The Royal Swedish Academy of Sciences has a mischievous bent. At a time when everyone including the Queen of England wonders why economists did not anticipate the financial crisis and still cannot agree a cure, the academy awarded the Sveriges Riksbank Prize (it is not technically a Nobel) to two American professors synonymous with economic modelling. It is popular to question Thomas Sargent’s line of work these days. In the 1970s, he revelled in the complex economic models that were the foundation of the so-called dynamic stochastic general equilibrium models now ubiquitous in central bank decision making. More important, he introduced into these models the burgeoning field of rational expectations – another idea increasingly under fire.