So then, how do you keep it simple when modeling an entire economy? In his gentlemanly manner, Lucas suggests that getting down to something simple and practical is easier said than done. "The whole point of macroeconomics is to simplify on a couple of things and not get lost in the details," he says as he describes the foundation of his and other economists’ work. "So we often talk about people as though everybody is acting exactly the same way for exactly the same reasons. There’s no such thing, obviously. But there’s no point in setting out complicated theories when you can’t work out their consequences. So complication is the enemy."
"I haven’t hit Newton’s level, I know," the economist modestly consents. "But when Newton looked at the Earth going around the sun, he neglected all the other planets because he couldn’t handle all ten planets. He figured he’d get pretty close, which of course he did. That’s how you do it: you start with something simple and develop it as far as you can."
Obviously, we’re dealing with a true master of abstraction and simplification. Lucas’ colleague Andrew Caplin at NYU, where he often visits as a guest, elegantly confirms this: "Bob’s models reveal that he has a very unusual mastery of how to tell a story as simply as possible to contain the essence of the situation. He’s doing the simplest thing you could possibly do that wasn’t ridiculous."