Lucas Critique
The argument that you can't predict the effects of a new economic policy by looking at historical data alone, because people change their behavior in response to the policy itself. Past patterns break when the rules change.
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Origin
Formulated by economist Robert Lucas Jr. in a 1976 paper that challenged the foundations of Keynesian macroeconomic modeling. Lucas argued that the decision rules in these models couldn't be treated as stable, because people adjust their behavior when policies change. The critique triggered a paradigm shift in 1970s macroeconomics toward micro-founded models and helped earn Lucas the 1995 Nobel Prize in Economics.
Updated February 22, 2026