This 33-minute podcast was released Oct. 28, 2020.
“The COVID outbreak has had very differential effects for different geographies and different parts of the country, different metro areas, as well as for different cohorts of people in the economy,” says Beverly Hirtle, executive vice president and director of research at the Federal Reserve Bank of New York. She talks with Maria Hasenstab, media relations coordinator at the St. Louis Fed, about how her work has changed in light of the COVID-19 pandemic and social unrest in 2020.
Today I'm speaking with Beverly J. Hirtle. Beverly is Executive Vice President at the Federal Reserve Bank of New York. She's the head of their Research and Statistics group and Director of Research where she oversees a group that provides analytics support for the New York Fed's responsibilities relating to monetary policy, banking supervision, payment systems and financial markets. Bev, thanks so much for joining me today.
Beverly J. Hirtle: It's my pleasure.
Hasenstab: Tell our listeners a little bit about yourself. You studied economics at Amherst College and went on to earn your Ph.D. in Economics from MIT. How did you decide to choose economics, and were there many women in your econ courses?
Hirtle: So, I didn't start out seeking to be an economics major or to get a Ph.D. in economics. When I went to Amherst, I thought I was going to major in something having to do with the humanities and, in fact, had already declared a major in American studies. When I got towards the end of my sophomore year and I was really in search of a course that wouldn't require me to write a long term paper at the end of the term, because I was doing a lot of that in my humanities courses. And, so, intro economics fit the bill and fit in with my schedule. So, that is how I found my way into economics – was really by choosing a course that, that fit my schedule.
And I got into the course and many of my friends and fellow students were finding the course to be confusing, and difficult, and hard to understand. And I just remember this very strong impression of sitting there and understanding absolutely everything and finding a framework and a logic for thinking about certain questions and about the world that just made complete sense to me from beginning to end.
I took the course. I did very well in it. At the end of the course I got a prize for having the highest grade point average in that course that semester. And I was sort of hooked on economics from then on out.
When I was at Amherst there weren't a lot of women in my classes. That's largely a function of the fact that Amherst, prior to the time I had been there was a college for men. It had just gone coed. In fact, I was in the first class of freshmen that was coed. So, there simply weren't a lot of women on campus. Probably, a quarter or a third of the students were women. So, there just weren't a lot of women in general in classes, and maybe in particular in economics.
When I got to MIT to do my Ph.D., there also weren't very many women. My class was roughly 30 people and there were 3 women. So about 10% of the class was women.
Hasenstab: Wow, that's, that's really cool that you were looking for a class to fit your schedule and you actually found one that fit so many more things than you might have been looking for at the time.
Walk me through your career journey. You began your career at the New York Fed. And, so, how did you come to the role you're currently at and why have you chosen to stay there?
Hirtle: Yeah, I have spent my entire professional career after graduate school at the New York Fed. So, for quite a while. I originally came to the Fed after graduate school. I mean, certainly most of my classmates at MIT were looking to find jobs in academia as assistant professors at top research universities.
I did not choose that route. I made a deliberate choice not to go down that route – not because I didn't think somehow that I could do it or I wasn't able to be an academic, but it just didn't appeal to me as a career. The things that academics did or, at least at that time, my perception of what it was like to be an academic was just, not what I wanted to do.
And the public service mission of the Federal Reserve was very appealing to me and, in fact, has been the primary reason I have stayed at the Fed. My entire career there I have been a series of opportunities to bring my training and skills as an economist not only to research that gets published in journals. Which I certainly have done. But also to the important policy issues that the Fed faces.
And there's always something new. There's always something challenging. And that challenge and the ability to work on many, many different kinds of things over the years really is what kept me at the Fed.
Hasenstab: Well that's great. Speaking of academics, you've been published in many academic, as well as finance-oriented journals. What's that process like?
Hirtle: It's a long process getting a journal publication. And I would say over the course of the career, it has changed in one really significant way. When I was first starting out, it was much more common for papers to be solo authored. In other words, for one economist to be the sole author of a paper. It's not that there weren't ever co-authored papers, there certainly were. But the sole authored paper, particularly early in the career, when you're trying to establish yourself was much more common.
Now I would say it's pretty rare to have a solo-authored paper. And in that way the profession is much more collaborative than it used to be. And working with a range of different co-authors is a very appealing feature.
