Hagen began his political career when, in 1973, he became a deputy representative in the Storting for the newly formed Anders Lange's Party. He had attended the founding meeting of the party at "Saga kino" in April 1973 and had been asked by deputy leader Erik Gjems-Onstad if he wanted to stand for election for the party. Hagen, however, soon also lost faith in Anders Lange, albeit for other reasons, and along with some other party "moderates" in 1974, he broke away and formed the short-lived Reform Party. Later that year, after a year in parliament, Anders Lange died of a heart attack, resulting in Hagen becoming an MP, as he had been elected as Lange's deputy to parliament. The Reform Party returned to and merged with Anders Lange's Party the next year. In 1977, the party changed its name to the Progress Party, and Hagen was elected leader of the party in the 1978 national convention. As the party failed to get any representatives elected in 1977, Hagen was away from parliament for four years but he was elected in 1981.