Despite workplace diversity initiatives promoted in recent years, white men are significantly overrepresented in leadership positions at many organizations, including the Federal Reserve. A Brookings report from April finds that Fed members are “overwhelmingly white [and] overwhelmingly male.”

But increasing diversity among members of the Federal Open Market Committee (FOMC) could have significant benefits for both the policy makers and the public, according to research by Boston College’s Francesco D’Acunto, Swiss Finance Institute’s Andreas Fuster, and Chicago Booth’s Michael Weber.

The researchers surveyed more than 9,000 US consumers—men and women who were Black, white, and Hispanic. All survey respondents read FOMC forecasts for unemployment or inflation that were paired with an accompanying photo. Some respondents saw a photo of FOMC member Thomas Barkin, one of seven white men on the committee. Others saw a photo of the only current Black FOMC member, Raphael Bostic. The final group saw a photo of Mary C. Daly, one of three women on the 2021 FOMC (out of 16 members total, including five alternates).

The respondents received a series of questions along with the reports and were asked to rate their trust, on a seven-point Likert scale, in the Fed’s ability to manage inflation and unemployment, and to rate their faith in the policy makers to act in the best interest of all Americans. Per the researchers, both forms of trust correlate with having economic expectations that line up with FOMC forecasts.

Women and Black survey takers were significantly more trusting in the Fed when they saw photos of Bostic or Daly, the researchers find. White men, on the other hand, had no less trust in the Fed if presented with the photos of Daly or Bostic than if presented with the image of Barkin. This demonstrates that diversity could boost trust in some populations without any corresponding drop in trust from white men, the researchers note.

The researchers also find that women and Black respondents who saw the photos of Bostic or Daly formed macroeconomic expectations—particularly on unemployment—that were closer to the forecasts they read. These two groups were also more likely to say they found the survey interesting when they saw photos of Bostic or Daly, and to spend more time with the content presented.

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A follow-up survey with about one-third of the original respondents further explored the idea of willingness to absorb information from the Fed.

These respondents were divided into three groups and asked to pick one of two short articles to read, each featuring a different policy maker’s statement about the future of the US economy. One group was told that the policy makers were from the Congressional Budget Office and the Fed, respectively. The other groups also learned the policy makers’ names, which made clear that either both options were men (the CBO’s Phillip Swagel and the Fed’s Richard Clarida), or that one was a woman (the CBO’s Swagel and the Fed’s Michelle Bowman).

Women in the final group were much more likely to want to read an article from the Fed than those in the other two groups. Men, on the other hand, made similar choices no matter which names were given or when names were not given. Again, there was no counteracting effect on the increase in interest from women who were given Bowman’s name.

Overall, the researchers say, having a more diverse Fed could be a boon for both the effectiveness of policy communication and public trust in the institution.

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