But in terms of the process usually there's a certain amount of brainstorming around a question. I think defining the interesting question is really the key. To link it back to my experience at the New York Fed and in the Federal Reserve System, that's what's been particularly great about it – is the interesting questions present themselves in the policy issues that we deal with all the time.
Sometimes your research and the knowledge that you have, the expertise that you develop through your research is useful to be applied to the policy questions. And sometimes the policy questions really guide you to the interesting research questions. I think it's that synergy between the research and the policy work and, knowing what the really interesting real world questions are to answer has been something that has been important in my career.
Hasenstab: Well, speaking of some of those interesting real world questions, a lot of your research area includes banking supervision. Why is that focus area important to you?
Hirtle: So, when I came to the New York Fed, I was not an expert in banking. I actually knew nothing about banking other than go to the ATM and put your card in and get out some cash.
It was one of those areas where I was asked to work on something when I was at the Fed, when I was early in my career. I turned a general set of knowledge and skills into this particular project. Probably something about capital regulation, which was what I was working on in my early days at the Fed.
And, so, developed a lot of knowledge through working with my colleagues in the bank supervision area of the New York Fed and at the Board of Governors. So, I ended up learning a lot about banking. And just as I was describing the interesting research questions then sort of present themselves. And one of the ones that I've been working on most recently is about banking supervision and if you'll allow me a little – a little bit of a detour here, I can explain why I think this is interesting.
In a lot of the economic profession, it's lots of people. Many, many people inside of the Federal Reserve and in – and in academia and in other central banks around the world have written lots of papers about banking and banking regulation.
And when you read a lot of those papers, you'll see that the terms bank regulation and bank supervision get used synonymously. There is often times not a lot of a distinction made between those two things.
Whereas, when I worked with my colleagues on the supervision area here at the bank and in the division of banking supervision and regulation at the Board of Governors, to me it was very clear that those two terms meant something distinct and different from one another. With regulations sort of being the set of literally of regulations and rules that banks need to follow and supervision being activities much more about monitoring, oversight and more qualitative aspects of evaluating whether banks are operating in a safe and sound manner.
And, so, I thought that was an interesting distinction to highlight. And thinking about the role that supervision plays as a complement to or a substitute for regulation has been the focus of some my research over the past few years, along with some of the research from my colleagues in the New York Fed.
Because supervision activities are something really important that the Federal Reserve does to which we devote a lot of resources. And I think there's a lot that economic research can add to understand the role that those activities can play and how they can be used to develop outcomes that are, best for the economy and, for the country and the global financial system.
Hasenstab: Thanks for explaining more about that banking supervision role in the Fed. Now, Bev, you were at the New York Fed during the financial crisis. Can you tell me more about that time and the work that you were doing while Wall Street was imploding? And how did the financial crisis change the way you approach your work or your research there at the New York Fed?
Hirtle: I was here during the 2007 to 2009 Financial Crisis. I did lots of things over that period of time, as did almost everybody at the New York Fed and the Board of Governors. The Fed, in general – there were no shortage of issues to work on or things to do.
But the thing that stands out most to me is the work that I did starting in late 2008 and into 2009 on the first Federal Reserve Stress Test, the SCAP or Supervisory Capital Assessment Program, where I was one of the people who was helping to design and implement that program. And I served, along with a lot of other people, on the oversight, committee that directed that program.
And I got involved in that because in the time leading up to the Financial Crisis, I had been playing with I wouldn't have given it this terminology then, but in retrospect was kind of a toy tabletop stress test program.
Some colleagues of mine in the supervision area had done some analysis long before the financial crisis a couple of years ahead at least – where they had look at some bank balance sheets and have said, "Oh, suppose that there were losses of this amount or that amount what would happen to the capital of the bank?" So, it was very tailored to some of the individual large banks that we supervise in New York.
And I kind of looked at what they were doing and said, "You know, I could program that up." I know that I have access to the balance sheet and income statement data for all the bank holding companies in the United States. And I could do something that would be a lot simple and plainer than what they are doing, but you could do it for a lot of firms.
So, just sort of out of my own interest and because I had the time and –in research we're encouraged to kind of pursue our interests in that way, I programmed something up. Well, that tool, as, as simple as it was, or as primitive as it may look in retrospect, turned out to be very useful as we headed into late 2008 and into 2009 as the question of whether the large banks had enough capital and how much additional capital would they need as the government was injecting capital via the TARP program. How much should that be?
