Women in Economics: Diane Swonk

Mary Suiter: Hello. 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. Today, I’m speaking with Diane Swonk, chief economist and managing director for Grant Thornton. Thank you for joining us today, Diane.

Diane Swonk: It’s my pleasure and honor.

Suiter: Well, I thought we might start off by just asking you how you decided to choose economics as your field of study.

Swonk: Well, it kind of chose me, I think. I’m severely dyslexic, and I grew up in the Detroit area during the worst of its economic demise in the 1970s and 1980s. And, the first economics class I took, I took only by accident. It was the only class open when I actually went to go register for classes, and I read the synopsis. I thought, “This sounds kind of interesting.” And, actually, the class itself was, you know, a 350-person lecture class by a well-known Marxist at the time, which wasn’t the most fun, who thought it was his job to get rid of all the students they had accidently let into the University of Michigan that they shouldn’t have. But, I had, three days a week, a break-out session with an MIT economist who was the teaching assistant at the time, and, you know, I may be dyslexic and I can’t read very well. I flip numbers, but I can do calculus in my head, and I grew up in the middle of something that was an economic train wreck. And, all of a sudden, the economics I was learning explained it could have been avoided, and the reality that I could make a difference in this world and people’s lives, that this was really about human behavior, policy, and interpreting how to make it better for the world, I was hooked that first class. And, that was it.

Suiter: That’s a great story. I did not realize that you were dyslexic. That seems like a tremendous challenge for the reading that might go into economics. So, what are some of the things you did to help you with all of that while you were studying economics at advanced levels?

Swonk: You know, it’s interesting because, I get paid to write? And, I actually, I say the only other language I can speak is Canadian because I can’t speak a foreign language, and my mother is from the upper peninsula of Michigan, which they say “hey” and “about,” you know.

Suiter: Yes.

Swonk: But, the reality is I was really good at taking notes, and economics was so intuitive. And, what dyslexia does, I do actually work a lot with the Yale dyslexic foundation, with the neurobehavioral institute here in Chicago. I work a lot with dyslexics, and it’s the only learning difference that—I don’t know my IQ, and I don’t care—but IQ and reading ability are not correlated. And so, even though I couldn’t read very well, I could take meticulous notes in multiple colors, and my notes, people would offer me money, which I never took. Maybe I should have. I should have been more propertarian as an economist, but I took meticulous notes and showed up for class and learned to sit in front of the class. Once I wrote it, and once I said it to myself, and once I repeated it, those were all things that were learning tools that, even if I couldn’t do all the reading that I needed to do, I could do a lot of other things.

And now, I often write a 3,000-word document on my iPhone, which sounds really strange. The computers and technology have really helped me to bridge what would have been a very hard thing. I also know my own weaknesses. I have people who are really great at editing me because I don’t know the difference between from and form. It looks the same to me on a page, and so, they won’t edit away my voice, which I found, but they will edit away all of the grammatical mistakes I make because, literally, I cannot spell.

Suiter: That’s a terrific story and really inspirational for young people who are, perhaps, struggling with some learning disability themselves, how to overcome and how to persevere and reach their goals. Thank you for sharing that.

Swonk: This is my whole life. It’s been doing things outside of the box, backwards, and not the way other people would do it, and, I was an only child. I grew up a lot alone. One of my stupid human tricks is I was a latchkey kid before they had latchkey kids, and I could break into a house. So, I know how to break into a house. I’m not sure that’s something you should brag about, but it’s thinking about how to get around something. And, you know, as a dyslexic, having those differences, it helps because you’re used to failing and learning from those failures, and I think, success, you learn more from your failures than you do from your successes. Of course, we love our successes, but life is, an obstacle course, and if I’ve done anything for my children, I hope it’s I just taught them to ask for help when they need it because I’m lost a lot. I don’t know my right from my left, and I can’t use a GPS as a dyslexic. And so, I just ask people, “Where am I going?”

Suiter: That’s terrific advice though. Ask for help and persevere, make your way around the obstacles, right, or over them. I wanted to also ask, I noticed in your bio that you advised the Federal Reserve, and since we’re the Federal Reserve Bank of St. Louis, I thought I’d ask you to talk a little bit more about that—

Swonk: —So, my first job, I started out, I turned down a job at what was then Arthur Anderson to take a job that was much less than I could make as a waitress, at was then one of the largest banks in the country, one of the 10 largest banks in the country, a bank called First Chicago, and we reported to the chairman’s office. The vice chairman at that time was a man named Bill McDonough, who later went on to become the Federal Reserve President of the New York Fed, and my boss, who was my mentor, had grown up within the Federal Reserve and come into economics to the private sector, but he was an advisor to the Federal Reserve as well.

