Sunday, August 28, 2016

The Fed on Facebook

The Federal Reserve Board of Governors has now joined you, your grandma, and 1.7 billion of your closest friends on Facebook. A press release on August 18 says that the Fed's Facebook page aims at "increasing the accessibility and availability of Federal Reserve Board news and educational content." This news is especially interesting to me, since a chapter of my dissertation-- now my working paper "Fed Speak on Main Street"-- includes some commentary on the Federal Reserve's use of social media.

When I wrote the paper, though the Board of Governors did not have a Facebook page, the Regional Federal Reserve Banks did. I noted that the most popular of these, the San Francisco Fed's page, had around 5000 "likes" (compared to 4.5 million for the White House.)  I wrote in my conclusion that "The Fed has begun to use interactive new media such as Facebook, Twitter, and YouTube, but its ad hoc approach to these platforms has resulted in a relatively small reach. Federal Reserve efforts to communicate via these media should continue to be evaluated and refined."

About a year later, the San Francisco Fed is up to around 6000 "likes," while the brand new Board of Governors page already has over 14,000. Only a handful of people post comments on the Regional Fed pages, and they are relatively benign. "Great story! I loved it!" and the SF Fed's response, "So glad you liked it, Ellen!" are the only comments below one recent story. Even critical comments are fairly measured: "adding more money into RE market only inflates housing prices, & creates more deserted neighborhoods," following a story on affordable housing in the Bay Area.

On the Board of Governors' page, however, hundreds of almost exclusively negative and outraged comments follow every piece of content. Several news stories describe the page as overrun by "trolls." "Tell me more about the private meeting on Jekyll island and the plans for public prosperity that some of the worlds richest and most powerful bankers made in secret, please," writes a commenter following a post about who owns the Fed.

It is not too surprising that the Board's page has drawn so much more attention than those of the reserve banks. One of the biggest recurrent debates since before the foundation of the Fed surrounds the degree of centralization of power that is appropriate. The Fed's unusual structure reflects a string of compromises that leaves many unsatisfied. The Board in Washington, to many of the Fed's critics, represents unappealing centralization. To be sure, many of the commenters are likely unaware of the Fed's structure, and maybe of the existence of the regional Federal Reserve Banks. They know only to blame "the Fed," which to them is synonymous with the Board of Governors.

In my paper, I look at data from polls that have asked people a variety of questions about the Fed and the Fed Chair. Polls that ask people about who they credit or blame for economic performance appear in the table below. Most people don't think to blame the Fed for economic problems. If asked explicitly whether the Fed should be blamed, many say yes, but many others are unsure. Commenters on the Facebook page are not a representative sample of the population, of course. They are the ones who do blame the Fed.

Arguably, the negative attention on the Fed Board's page is better than no attention at all. As long as they don't start censoring negative comments-- and maybe even consider responding to some common concerns in press conferences or speeches?-- I think this could actually help their reputation for transparency and accountability. It will also be interesting to see whether the rate of interaction with the page dwindles off after it loses novelty.


Comments appreciated!