I'm not in any way claiming that my little toy model was what was used, because it wasn't. But some of the ideas that I had worked on and developed in thinking about that model and working on it with my colleagues were what kind of set me up to do the actual real stress testing that we did in 2009. And, indeed, after that I went on as the stress testing became part of the Fed's regular toolkit. I continued to work on stress testing for a number of years after that.
So, what did I do during the Financial Crisis? As I said, I did a lot of things. But the work on the stress test – both my own contributions and just the tremendous team effort it was involving people from all over the system with all kinds of backgrounds. The supervisors, the accountants, the economists, the financial analysts, the lawyers – it really was a terrific team effort.
And then you asked about how has it changed my approach to work. I don't know that it changed my approach to work. I definitely know that it changed my way of looking at the world in the following sense: A lot of things happened during the Financial Crisis which I certainly did not anticipate would ever happen. It really, for me, shook some assumptions that I had made, without really even knowing that I was making those assumptions about the way the world worked, that proved to be wrong. And, so, I now am much more conscious of, when I'm thinking about things, to ask myself the question, "What, what am I assuming so deeply that I'm not questioning it? What if I'm wrong about the things I'm assuming?" And to take a perspective that's more aware of my own process of thinking, as well as drawing on all, my insights, and expertise and training as an economist.
Hasenstab: Wow. Thank you for sharing that. I can't imagine what a stressful time that must have been in 2008 and 2009.
Speaking of changing your approach, we're recording this episode in late 2020. And I'm wondering how your work at the New York Fed has literally changed in light of the pandemic and also in the wake of social unrest this year?
Hirtle: My work has changed principally, I would say, in the focus of what the research group at the New York Fed, which I am responsible for, what we have focused on and the work that we've done.
For instance economists in the group have done everything from completely rethinking some of the models that we use to forecast GDP and inflation and unemployment in the near term, to take account of something as unprecedented as both the size and suddenness of the shock that the COVID outbreak and resulting social distancing caused to the economy.
We have economists who really jumped in and studied deeply the epidemiological models that the public health profession uses to project and to analyze the outbreak of a pandemic like this to try to understand how those models work. The underlying math, in a lot of ways, is very similar to some economics models, but, of course, the assumptions embedded in them are quite different.
We have spent a lot of time analyzing– along with the rest of the economics profession –very high frequency data and unusual data sources. Everything from credit card receipts to searches on various search engines to try to understand, at a much closer frequency, what is actually happening. Not just in the economy for the whole U.S., but in our district, which is New York state and southern Connecticut, northern New Jersey, Puerto Rico and the Virgin Islands is the New York Fed's district, but, in other areas of the country, as well.
And, at the New York Fed, we have for a long time invested a lot of time and resources in collecting micro – that is data at the level of individuals on consumer credit. Also we do a survey of consumer sentiment. And we were able to leverage a lot of that to reach better understanding of very current developments, including how the COVID outbreak has had very differential effects, for different geographies and, different parts of the country, different, metro areas, as well as for different cohorts of people in the economy.
Certainly that has been an increasing area of focus in light of the social unrest earlier this year. It was something that we have always been interested in and continue to devote, resources towards understanding. That's the external focus.
Internally, of course, we are also taking a hard look at ourselves, as a research group and our practices, the way we operate, to make sure that we are including diverse perspectives. We are inclusive as possible to all kinds of different points of view. So, again, it's not that we had previously been unaware of this. But I think we've come to understand some things in ways that I don't think we had before.
Hasenstab: There's been ongoing media coverage about the lack of diversity, equity and inclusion in the broader economics field, and also specifically in banking and finance and even at the Federal Reserve System. In your opinion, what are the challenges of recruiting women and underrepresented minorities to the field?
Hirtle: In focusing in particular on economics Ph.D.s the percentage of new Ph.D.s coming out of U.S. Ph.D. programs, it's about a third of all new Ph.D.s certainly up from when, when I was in graduate school. But it's not a percentage that's moved a lot over time.
These are statistics put out by the Committee on Status of Women in the Economics Profession or CSWEP, which is part of the American Economic Association. As you go, from new graduates through the academic process in academia, the percentage of women just falls at every stage going from assistant professor to associate to full professor. And the percentage of underrepresented minorities, they are truly underrepresented in economics. It is very small.
To me that speaks to a pipeline issue. How do we attract more women and underrepresented minorities to the field? You can keep backing it up at every step of the way because, I think if you look at the numbers coming out with undergraduate degrees in economics, it similarly – I mean it may be a little bit higher than those pursuing Ph.D.s. But they're not – say for women 50% of people with economic BAs. It's far short of that.