And so, from a very early age, not only was I called on by the Chicago Fed, but I knew people at very high ranks and got exposure to the Fed right up to Chairman Greenspan at the time. And so, I was only 23 years old with a graduate degree in economics and having, reporting to all older men. I grew up in an environment where I was the only child and always around adults and used to talking to adults. So, that was more comfortable for me.

Suiter: Wow. That’s really interesting. You had, of course, the Marxist professor. Along the way, did you have any other faculty interaction that was really positive in terms of your growth in economics?

Swonk: Absolutely. Oh my gosh, I mean, Ned Gramlich was at University of Michigan and at the Fed later Certainly Ned Gramlich was just an amazing man, and I admired him so much. Originally, by doing my graduate work at Michigan and later at University of Chicago, but also just, you know, reading his work, and then getting to know him while I was at Michigan and then later at the Fed, that was just such a special thing for me.

I also had, many great professors. I got to work on the Michigan model early on, and I actually remember one day one of my colleagues said to me, “How can you remember that?” I, thought I was going to play with the Michigan model, and this was back in the day when, programming was not as easy and you didn’t have instantaneous results, and I decided to get rid of defense spending because I was, a liberal, young student at University of Michigan and thought, “Well, we don’t need defense funding.” And, it was 1985 and defense was 8½ percent of the U.S. economy, and all of a sudden, I saw these results coming out, and it just destroyed the entire U.S. economy. And, I’m like, “Oh my gosh! That’s terrible!” And, it made me realize very quickly how errant we were, and that’s, again, the benefit of being a dyslexic in economics.

We don’t think linearly, which is probably obvious from my answers, but also, we think in reaction functions, or not chaos theory, you know, but a butterfly across the world could start a tsunami somewhere else. I think that’s really a useful way of framing the world is realizing that any change one place can have a reaction function somewhere else. And so, my professors that I had really helped me understand that and also helped me understand it in a very human, applied way. I mean, I was one of the first graduates ever of what was called University of Michigan’s Applied Master’s in Economics programs, and I didn’t know that, at the time, that I was new to it, that it was just begun. But, it was just so real. It was about the real world and that you could make a real difference in this world, and as I said, because of the train wreck I grew up in—my best friend went into poverty, my father worked for General Motors—I brought money to school every day so she could have lunch, and we never spoke of it. To have grown up in that environment and to see my kids repeat it, I know we’re on the lucky side of that situation, but it still is heartbreaking to go through the crisis and see my kids. My son didn’t buy shoes for two years—he was 14—because his best friend, his father was a stockbroker and lost his job.

Suiter: That’s amazing.

Swonk: Economics is everything to me. It’s just life. It’s human behavior, and my professors had a profound impact on everything I do.

Suiter: I wonder if you could talk just a little bit about what the Michigan model is for our listeners.

Swonk: Michigan is much more applied. So, I went to two schools that really didn’t like each other, and so, some of my greatest mentors from Michigan, when I went to the University of Chicago, actually wouldn’t talk to me for a while. So, that was a bit tough. Going to the University of Chicago in the late 1980s, Chicago Booth School of Business, that was not easy either, and one of my biggest issues today, and I’m working with both universities on this, I’m doing research on economics and diversity and gender issues in economics and to feel validated that women really weren’t treated very well in economics.

There was a deliberate bias moving from Michigan, where I really did feel nurtured, to an environment where I really felt not as nurtured, and I did extremely well and it was really easy because I already had the economics. And so, it was very hard to go through that process of the misogyny I faced in the classroom and from professors, and this is a time, remember, there was a Nobel laureate—I won’t name him, but part of University of Chicago’s named after him—that said, you know, “When women enter the profession, the profession will suffer quality.” And, that really is something we know now has been validated by research in economics and diversity of economics that women have to work twice as hard to do well. And, I think it’s part of the reason why I chose a business course, because, frankly, being in business was much easier than being in academia as a woman.

And, I had many mentors. My mentor for over 20 years is an economist, formerly at the Federal Reserve and the Congressional Budget Office. I worked with Alice Rivlin, who I just adore, and Janet Yellen, who I came to just adore as well. These people all were mentors to me at a time where they saw the value of a different perspective. They understood the value and what I brought to the table and didn’t see it just as a lens of gender. That was really important to me. So, I was really lucky to have those mentors, but I also saw the other side, and I realize now, in retrospect, some of the reason I took the path I happened to take was because I’ve been so involved in things like the National Association of Business Economics.

That was a group that always promoted the strong women in the group to the top. I became president. I was one of the youngest presidents, the youngest president ever, of the National Association of Business Economics, and I was a woman. I was accelerated in a rapid way, and there was nothing token about it. I had to work really, really hard, but I had someone who believed in me and people who, spurred me on, and the sense that we were all on the same team. It wasn’t one team versus the other. That really made a difference, and I think being a woman in economics, choosing the route I did through business, actually even though I was in finance, I spent many a time as the only woman in a room much of my career, which was not the way I would have chosen it. I am thankful that I chose a route that I think actually was easier for women than it was in academia.

