Diverse Policy Committees Can Reach Underrepresented Groups

Abstract

Increasing the diversity of policy committees has taken center stage worldwide, but whether and why diverse committees are more effective is still 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 respondents form unemployment expectations more in line with FOMC forecasts and trust the Fed more after this intervention. Women are also more likely to acquire Fed-related information when associated with a female official. White men, who are overrepresented on the FOMC, do not react negatively. Heterogeneous taste for diversity can explain these patterns better than homophily. Our results suggest more diverse policy committees are better able to reach underrepresented groups without inducing negative reactions by others, thereby enhancing the effectiveness of policy communication and public trust in the institution.

Households’ Response to the Wealth Effects of Inflation

“…Given noise in survey data (D'Acunto, Fuster, and Weber, 2021), we take two steps to filter respondents. First, we omit 563 respondents who make wrong or implausible entries in the balance-sheet-decomposition task: those who enter a negative share of a balance-sheet item relative to gross wealth; a share greater than one, that is, the value of a single balancesheet item exceeds gross wealth; a share of nominal assets equal to zero; or a value of an outstanding mortgage, consumer loan, or the sum of the two that is equal to gross wealth.…”

Home Price Expectations and Spending: Evidence from a Field Experiment

“…From a methodological perspective, our paper adds to a growing literature that uses information provision experiments to study the formation of macroeconomic expectations and the role of these expectations in economic decision-making (Armantier et al, 2016;Binder and Rodrigue, 2018;Cavallo et al, 2017;D'Acunto et al, 2022;Haaland and Naess, 2023;Haaland et al, 2023;Laudenbach et al, 2023;Roth and Wohlfart, 2020). Only few other papers have linked information experiments shifting expectations with administrative data on spending decisions (Coibion et al, 2021a,b;Galashin et al, 2021), and these papers focus on inflation expectations.…”