Wednesday, August 21, 2013

Diversity in Economics

Bank of England Governor Mark Carney, in an interview earlier this month, pointed out that there are no women on the Monetary Policy Committee (MPC). There also happen to be no female ministers in the Treasury. Carney suggested,
“What we have to do at the Bank of England is grow top female economists all the way through the ranks. That adds to the diversity in macroeconomic thinking, it adds to qualified candidates for the MPC including qualified candidates to be a future governor.” 
This seems like a reasonable message, but Philip Booth at the Institute of Economic Affairs wonders "why Osborne and Cameron are not hauling Carney in for a dressing down." He makes a deeply confusing comparison between Carney and Larry Summers, and then adds:
"It is worth noting that I am quite comfortable with the idea that the sexes are complementary and that, in any business, social or family situation, they may (on average) bring different characteristics to the table. However, if Carney holds this position, there are some interesting conclusions because, if it is accepted that women (on average) might exhibit certain skills in greater preponderance than men, then the opposite may have to be accepted too. But, let’s move on…"
Before moving on, though, what are these "interesting" conclusions? If men do exhibit certain skills (like passive-aggressive ellipses usage) in greater preponderance than women, do we really know that each of these man-skills are beneficial for monetary policymaking? 

Booth writes, "Surely, there can only be two reasons [for Carney's remarks] – that Carney believes that there are intrinsic differences between the ways in which men and women reason and assess evidence or that their social experiences are different from those of men who have similar career patterns."

Really, can these be the only two reasons? Isn't it also plausible that Carney thinks the lack of women on the MPC is a sign that some qualified candidates are, for various and perhaps subtle reasons, not making it into or up the ranks, and that excluding part of a talent pool is a generally bad idea? It is not just that the social experiences are different for men and women who have similar career patterns-- different social experiences also lead men and women to having different career patterns. Does Booth himself think that it is just a big coincidence that there are zero women out of nine on the committee? Surely his manly math skills are good enough that he doesn't chalk that up to random chance. So even though Booth is chiding Carney for implying that men and women are intrinsically different, he seems to be working off of some "interesting" assumptions himself.

Next, Booth manages to list eight female economists, but doesn't personally think that any of them would add diversity to the MPC. He thinks Gillian Tett might add diversity to the group, "but it is the fact that she is an anthropologist that ensures that her views add diversity, not the fact that she is a woman." (In fact, a survey of 400 economists documents notable differences of opinion between the genders.) Then he gets to the most telling paragraph:
"It does not follow that adding those women who choose to become economists to a group of male economists adds to the diversity of thinking of the group of economists. It may be the case...that those women who ‘add diversity’ in intellectual life do not choose to become economists. This would mean that women contribute to diversity in society but not necessarily to diversity amongst economists."
He is inadvertently proving Carney's point, just as he is trying to tear it down. If he thinks that intellectually diverse women do not choose to become economists, he needs to ask himself why that is. It might help to read Neil Irwin's article about what happens when a certain female economist does "contribute to diversity":
Yellen has a perfectly solid relationship with Bernanke, as best as I can tell, but she’s more of her own thinker within the institution. She has spent her time as vice chairwoman urging Bernanke and her other fellow policymakers to shift policy to try to do more to combat unemployment, and thinking through ways to do just that...And people dealing with her within the Fed have viewed her not so much as Bernanke’s emissary but as her own intellectual force within the organization.
Felix Salmon summarizes Irwin's reasons why the White House is uneasy about Yellen:
"The first is the 'team player' attack: Yellen is an independent thinker more than she is a loyal deputy to Bernanke... She never became part of the boys’ club which was making enormous decisions on a daily basis in the fall of 2008... The 'team player' argument, then, is basically the 'one of us' argument, thinly disguised. Which is the first place that the sexism comes in...
This second reason essentially takes the 'team player' argument past its breaking point, to the point at which the Obama team is basically saying 'Yellen needs to share our biggest weaknesses.'"
I hope this post was not too much of a rant. I just wanted to make the point that Governor Carney's remarks are perfectly acceptable and in fact welcome.