Suiter: So, given your experience and some of the things that you just shared, what kind of ideas or suggestions or plans do you talk with them about in terms of bringing diversity to economics and other disciplines in business?

Swonk: Well, a part of it is money and having enough money to sponsor research, and that’s what I’m doing now. I already have a research grant I’m working on with the University of Michigan. I have one I’ve already established with the University of Chicago to spur research on the economics of diversity, gender diversity, and what are the hurdles, what do we need to change, what is the most productive way to get the most critical mass of people who need to make the decisions. It’s not just about one person sitting at the table, and I’ve talked to a lot of women CEOs I happen to know that happen to live around me, which is really interesting. I have a concentration of them that live around me, and we talked about it’s not just about having one woman at the table.

It’s about having a critical mass of diversity, whether it be women, whether it be a minority, whether it be, the LGBTQ community, all that diversity around the table, even different regions of the country, different regions of the world represented. Having that critical mass is really important too, and so, I actually have the privilege of being able to fund research, which I’m working on. Funding at the University of Michigan, we haven’t gotten that quite completed yet, but we are working with both the Ford School and the Economics Department. The Harris Policy School has helped me to structure research grants to go to the Economics Department at the University of Chicago and Booth School of Business to help figure out how to change the equation across the board, and it’s got to be across disciplines as well. And, I think that’s what’s really important.

I have to admit, when the research came out, that it was harder for a woman undergraduate in economics to make it than a woman in STEM. That was devastating to me, and I realized how lucky I was to have been in the place I was when I went through it. But, that’s just not right. My daughter recently got a job. She turned down another job, and she said one of the reasons she turned down the other job—and it’s in STEM, she’s a biologist—is because they never hired a woman before and she wasn’t sure what that meant and how they were going to treat her. And, there was something about her antennae that went up, and I thought, “Wow. That’s still happening to her.” And, you know, she just graduated from college, and, how could I have not have done more for her in this world?

Suiter: Yeah. It is a bit frightening. When I talk to young women and I hear their experiences, and as you mentioned here, I’m a little shocked that they’re still having those experiences. So, you’re mentoring your daughter and, through this research, looking for solutions, but I’m assuming that you also do a lot of mentoring of women in your business and your personal life. So, could you talk a little bit about that?

Swonk: So, it’s really hard. Mentoring is organic. You choose each other. But I’ve mentored many people over my career, and one of my greatest prides is that every administrative assistant I’ve ever had has not only gone on to finish an undergraduate degree, but graduate degrees and leave the nest. And they move on, but encouraging people to reach for the stars, hiring the smartest people and knowing the potential’s there and saying, “I’m going to help you get there. You’re going to make it. It’s okay. We’re going to figure this out.” And, just being there to sometimes pick them up when they stumble and also remind them that stumbling has a lesson in and of itself and being real. Showing that a strength is admitting your own vulnerabilities and embracing them and turning lemons into lemonade, like with my own dyslexia, that’s really important to me. I’m not a perfect mom, no one is. I love my kids more than anything in this world, but my legacy to them and anyone I mentor is be strong enough to ask for help when you need help. That’s a strength, not a weakness.

Suiter: That’s great advice. In the research that you’re sponsoring and research that you’ve done, have you identified any solutions or any issues that surprised you?

Swonk: Oh, gosh. I wish I didn’t. Yes. One is critical mass and not understanding that it’s not just about checking a box and getting someone around the table. It’s about getting the right person around the table and the right critical mass of people around a table to have diversity actually lift the bottom line in business and in decision-making in general. I’m struck by studies on juries, even. And, if you have, say, a Black defendant and an all-white male jury—these are mostly originally done on men—actually tracking the verbiage of the discussion about what the person was charged with, the verbiage was mostly focused on biases.

Having a Black defendant and an all-Black jury, the same thing occurred. It wasn’t until they got to 50/50 that the actual discussion was only about the facts of the case, and then, they came to the most optimal solutions. And so, the, idea that, you really need not just diversity around a table for diversity['s] sake. First of all, it has to be the right diversity, but also, there needs to be a critical mass to that diversity and that you’re representing different views in a way that they can be heard and that their voice can actually change the direction of the discussion so you’re discussing more the facts and the data, not biases.

Suiter: I have not seen that. So, that’s a very interesting piece for me. Grant Thornton, so you moved your group, your team, to Grant Thornton. Can you talk a little bit about the work that you do there?