I think we can offer a lot of reasons why that might be. I do think there is an issue of tone maybe in the economics profession. We tend to be – I hate to use the word combative, but if you think of what it's like to go somewhere as an economist and you have a paper that you want to present and you start to present your paper – not in all cases, certainly, but in enough cases, the person will get, a few sentences out and be interrupted and be challenged.
The dynamic in the room is challenge and rebuttal, challenge and rebuttal, rather than an environment that is more supportive or suggestions – we're all in this together to make your research even better than it already is.
You do get that in some environments, certainly. But I think that approach can sometimes be off-putting. I don't mean just in terms of gender or ethnicity, but certain people would rather be in fields or settings that are less – that are more embracing and less, confrontational at times.
So, how do you address things like that? These ideas are certainly not new to me. But we can adopt practices like, if somebody is presenting a paper or talking to us in a job interview – giving them a quiet period of five minutes before anybody interrupts with a question.
If somebody is in a seminar setting and there's somebody who's being – just has a point and they're not going to let it go, and they're interrupting – as somebody else sitting there to kind of interrupt that person and say, "Why don't we let the presenter move on?" so that we all kind of hold one another accountable for the environment in the room.
I think as a profession, we could do a much better job at telling, particularly undergraduates and maybe even reaching into high school students, what are the really interesting set of questions that some people with, with Ph.D.s in economics, that some economists get to address and answer?
And that sort of circles back to the very first thing I said about what was it that attracted me to the New York Fed and why I've stayed there. It's the public policy mission and the ability both intellectually and for the good of others, hopefully to address some really challenging and interesting questions. And I think we can do a better job of talking about what it is to be an economist and what we do in ways that are more concrete and specific.
Hasenstab: Well, thanks for sharing some of those maybe challenges within the profession and opportunities to overcome those. And I'd like to ask you about your career. Can you talk about some of the hurdles you may have faced in getting to where you're at and how you overcame them?
Hirtle: Early in my career I think I was very fortunate that my managers and the people I worked for gave me the chance to really contribute on some important projects, to bring my training as an economist, my knowledge of banking and financial markets, and to be a contributor on some important projects, on policy issues for the New York Fed, at that time mostly related to some of the early days of the Basel capital requirements or market risk and trading activities.
I was in those early years what you would think of an individual contributor in that it was mostly me and my skills and interests, and ability to communicate was what I was bringing.
Over time, as I became more experienced and more senior things move on to a pivot where really the next step is to become more of a leader. So, the difference here is that as a leader you are doing less work yourself directly and more of managing other people or managing projects. So, you have a – you have a project and, you know, you're responsible for conceptualizing what the project needs to be, understanding what is required, or demanded. There's a project team you're working with those people on the team. You're giving them guidance. You're mentoring them. You’re giving them feedback on their work. But there's much less direct contribution by myself to the core of the work.
And that's, that's a real pivot. It's a different set of skills. I, of course, at the New York Fed, got training in people management and other things. But it, it is a different skill set. And it took some time and effort, and missteps occasionally, to learn how to do that well.
You get to a point where I had to take a look at myself and say, what is it that I want? What is the role that I want to play here? What skills do I need to do? How do I need to act and behave? And it's not just how do I see myself? But how do others see me? So that they see me no longer as just – I'm doing air quotes you can't see – just an individual contributor. But, a leader with a different and broader set of skills.
So, I don't know that that was a hurdle in my career. But it was a transition and an inflection point where I had to consciously decide, "This is what I want to do and these are the set of skills that I need to develop to be able to do it well."
Hasenstab: I'm glad you were able to share that pivotal point in your career and how you were able to work through that and find success. Tell me about the mentors you've had. Were any of them women and how have they helped you achieve success?
Hirtle: I've had a number of people who have been really influential in fostering my career, some of them were women, some of them were men. If there's a common thing that they all did, particularly in the early part of my career – is to step aside and to let me be in the lead.
In other words, if there was a project and I was on the team, to take charge of some part of that project. To be the spokesperson, the voice of that project. If there was a time to brief senior people, that I was the one who did that part. They were not taking my work and speaking on my behalf.
And I will be enormously grateful always to the people who did that.
