A Diverse Fed Can Reach Underrepresented Groups

90 Pages Posted: 9 Aug 2021 Last revised: 11 May 2022

See all articles by Francesco D'Acunto

Francesco D'Acunto

Georgetown University

Andreas Fuster

École Polytechnique Fédérale de Lausanne; Swiss Finance Institute; Centre for Economic Policy Research (CEPR)

Michael Weber

University of Chicago - Finance; National Bureau of Economic Research (NBER)

Multiple version iconThere are 3 versions of this paper

Date Written: May 10, 2022


Increasing the diversity of economic policy bodies has taken center stage worldwide, but whether and why diversity matters is unclear. In a randomized control trial that varies the salience of female and minority representation on the Federal Reserve’s monetary policy committee, the FOMC, we test whether diversity affects how Fed information influences consumers’ subjective beliefs. Women and Black consumers form unemployment expectations more in line with FOMC forecasts and trust the Fed more after realizing that the FOMC is more diverse than they thought. Women are also more likely to acquire Fed-related information when associated with a female FOMC member. White men, who are overrepresented on the FOMC, do not react negatively. Heterogeneous taste for diversity can explain these patterns better than homophily. More diverse economic policy bodies thus reach underrepresented groups without inducing negative reactions by others, which increases the aggregate effectiveness of policy communication.

Keywords: gender, race, subjective beliefs, monetary policy, trust, central bank communication, survey experiments

JEL Classification: D84, E52, E58, E70, G53

Suggested Citation

D'Acunto, Francesco and Fuster, Andreas and Weber, Michael, A Diverse Fed Can Reach Underrepresented Groups (May 10, 2022). University of Chicago, Becker Friedman Institute for Economics Working Paper No. 2021-95, LawFin Working Paper No. 21, Chicago Booth Research Paper No. 21-20, Fama-Miller Working Paper, Available at SSRN: https://ssrn.com/abstract=3901975 or http://dx.doi.org/10.2139/ssrn.3901975

Francesco D'Acunto

Georgetown University ( email )

Washington, DC 20057
United States

Andreas Fuster

École Polytechnique Fédérale de Lausanne ( email )

Quartier UNIL-Chamberonne
Bâtiment Extranef
CH-1015 Lausanne

Swiss Finance Institute ( email )

c/o University of Geneva
40, Bd du Pont-d'Arve
CH-1211 Geneva 4

Centre for Economic Policy Research (CEPR) ( email )

United Kingdom

Michael Weber (Contact Author)

University of Chicago - Finance ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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