Swonk: It’s becoming something new. They never had a me before. This is what I do is I always go someplace where there’s something undefined and define it. I’ve had the beauty in my entire career to actually define my job, which means I can define it to my strengths and not my weaknesses. So, I had several suitors and I had my own company, and I had been talking to Grant Thornton and I had no idea that their CEO had wanted to hire me for the better part of a decade. And, I had the luxury of making a decision of being able to work with people I actually like and also really could relate to, and I’m a Midwestern girl. I’m not a New York Wall Street economist. I compete with Wall Street economists, and maybe I’m as good or not as good as them, but I’m a Chicagoan. I’m from Michigan. I’m a Midwestern person.

And, having that sort of difference in perspective for me and then being able to tap the resources of a firm that’s global in reach and one that’s really trying to transform itself. That was exciting to me. And, I think they’re doing some really exciting things, and they wanted to be thought leaders out there and embrace that. They wanted to be able to bring more intelligence, economic intelligence, to their clients and lever it and it’s all new ground.

To me, my whole job has been defining my own job, and I get to do that all again, but reinventing yourself. You’re nothing if you’re not constantly trying to improve upon what you are, and this is a challenge for me to step it up.

Suiter: What would you say to young women choosing a field of study to encourage them to go into economics? What else would you like to talk to us about relative to women in economics?

Swonk: I chose economics because it kind of chose me. It just was the easiest thing I’d ever done. It was the easiest A I’d ever gotten, and I know that sounds strange. But with my dyslexia and how I think and my framing of the world, I’m sort of a Forrest Gump in a lot of very important places in history, and it gave me, it crystalized things. It gave a framework for understanding the world. It gave me purpose, and I know that sounds really trite and I’ve heard billionaires say, “Don’t go after your passion. It’s not worth it to go after your passion.” You know, I went after my passion. I went after something I loved. I was paid much less than I could have in another field, in another job offer that I had on the table at the time, and I turned it down and earned less than I could as a waitress with a graduate degree in economics because I wanted to do economics. I wanted to give it a chance, and I think we often get sidetracked by what the dollar signs are.

And, you know, the reality is it’s where we spend the most of our lives. I have two kids I adore and love and would do anything for, and they are everything to me. They now know that I’m a better mother because I was not home every day, because that’s just not how I’m cut out. It took them a while to realize that, but I think, since my son is now a standup comedian and uses me as his material, I think that I’ve given him a lifetime of it. He’s only 20. So, I don’t know. It’s really important for people to do something that they’re passionate about, feel comfortable in their own skin about what they’re doing, and to be honest with you, my career did better when I stopped denying who I was.

I started out wearing a man’s suit, basically, and a skirt. I had wingtip heels instead of wingtip flats. I worked in [a] bank. I had a bow tie because that’s what they did back in the 1980s. Once I got to dress like a woman, be a woman, be pregnant on stage giving live performances, be live on TV with contractions four minutes apart, I realized I’m not a man. I’m a woman, and all of that difference that I bring to the table was a perspective that had value in it. And, understanding that you have value and embracing your differences as value is really key in anything you do.

Suiter: Well, thank you. I think we’ll have to seek out your son so we can hear this comedy routine.

Swonk: No, you don’t want to do that. I’ve actually heard his comedy. It’s funny, but it’s very hard. Humbling, much like the job of an economist.

Suiter: You mentioned economics being a framework for the world. And so, could you talk a little bit about that framework?

Swonk: Economics is the collective study of human behavior, and we use math to frame it because it’s useful and gives us a tool. But, the reality is I always remember, what incentivizes a person. It’s all about understanding what forces a person to make a decision, and that may or may not be money-wise. The incentives are nonpecuniary at times. The incentives are driven by a whole spectrum of things, and understanding that, to me, that’s where the complexity is and the importance is. One of the things I’m really struck by, a University of Chicago colleague, who I admire, wrote about, the mindset of being in poverty, not being able to accept a position that would enhance your career earnings, but being stuck maximizing week to week your ability to cover food and shelter.

And, talking to a client who is trying to do the right thing and create a career ladder for one of their employees and losing their employees for 50 cents an hour, they didn’t understand it. And, I said, “Fifty cents an hour on a 40-hour work week is $20 a week to that worker, and if they’re maximizing food and shelter, that’s actually a meal for them. So, if you have a picnic once a week and change the dynamics of the workplace, you might be able to retain more workers and also give them that opportunity and flexibility and luxury of maximizing their career earnings instead of just what they need for food and shelter for a week.”

So, to me, that framework is really important because it really is where the, tire meets the road in terms of moving forward as a society.

Suiter: Diane, thank you so much for your time today. It’s been great to hear your story. To hear more Women in Economics podcasts, visit stlouisfed.org/womeninecon. That’s one word, stlouisfed.org/womeninecon. Thanks, Diane, so much for joining us.

Swonk: My honor. Thank you.