I think the other thing that some of those folks had in common was that they would say to me, "What do you think? What's your view of this?" And then really listen to what I had to say. Even when I was maybe the most junior person on the team. Even when, in some sense, you know I didn't have their experience, their institutional knowledge, the depth of what they brought. But they were willing to hear a different perspective. They were willing to listen and incorporate what I brought. And, so, that made me feel like I did have something to bring and kind of made me feel confident. Made me feel bold enough to speak up in other settings.
Hasenstab: Well, as an executive vice present and research director at the New York Fed, do you find yourself now in that role mentoring many women or underrepresented minorities?
Hirtle: Yes, in my entire time as a manager, I have tried to learn from the examples that I was describing and behave in the same way. When I was a manager that had a lot of people reporting to me, as I do now actually, I have really tried hard to model myself on the things that I recognize as being really helpful in my own career.
I don't if I would call it mentoring so much as that there are a number of women, not all in research that I try to maintain, active contact with say things like "Let's have a coffee," or in these days a virtual coffee, talk to them about, what they're experiencing. How they're doing. Try to be a sounding board. Try to be a non-judgmental sounding board. Provide advice if I am asked. Simply listen and take it in if I'm not asked to give advice.
I, again – certainly I can do that hopefully effectively, particularly for the people who don't ultimately report to me in some way as part of my group. Because, they can come and be maybe a little bit more open and honest with me than they might be, within their own reporting line feel freer to reveal some vulnerabilities because they don't, in some sense, work for me. And I really try hard, to play that role as other people did the same for me during my career.
Hasenstab: Bev, the, the name of this series is Women in Economics. Why does it matter to you that women play a larger part in the field of economics?
Hirtle: There is the really obvious answer that, by not having more active engagement of women in economics, we're leaving 50% of the smart people with really good questions, with really good ways to answer those questions. They are not part of our profession and that's, in the economist joke, that is literally the $20 bill lying in the gutter that that you don't want to – can't be bothered to bend over and pick up.
It weakens us as a profession not to have the full set of the absolute best people that we can have challenging all of us, asking the questions that are interesting and compelling to them. And coming up with innovative and creative ways to answer them. So, to me, that's the biggest thing that we miss by not having more women in the profession.
Hasenstab: And what advice would you give to younger women, either interested in the field of economics or just starting out in the field?
Hirtle: I would advise, particularly undergraduate women to get to know their economics professors as a way of getting to understand the profession. The economics professors at colleges and universities, are practicing economists and have a lot of, insight and advice that’s very useful. Don't be afraid to ask.
I sometimes do talk to undergraduates, both women and underrepresented minorities and, really any undergraduates, the thing I always advise them is, "Talk to your professors. Ask them, 'Do you have any research that I can help you with? Could I be a research assistant for you?' “The worst thing that they can say is, "No." And the best thing that they can say is, "Yes." And that will get you real life experience seeing what it is economists do and how they think about the world.
I mean, we have, at the New York Fed, and indeed across the whole Federal Reserve System, a terrific series of programs for research assistants or research analysists which are typically people who've just recently graduated from college and they come with us in New York. And they're there to help the economists. And they get a real dose of what it is to be an economist and what kind of things economists do. And that can be a good eye opening experience trying to understand fully the set of really interesting and challenging questions that economics can address.
Hasenstab: That is solid advice. Is there anything that I haven't asked about today that you'd like to add related to women in economics?
Hirtle: Speak up and speak out. Have faith in your own opinions and views as being valid and worthy of being heard and that's true really no matter what field that you're in.
To this day I sometimes do this, where I want to comment on something and I always start off by saying, "Well I mean, this is just my thought,” and I qualify it 12 ways before I actually get to the point where I state my, my view on something. And I want to say, "Don't do that.” Just have confidence and faith in your point of view, and your validity, and your reason for being there in the room. If you've been asked into the room in the meeting I always say, "Sit at the table." Do not take that seat around the outside of the room. Walk right up and sit at the table. You've been invited to the meeting and you belong there.
Hasenstab: That is great advice. Thank you so much for sharing that. And, Bev, thanks so much for joining us today and sharing your story.
Hirtle: It's been my pleasure.
Hasenstab: To hear more from the Women in Economics Podcast Series, visit stlouisfed.org/womeninecon. That's one word, stlouisfed.org/womeninecon. You can also stream Women in Economics on Apple podcasts, Spotify or Stitcher. Or ask your Amazon device, "Alexa, play Women in Economics from TuneIn. Thank you.