Women in Economics: Ellen Zentner

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Maria Hasenstab: I’m Maria Hasenstab, 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 Ellen Zentner, the Managing Director and Chief U.S. Economist for Morgan Stanley.

Hi, Ellen.

Ellen Zentner: Hi, Maria.

Hasenstab: I’d like to talk to you about being a woman in the field of economics. When did you learn that you were interested in economics?

Zentner: Well, I’m glad you asked when, because it took quite some time. I mean, I look at kids today going through school that are expected to know what they want to do as early as high school, and I had no idea, and I went straight into college and had no idea, and was naturally taking courses that seemed to interest me, and one day one of those was macroeconomics, and it inspired me. I loved the professor. The subject interested me. It seemed like it was built a lot on just behavior, understanding behavior, how minds think, what we do with the resources that are given us. It really did speak to me, because the reasoning behind it—the overlay of theory on top of mathematics was really what captured my interest, and I sailed right through, got my degree and went straight into graduate school and focused on econometrics, which at that time was a budding part of economics, applying statistics more heavily than, say, just theory.

Hasenstab: So you mentioned a professor. Can you tell me more about that person? Was he or she a mentor?

Zentner: No, not a mentor, and this is something that I fault myself for, for not having the insight to reach out to mentors. I think young people today understand the importance of mentorship. And I was a loner in college. I admired this professor from afar, but was very scared to approach professors and talk to them in a very personal way and ask for advice and those types of things. The students that I meet with today and young professionals, much more bold than I was at their age. So I would say that I didn’t seek my first official mentor in the economics profession until I got my first job working for the State of Texas straight out of graduate school, and it was the first chief economist that I worked for. So the professor was really critical in helping me over that hump of finally deciding exactly where I wanted to apply myself in school, but, to this day, they don’t know that.

Hasenstab: Wow. Can you tell me more about that mentorship at your first position and any other mentors, however they played a role in your career?

Zentner: I got an undergraduate degree in economics and thought, well, what the heck do I do with that? I mean, it’s such a general degree, and that’s part of the beauty of it, is that you can really go on and do many different things, including remain an economist and purely study and practice economics. So I went straight into graduate school. When I got out of graduate school, I said, “Well, what do I do with a graduate degree?” And so I went back home to Austin, Texas, and at that time, if you were an economist practicing in Austin, Texas—now there are many hedge funds and other financial-field businesses there in Austin, but at the time, you worked for the state.

So I started with the Comptroller’s Office in the Revenue Estimating Division, and my first chief economist I ever worked for was Tamara Plaut. So, one, it was very lucky that I was able to work for a woman, and she took me under her wing and started teaching me her deepest knowledge that she had picked up as a macroeconomic professional. And here she was with a Ph.D. from University of Pennsylvania. She had studied with some of the greats in our field like Lawrence Klein, the father of macroeconomic modeling, and it was just an incredible experience, and I stayed there with her for the first five years of my career. And to this day, we remain good friends. When she travels up to New York—she still lives in Austin, Texas. She travels up to New York and stays with me and my husband when she’s visiting, and it’s just a friendship that’s lasted throughout the years.

Hasenstab: You’ve talked about how you thought some of the students of today are bolder than you were. Have you done anything to reach out to mentor younger women or men in the field of economics?

Zentner: Yeah. I would say I’ve almost gone too far in that direction, although you probably can’t go too far in that direction, because I didn’t reach out, and would have loved someone to recognize that and draw me out and say, “Hey. I want to help you.” And so I don’t even wait for young people to come to me. Young people within our firm at Morgan Stanley, young people that are just in the finance field, in general, or specifically in economics, I will reach out to them, as well as them seeking me out, and tell them, “Look. I’ve got a wealth of knowledge to share. I want to help you over the troubling humps that I had to jump or hurdles I had to make, but make it easier for you. Let me pave the way for you.” And I absolutely adore it. I think it’s a critical part of my career, that it’s my responsibility to pass on knowledge and make that path as easy as possible for those young students.

Hasenstab: Can you talk about some of the hurdles you just mentioned, hurdles in your career?

Zentner: For me, one of the most important things in my career was the “aha” moment that I had when I realized that keeping your head down and working hard was not going to get you that far, because you need to be recognized for that, and I think a lot of women do that. We go into our careers believing that if you work hard, keep your head down, work hard, nose to the grind, that you will be recognized and you will move ahead, and that may very well be what happens to you, but you shouldn’t sit back passively and expect it to. And I had an “aha” moment where I decided that I needed to be actively managing my career, and it was after I had moved up to New York and taken my first job on Wall Street. I was at Bank of Tokyo-Mitsubishi for eight years after my five-year stint at the State of Texas, and I tell you, when I started actively managing my career, it’s like it took off like a slingshot, and part of that was being sure that I was in partnership with my boss so that when I went into meetings, it was a sharing, caring relationship. “I want to understand what you need from me, and I want you to understand what I need from you.”

