Women in Economics: Claudia Sahm

Mary Suiter: I’m Mary Suiter and you’re listening to Women in Economics, a podcast series from the St. Louis Fed’s Timely Topics audio channel. I’m here today with Claudia Sahm. She’s the Section Chief for Consumer and Community Development at the Federal Reserve Board of Governors. Claudia, thanks for joining me today.

Claudia Sahm: Oh, thank you for having me.

Suiter: So, what we really want to find out is how you became a woman in economics. So, when did you make the decision? Or what in your early life or college, what made you decide on economics?

Sahm: So I would really have to credit the education that I got at Denison University. So, when I started as an undergraduate I had no idea what an economist was or what they would do. And my first class at Denison was a principal’s honors course on economics. (Denison University professor) Sohrab Behdad was my first economics professor and he ended up being the advisor for my senior thesis when I finished. So I was definitely taken from the beginning. And I think one of the things that really struck me, especially the way economics was taught at Denison was to really tie it to the real world. So I can remember, even in that first class we would have exercises where we’d read articles in The Economist and have to try and write short essays on how it tied into the models and the ideas that we were learning in class. And I just, I loved that. That was, to me, made it very real. I love the tools that economists use. So the data and the models and the analytics, and… That’s something that like, I saw time and again where I was at Denison and then later when I was a research assistant at the Brookings Institution. And then my time with the Fed, that’s been a big part of it.

Suiter: So, you like the way that your professor tied real examples to the curriculum or what was being taught. So, is there a specific example of that that really stands out in your mind?

Sahm: I could point to a lot of examples. There’s one that I like to tell just because it ended up circling back in my own professional life. So, in our intermediate macro course, (Denison University professor) Dick Lucier, part of the exercise was we were to be like we were on the Council of Economic Advisers. And so through the course of the semester we had binders and had to get the Wall Street Journal and cut out articles and put together portfolios. And then the idea was is we would do briefings to the president. So, the professor would be the president. And we’d come with our economic analysis. It was definitely role playing. But it was an exercise that made an impression on me. And, I mean, it was a lot of fun. And then it ended up that two years ago I had an opportunity to do a detail at the Council of Economic Advisers from the Board. And it was one thing when I went over for my first interview. And I was like, I did this as an undergraduate. That was my impression of what it was to be an economist that was put in, you know, planted in my head when I was an undergraduate. And it was really cool to be able to actually do that. And to, kind of, like close the loop on this it happened that Dick Lucier was here was out in DC visiting his children and I got to give him a tour of the West Wing. And, you know, show him where I worked at the Council. That really is like, how I think about being an economist. And I’ve been so fortunate to be able to have those opportunities.

Suiter: So, there’s a word that you used in there, ‘fun’ and people don’t often associate that with economics. But I think your example points out exactly how it can be fun when taught with enthusiasm and interest. So, has your experience in economics been shaped by your gender?

Sahm: For a very long time I haven’t thought of myself as a woman in economics. I really… I’ve been an economist. And to be clear, the mentors that I’ve had from undergraduate through Brookings, through my time at Michigan with my PhD, the mentors I’ve had have just happened to been all men. So, at Denison, again, they had spent a lot of time thinking about how to teach economics. And Robin Bartlett is a professor at Denison. And she was there when I was there. And she has been very active in the Committee on the Status of Women in the Economics Profession. So, CSWEP, which I was like, totally not on my radar as a student. And I remember one conversation when I was finishing up at Denison, at that point it was pretty clear I was going to go to a Fulbright and, you know, grad school was probably on the horizon. And she had stopped me and was like, you know, you never took one of my classes. Well, that’s true. She’s a great professor. But it was just interesting because she was definitely, a strong woman professor in the department. And I really hadn’t sought out her mentoring. In hindsight, maybe that would have been smarter. But it didn’t occur to me , that I should be trying to get women mentors a lot of the classes I sat in, the seminars I go to, there weren’t many women. So, you know, it’s something you notice. As I’ve gotten older and I had kids and trying to balance work and family … I do think it shapes some of my experiences.

Suiter: Well, just for our listeners, can you just tell us what CSWEP stands for one more time?

