessimist" and a "defeatist." Sustained economic growth beginning in 1940 undercut his predictions. Hansen served as special economic adviser to Marriner Eccles at the Federal Reserve Board from 1940 to 1945. He trained influential students including Paul Samuelson and James Tobin, both future Nobel laureates. He testified before Congress against using unemployment to fight inflation, advocating instead for changes in interest rates, tax rates, and wage and price controls. In 1967, Paul McCracken, chairman of the President's Council of Economic Advisers, stated: "It is certainly a statement of fact that you have influenced the nation's thinking about economic policy more profoundly than any other economist in this century." The American Economic Association awarded him its Walker Medal in 1967.
Did You Know?
- Hansen graduated from Yankton College in 1910 with a major in English before switching to economics.
- He helped create the US Social Security system in 1935 and assisted in drafting the Full Employment Act of 1946, which created the Council of Economic Advisors.
- Hansen's 1938 book *Full Recovery or Stagnation?* inspired Paul Samuelson's famous multiplier-accelerator model of 1939.
- He served as co-rapporteur to the economic and financial group of the Council on Foreign Relations's War and Peace Studies project from 1939 to 1945.
- Hansen died in Alexandria, Virginia on June 6, 1975 at the age of 87.
Frequently Asked Questions
Who is Alvin Hansen?
Alvin Harvey Hansen (1887–1975) was an American economist who taught at the University of Minnesota before becoming a chair professor at Harvard. He is commonly nicknamed "the American Keynes" for his role in translating Keynes's ideas into a framework U.S. readers and policymakers could grasp.
What is Alvin Hansen most famous for?
Hansen is best remembered for bringing Keynesian economics into mainstream American discourse in the 1930s and 1940s and for co-developing the Hicks–Hansen IS–LM model, a standard analytical tool linking goods-market and money-market equilibrium. He also helped shape the early U.S. Social Security system through his 1937–1938 service on its Advisory Council.
Did Alvin Hansen win a Nobel Prize in Economics?
No, Hansen was never awarded the Nobel Memorial Prize in Economic Sciences. His most influential work, especially the IS–LM synthesis, was published in the late 1930s and early 1940s, well before the prize was first handed out in 1969.
What is the secular stagnation thesis that Hansen is linked to?
In the 1930s Hansen argued that the U.S. economy was experiencing a persistent decline in the desired rate of capital investment, driven by slower population growth and a reduced need for new infrastructure. The term "secular stagnation" has since been revived in modern debates about prolonged weak demand and underinvestment.
How did Alvin Hansen influence U.S. government economic policy?
Hansen served as a direct policy advisor and used his Keynesian framework to argue for active fiscal management of the economy during the Depression era. His participation on the Social Security Advisory Council in 1937–1938 gave him a hand in shaping the program's early design.
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