— Ch. 1 · A Farm Boy In South Dakota —
Alvin Hansen.
~4 min read · Ch. 1 of 6
Alvin Harvey Hansen was born on the 23rd of August 1887 in Viborg, South Dakota. His father Niels Hansen worked as a farmer while his mother Marie Bergitta Nielsen managed their household. The young boy grew up surrounded by the rolling plains of the Midwest where economic cycles felt like weather patterns rather than abstract concepts. He attended Yankton College and graduated with a degree in English during 1910. This choice seemed odd for someone who would later reshape global economics but it reflected the wide interests of a curious mind.
The path to economics began when he enrolled at the University of Wisconsin-Madison in 1913. There he studied under Richard Ely and John R. Commons who taught him to use economics as a tool for solving social problems. He completed his PhD coursework by 1916 and married Mabel Lewis that same year. They went on to have two children together. The transition from English literature to hard economic data marked the start of a lifelong journey into policy and theory.
Rising Through Academic Ranks
Hansen taught at Brown University while writing his doctoral dissertation titled Cycles of Prosperity and Depression. He finished this work in 1918 though it was not published until 1921. By 1919 he moved back west to take a position at the University of Minnesota. His career advanced quickly as he became a full professor by 1923.
His book Business Cycle Theory appeared in 1927 followed by Principles of Economics which he co-wrote with Frederic Garver in 1928. These works brought him attention beyond the classroom. A Guggenheim grant funded travel across Europe between 1928 and 1929 where he wrote Economic Stabilization in an Unbalanced World. This publication established him within broader circles of public affairs. He was elected as a Fellow of the American Statistical Association during 1932. He also worked for the Economic and Financial Organization of the League of Nations before moving east again.The Hicks-Hansen Synthesis Model
John Maynard Keynes had written The General Theory but many Americans struggled to understand its complex arguments. Hansen helped bridge that gap through a joint development with John Hicks known as the IS-LM model or Hicks-Hansen synthesis. This mathematical representation used two curves to illustrate how monetary and fiscal policy influence GDP.
The investment-saving curve intersects with the liquidity preference-money supply curve on a graph showing interest rates against national income. Mainstream economics textbooks still use this framework today to explain macroeconomic theory. Hansen's contribution transformed abstract ideas into a visual tool that policymakers could actually use. It became one of his most outstanding contributions to economic thought alongside his other writings on business cycles and national income.