Sahm: Yeah. So, it’s the Committee on the Status of Women in the Economics Profession. And I think one thing that’s interesting to note is CSWEP was founded in 1971. So, it even predates my entry to the world. And so I think that’s one of the things. Women in economics has become a very prominent topic in the last year or so for various reasons. And it is really important to understand this is a conversation that has been going on in the economics community for a very long time. It maybe hasn’t had as broad of support as it should have. But there are plenty of women and men you can point to that have been working hard to improve the status of women. And there’s actually a committee in the AEA (American Economic Association) that focuses on underrepresented minorities. And that actually was started in 1968. There actually is a new working group for lesbian, bisexual and queer economists. And they started a newsletter. So, I mean, there’s a longstanding commitment to having economics be more inclusive. But to be honest, the progress and really the broad-based support has been lacking in the profession. We can do better than we have.

Suiter: And, what are some things you think we could do better in the profession to be more inclusive?

Sahm: The thing that’s frustrated me the most is economics has really drug its feet on recognizing this is a problem. And the diversity inclusion is something that we need more of. The lack of it that we see in the profession is something we should be concerned about. And I can understand where that comes from to some extent. I mean, one of the things that draws me to economics is we really spend a lot of time thinking about individual choices and decisions. And preferences are something that we take as given and then do our analysis. Not everyone has to love economics as much as I do. It’s hard for me to understand but I can accept that. And so I think there’s been an attitude well, if, you know, most women don’t want to do economics we shouldn’t push them to. And, oh, by the way, there should be more men doing nursing. It’s not like we need gender parody necessarily, but I think it’s been frustrating the way economists just accept the status quo and say well, this is the way it is. Women aren’t interested. Minorities aren’t as interested. And, we need to think harder about why is it they aren’t interested? And I do think the quality of the economics suffers. The wisdom behind our policy advice is not as good when you just don’t have all those voices being heard. But this is something that economics broadly has been very slow to say is a problem. I think there are signs that’s changing. And it’s going to be a very difficult conversation. And I don’t think we know exactly the tools, the way we’re going to get to a more welcoming and inclusive economics. We’re trying to figure that out.

Suiter: And so you work a lot with men obviously. Male economists. Do you have those conversations sometimes with them?

Sahm: Yeah. And I have to say the Board of Governors in D.C., so David Wilcox who’s a Division Director of Research and Statistics. And to be clear, all the way up in our management. So this was something Chair (Janet) Yellen had been very interested in as well. I mean, we have had very serious discussions about diversity in economics. There’s been a lot of effort in trying to think harder about our hiring practices, especially for economists. And then also ways that we can improve the pipeline. So, the Board has started a course that’s team taught with Howard University that’s teaching our programming and economics. And this is for undergraduate, some graduate students. But I think part of that is, you know, giving students tools. And then, you know, maybe they come work as research assistants at the Board or other places, and try to actually get more people interested in economics that haven’t been in the past. So there’s been a lot of conversation. And we’ve been trying to take steps. And (Swarthmore College professor) Amanda Bayer has been, kind of, they’ve created a consulting relationship with her. And she has years and years of research on this topic. And so I think I’ve been really encouraged to see that conversation started. But it’s hard. You have to be careful. I mean, we want to be more inclusive. But that doesn’t mean that we want to discount the people that show up on their own. I mean, some of the economists that I have learned the most from and listened most respectfully to their ideas, a lot of them, they’re white men. The objectivity of economics is one of its strong suits. And it’s very analytical. And a lot of times we use math and numbers and data. And that’s a really great thing. But sometimes it makes these conversations about how I feel, and what you just said makes me uncomfortable, so those conversations are a little harder for us to have. So I think we’re like, learning it together. But it’s not easy. And that’s even within an organization where very high up in the organization there’s been a lot of emphasis placed on improving diversity. I don’t see that as broadly in the economics profession. Although there’s some signs. And then you’ve got to really roll up your sleeves and do a lot of work.

Suiter: So, I know you love macroeconomics. And you’re certainly enthusiastic about it. And that’s great. Can you talk a little bit more about what your specific interests are and what kind of research you do?

Sahm: Yes. So, my love of macro comes in many forms. I even have my personal blog, Macro Mom. I want to reinforce it. Like, macro can be exciting to women. I think it’s fascinating. I mean, we’re dealing with people and institutions. The thing with macro that really amazes me, it’s when it all comes together. It’s so dynamic and there’s so many people and so many different lives that are coming together. So, I think the challenge of trying to find the patterns and understand the trends. A big piece of the Fed’s work is trying to smooth out the ups and downs in the economy, help support when there is a recession or help, you know, try and make a more stable economy. And that really impacts people. Like, the policies that we do. So, that’s really important to me.

