The field of economics has a racial-disparity problem, Fed leaders say, and that worries them
‘That means we’re drawing conclusions that are often not reflective of reality,’ says Raphael Bostic, the first Black president of a regional Federal Reserve bank.
Top Federal Reserve policymakers say they’re concerned that Black and Hispanic people are sharply underrepresented in the field of economics and that the disparity lessens the perspectives economists can bring to key policy issues.
“If we don’t have a diverse group of people in the field, we won’t have the right topics to focus on,” said Eric Rosengren, president of the Federal Reserve Bank of Boston.
At a webinar sponsored by the 12 regional Fed banks, the officials and many outside economists addressed the problem on the same day that a Brookings Institution study reported that the top ranks of the Federal Reserve system remain disproportionately white, particularly on the boards of the regional banks.
The viral pandemic and last summer’s racial justice protests have thrown a national spotlight on longstanding racial and gender disparities within the U.S. economy, with unemployment rates chronically higher for African Americans and Hispanics and levels of wealth, income and home ownership sharply lower.
Yet even in that context, economics trails other fields in measures of diversity, the officials said, and the profession has been slow to address racism as a source of economic inequality.
“Race is a variable that economists are lazy about,” said Raphael Bostic, president of the Atlanta Fed and the first Black president of a regional Fed bank in the system’s 108-year history. “That means we’re drawing conclusions that are often not reflective of reality.”
In an interview, Bostic pointed to the Fed’s adoption last summer of a policy framework that calls for the nation’s central bank to wait for actual increases in inflation before possibly raising its benchmark interest rate. Previously, the Fed would raise rates on the expectation that inflation was poised to accelerate even though those forecasts didn’t always prove accurate.
This new framework, Bostic said, reflects the Fed’s broadening recognition of the consequences of its policymaking.
“If you cut off the recovery because of fears of inflation even when you haven’t seen it, you’re preventing groups of people from really fully participating in the economy,” Bostic said. “And when you look at those groups, they tend to be lower-income people, and they tend to be minorities that are the last ones to benefit.”
Ebonya Washington, a Yale University economist, said just 2.8% of economics Ph.D.’s in 2019 were granted to Black students and 5.8% to Latinos. African Americans earned more doctoral degrees in mathematics and other scientific fields, she said.
Washington said that suggests that the problem isn’t just a question of building a bigger pipeline of young students but of making economics more welcoming to African Americans.
“It’s not about solely changing the student to fit into the flawed profession, but let’s change the flawed profession,” she said.
The lack of diversity results in a narrower range of research. Dania Francis, an economist at the University of Massachusetts, and Anna Gifty Opoku-Agyeman, co-founder of the Sadie Collective, a nonprofit that supports Black women in economics, calculate that from 1990 through 2018 the top five economics journals published only 29 papers that explicitly addressed race and ethnicity. That was fewer than 0.5% of all papers published in that period.
Lisa Cook, an economist at the University of California, Berkeley, said the lack of representation is difficult to overcome without more role models in the profession. She praised a summer program run by the American Economics Association for helping address that obstacle.
Young students who participate in the program often say, “This is the first time I’ve ever had … a black woman as a professor in an economics class,” Cook said. “We’re not developing, promoting, or tenuring black women … And that’s true for underrepresented minorities more generally.”
Academic economists have often been dismissive of racism as a factor in incomes, employment and other economic barometers. A result is that young minority students who are seeking solutions to racial inequalities might be discouraged from pursuing a career in economics.
“There appears to be no evidence that will get economists to admit, yes, there is discrimination, and, yes, it matters,” said William Spriggs, chief economist for the AFL-CIO.
Spriggs and Cook have been mentioned as potential Biden administration choices for the Fed’s board of governors, which has one vacancy. If nominated and confirmed by the Senate, either would become just the fourth Black person to serve as a Fed governor.
The report from the Brookings Institution noted that the directors of the 12 regional Federal Reserve banks, who select the banks’ presidents, “are overwhelmingly white, overwhelmingly male and overwhelmingly drawn from the business communities within their districts, with little participation from minorities, women or from areas of the economy — labor, nonprofits, the academy — with important contributions to make to Fed governance.”