  1. I thought women had plenty of MPC (Marginal Propensity to Consume)!

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  3. Carola, thanks for the post. I didn't see it as a rant, though it does illustrate (once again) how quickly discussions of gender in central banking can go off the rails. Of course, telling me that someone has a PhD in economics from school X reveals much more about their economic views than telling me their gender. And yet, economic analysis, especially at a central bank, is more than economic views ... there is a lot of collaboration and communication too. How you present your ideas can matter as much as what those ideas are.

    I agree more with Carney and I think the Board is in a better place. I was fortunate to organize a panel of female Fed economists a while back for the local CSWEP chapter in DC. Filling the distinguished panel of policymakers and senior staff took no time at all. No surprise who our keynote was. And yet, getting some of my female colleagues to attend was a bit trickier. As soon as you highlight gender (or any non-majority attribute) people get rightly cautious about self-identifying. Had the panel been the male equivalents, I am sure the advice would have been just as good, but it would have been a bit different.

    Sometimes it's just nice to know you fit in (even when you look around in meetings and see a lot of blue shirts and khakis) and you have role models who acts like you want to act. That's the bonus from diversity (on many dimensions), it tells the next generation it is in their choice set too.

  4. Thanks for the comment Claudia. I probably wouldn't normally have written this post. But earlier this week, a man knocked on the door of my shared office (which is labeled "Finance Office.") My name and my male officemates' names are on the door. I answered and he asked to speak to (Male 1). I told him (Male 1) wasn't there and he asked to speak to (Male 2), and then skipped over my name and asked for (Male 3). Two of these officemates never even come to the office so it was obvious he didn't actually know them. I asked if I could help him and he said "Well, I wanted to ask something about finance..."

    "That's me," I said, pointing at my name on the door. But he got all weird and was like "Well, but I needed to talk to someone who would know about stochastic processes." I didn't think I should have to defend my knowledge to him (since he assumed my male officemates would have that knowledge). He went on his way. But it really bugged me.

  5. Well! I suppose that your loss must be our gain. It's a pity that you wouldn't normally have written this post because it is a very good one - germaine, timely, and well reasoned.

    You do seem to be bending over backwards to avoid ranting. In your shoes, I don't think I could have avoided being just a wee bit more acerbic.

  6. I followed the link from FT Alphaville.

    Carola, you might be interested to read an extract from my comment on the web edition of Gillian Tett's article:

    "Just under twenty years ago, as an employee of the BoE, I was asked to do a statistical investigation of the progress of women through the BoE hierarchy. I found, consistent with Gillian's story, that the low representation of women at the more senior levels was adequately explained by the higher wastage rate of women, particularly in their child-bearing years. In fact, the evidence then suggested that women were generally promoted faster than men - a more rapid flow into the top buckets was struggling to overcome the leaks. I was not asked to investigate the reasons for these tendencies."

    In other words, if the diversity value of women in monetary policy making is considered necessary, the answer seems to lie in making it easier for women to combine work with childcare, and/or return to work after a break, rather than tackling any bias against women in the progression process.

    Personally, I did not get the impression that there were systematic differences in thinking between male and female BoE employees in my time that might mean that something important was being missed as the result of the under-representation of women on the MPC. What I considered more interesting was the concentration of staff from a middle class academic background, which seemed to be associated with what I considered to be an excessively safe and retiring approach - individuals who draw strong and especially awkward conclusions and sell them to others tend not to make it to the top. I believe that this matters most when things are going awry, such as in the run-up to the financial crisis. Policymakers are reluctant to deliver unwelcome news, let alone action, and they don't appreciate young whippersnappers who are urging them to do so!

    Finally, a more general point about diversity in monetary policy making which occurred to me as a central banker. Surely, since perhaps the defining issue in monetary policy is inter-temporal preferences and opportunities, a compelling variable over which to diversify is age.


Comments appreciated!