When I started at the Board I started in the summer of 2007 right before things got really exciting. In my first job at the Fed was forecasting consumer spending. In January of 2008 we put the tax rebates, the 2000 tax rebates into the forecast. And then the recession; my first year was a birth by fire in terms of macro forecasting. And I remember being very frustrated with myself because we were getting asked hard questions about what’s happening with the economy. How are households responding? How do we get to this place? It’s not like anybody had all the answers. But certainly being fresh out of a PhD and trying to learn how to do macro forecasting on top of something we haven’t seen since the Great Depression. I mean, so it was a very daunting, very humbling time.

But I really enjoyed the macro forecasting, the current analysis. I’m wearing my FRED T-shirt, so I love the data and the resources. Even after having done a PhD in economics, it’s not like I really understood or even expected that to be my first job. But one of the things in the group that I’m at the Board, a lot of it is storytelling. I mean, we are writing down a forecast for the U.S. economy. So I’m looking at like, aggregate consumption. And we have plenty of time series models. And there’s a framework for how we think about the data. When you do updates every six to eight weeks, you’re not reinventing the wheel every time. But there’s a real understanding that like, those time series models, the kind of, the big structure, it’s going to miss a lot of things.

And so my research coming into the Fed and still is very much an applied microeconomics. So I look at household data. And when I started it was, a lot of it was on survey measures of preferences. So my thesis was actually on risk tolerance and how it may or may not change over time. Like, shocks that happen to individuals or as they age. And at first I thought, well, this is kind of not that related to writing down a time series forecast for the U.S. economy. But what I found out is, actually, it’s really related. Because we know things are missing from those models and so you go to finer data. My research actually pivoted quite a bit to thinking about physical stimulus and how households respond to the various types of stimulus that were put out to deal with the recession. And I spend a lot of time puzzling over what are households doing here? Like, because we were trying to look for patterns. I mean, in the end for my policy work it was to be able to say, okay, the tax rebates will have X percentage point effect on GDP growth. But a lot of it was just understanding, well, why do people respond to stimulus? And how would we structure it to be more effective? Those kind of questions I find really fascinating. And it involves going and talking to real people and trying to figure out what they’re thinking. So, I have done a lot of macro forecasting. But it goes along with a lot of, like, studying household behavior. And over time I’ve gotten really into economic measurement which has a long history in economics. And it’s pretty exciting to be now contributing to some of the ways we could improve measurement. I’ve had some big data projects. And so that all really ties into macro forecasting.

Suiter: It sounds like a great mix of things. And your job is different every day it sounds like. So, it keeps it interesting and fun and exciting for you. So, when I talk to people, when I talk to groups of people, when I taught, I would often ask my students, what do you think you’re going to learn in this economics class? And, of course, what I would hear is money and supply and demand. And then I would offer my explanation of economics. I wondered if you could tell us what your definition of economics is. What you would say to just a general audience about what economics is.

Sahm: It’s an important question. I’ve spent a lot of time trying to think about why women and minorities and other groups that aren’t well represented in economics we’re not doing a very good job of explaining what economics is and how it really relates to everything that we do. It’s really about the decisions we make with the scarce resources we have. I don’t think economics can like, take over the world in terms of analysis. Things like history and philosophy, and science, you know, those all have their place and their times where those are the right tools to take to a question. But I think there are really so many decisions that we make, and everyone is making. Decisions about do you buy a house or do you rent? Or how much do you need to save for retirement? What kind of job… I mean, the decisions people make in terms of education that they get, it’s, you know, economics really is everywhere. I mean that was how I started as an undergraduate. But like, from the people that I’ve really learned a lot from as economists, they have reinforced that all along the way. You know, I can remember David Laibson and there was a summer institute for behavioral research that was more for graduate students to get them pointed in that direction. And his big advice was like, go out into the world. Like, if you’re interested in a lot of these behavioral, like, go try and take out a payday loan. Go out there and do the things that everybody, is doing in terms of economics. And I think that was also reinforcing of why it’s so important to have the different life experiences. That you really understand what’s going on. And there’s been a lot of discussion about how we teach economics, especially in introductory levels and like, bringing in the real world. And you do need to be able to simplify reality to be able to talk about it. I mean, some of the concepts, but we have to balance that with being true to just how varied economic life really is. To me that’s a lot of what economics is. It’s like, being able to tell the story of the lives, the economic lives of the people around us.

Suiter: And so you’d suggest to young women that economics is about life. And life is messy. And you have to look at and be able to tell a story about what you’re learning. What else? If you were speaking to a high school girl, or maybe a junior or a senior in high school or a freshman in college, what would you suggest in terms of coursework for them, or things they might do to really develop the skills beyond just classroom skills? The skills they need to be an economist and be a woman in economics.

Sahm: One of the things that’s really important is being able to make your own economic decisions well. There’s been a lot of push to try and improve financial literacy in high schools. I find it pretty fascinating to follow, you know, read the newspaper and follow like, the economic policy debates. I mean, I can remember some, even when I was in high school, things that would come up like, in terms of welfare reform and things. If that resonates with you, kind of look out into the broader world and the discussions that are happening. Be informed. Pay attention to what’s going on. But to really look at like, the decisions you’re being asked to make, you know, like, thinking about college and how do you choose the school? And really trying to like, arm yourself with the tools, the data that’s out there. So you can learn to make informed decisions. And maybe that happens in the classroom. But I suspect it happens even more-so with seeking out the information, talking to people who’ve made those decisions. Talking to your parents. Talking to relatives. Finding people that have finished from high school. Be informed. Be curious about, I have these big decisions to make. What am I supposed to do? And so I think you can learn economics by doing it. And so focus on the things that are most important to you. And try and learn that way.

In terms of the coursework, I think I would really push statistics. There’s no reason for us to be afraid of math. It shows up more often with women. And I did a little bit of substitute teaching when I was in college. And I was amazed how young you can get the like, ‘I’m not good at math.’ And I’m like, ‘Oh, you’re a second grader. You’re going to be able to do this.’ You know? Fighting against your internal critic, the person that’s like, inside of you that’s saying, ‘Oh, I’m not good at this. I can’t do that.’ You know? Like, those… Being comfortable with numbers and your finances. I mean, people are being asked to make more and more of their own financial decisions. Like, you really have to push yourself to, kind of, a basic, not just competency but also confidence in your abilities. So, I think that is important. But that’s like a life skill thing. It comes in handy if you become an economist. But I think that goes more broadly.

Suiter: That was great. I wonder, is there anything you’d like to tell us that you haven’t about being a woman in economics?

Sahm: I’ve spent a lot more time talking about being a woman in economics in the last year than I ever expected to. And unfortunately the forcing event for a lot of that were very unpleasant stories and experiences of what it means to be a woman in economics. And I think I have spent time sharing my own experiences, sharing experiences around me, kind of giving my insights on what it means to be a woman in economics. And one of the things that I have worried about some is that it sends a too pessimistic of a message. I don’t think the economics profession has embraced fully or had embraced fully what a problem the lack of diversity was. And so I spent a lot of time being very creative about all the different ways I can, you know, reinforce to you that this is a problem. I think that had an audience. And there were people in economics who needed to hear that. What I’ve worried is that sends the wrong message to the young woman who’s thinking about, do I become an economist? I’ve seen that up close and personal. I have a research assistant who’s applying for graduate school in economics. And her background was not in economics. And encouraging her to go into econ and helping write reference letters. I mean, I really did pause. It’s like, I’m going around telling you how hard it’s going to be and the biases you face. But go do it. And so I do think even though we should be aware of the challenges. And again, I think it’s everybody’s going to push in to solve these. I don’t expect the next generation of women economists to be the ones to like, fix everything. It’s not… If this is a problem it requires everyone’s attention it’s good to have your eyes wide open about the challenges. But I see way more opportunities and potential for women. I love doing economics. I have so many questions and things I want to answer and analysis I want to do. And I think, really, for most women that join the field, that’s what they’re going to do. I mean, we have a lot of people who do amazing research and keep the conversation going. And I am so thankful that that’s how they focus their research. But that’s really a small slice of the picture.

Suiter: But I agree. We don’t want the problem to push away young women because they’re fearful of the problem. So, it’s been really great talking to you. Thank you so much for joining us today.

Sahm: Oh, thank you. It’s been great.

Suiter: To hear more Women in Economics podcasts, visit stlouisfed.org/womeninecon, that’s one word, stlouisfed.org/womeninecon.