I tell people I mentor be sure your boss understands the path that you believe that you’re on. Have that sanity check. Do they see you as being on that same path? Are you ticking off the boxes that you need to tick off in order to be sure that your work is recognized? And if you do that, you can move ahead more quickly, but you’ve got to be sure, first and foremost, that you are on the same page with your boss. Now, I understand this can’t apply in ever aspect of economics. For instance, at the State of Texas, like many government jobs, there are predicated levels that you move through, and so you might work in an organization where it may not matter how hard you work or how many hours you put in. It may be that you get promoted along a same exact path at the same time as others. But most of us work in industries that are merit based, and if you work really hard—and more importantly, if you get recognition for that work—then you can ensure that you are rewarded.

Hasenstab: That’s great advice. Ellen, is it ever too late to reach out for a mentor? Do you have one now?

Zentner: It’s never too late. I, first and foremost, within the firm, within Morgan Stanley, reach out to higher women in the firm, so senior women in the firm, senior management, and across the firm as well, because it’s very important that I get feedback and experiences and advice from women not just in the field of economics or finance, but it could be someone in HR, someone in our Diversity Program, someone that’s, you know, in firm management. And so it is never too late, and a diverse set of views is very important.

I am approached most of the time by young women who are still in school, but are graduating with a degree in economics soon or they are early in their career and they’re changing jobs, so typically the ones that have reached out to me that I mentor are usually in their early twenties, just about. You know, I hope that I can continue to mentor, gosh, until I fall dead out of my chair at work one day, you know. [laughs] Economists, we don’t retire, we just fall out of our chair one day. But I hope to continue to mentor, and, I hope that I’ve been a great help to them.

Hasenstab: You’ve touched upon this a little bit, but what hardships and challenges have you faced as a woman in the field of economics?

Zentner: Well, I think, you know, that can be many podcasts. I think that with each generation, as we think things have gotten easier in the world of finance, many things stay the same, and some of it is because, regardless of what kind of business you’re in, there can be personal biases that are difficult to overcome. So, for instance, a woman can go into a meeting and say the same exact thing a man does, but it’s heard completely differently. And so being in management meetings, I have noticed at times—and my mentors, when they were trying to prepare me for the world of finance, also noted that there were times that when asked about the positive aspects of a woman’s work when reviewing the work of different people up for promotion, the word “aggressive” was used and it was taken as a negative viewpoint of that person, but when the man was described as having a trait of being aggressive, it was viewed as being quite positive, you know, on par with being a go-getter. And so my takeaway from that is that, in some ways, it’s almost insurmountable to overcome personal biases, but what you can do is study very closely how you’re being heard by others and how you can change what you’re saying and how you’re characterizing things and what you’re doing so that you’re sure that they’re hearing it correctly.

And so I developed ways early on in my career to pass along feedback and get that, “Hey, look at me, look what I did,” moment, but in a very passive, almost imperceptible way.

So, for instance, a client, internal or external, sending me an email saying, “You helped last week with this, and it was wonderful. It was such a great help. It helped us make some important decisions in our business process.”

And I would write back and say, “Thank you so much for the feedback, and—wink, wink—I certainly wouldn’t mind if that somehow made it to the ears of my boss.”

And you can’t believe how quickly people will turn around then and separately send an email to that boss and give those compliments. Now I’ve done the patting myself on the back, but I’ve done it in a way that made me more comfortable and that my boss was probably more receptive to.

Hasenstab: Why do you think it’s important to have women and other minorities or underrepresented groups in the field of economics?

Zentner: Well, I think we could broaden that out to say any field would benefit from diversity. It just shows that when you have diverse views, diverse backgrounds, diverse debates going on in the room, it makes for a better company, it makes for better board dynamics, it makes for better decision-making. It’s one reason why on the Federal Reserve Board, why it’s always important that the Board of Governors maintain diversity. And I don’t just mean race and ethnic backgrounds. A diversity of views in terms of the levels of educational attainment and where that education was received, and maybe you have some coming from a business background and some coming from the world of academia.

It’s the same thing that I look for in terms of a dynamic on my team. I have an odd number on my team. There are five of us, and so at any given time, either we’re three-two women to men or we’re a two-three, and because it’s an odd number, I can’t split one of those in half and get it even. But I’m telling you it’s critical, in my view, on my team to have at least two of us women on the team because we come at a problem in a different way. We approach it in a different way. We tend to be more inclusive of others’ views when we debate and think about a topic. You know, if you look at the field of academia and just look at the area of concentration of women versus in men in terms of the areas they like to study, it can be very different. And so I think that we do ourselves a disservice by not paying attention to diversity in any of our group dynamics.

For us in the field of finance, where I think we can make inroads and where I think we are falling short is that Wall Street firms tend to recruit from a particular set of schools, and so what you’re going to do is you’re going to get a pipeline of new analysts coming in—and particularly if we focus just on economics—that have all studied with the similar professors at the similar schools over the years, and it’s a certain doctrine that’s taught at those particular universities, and I really think we do ourselves a disservice by not moving out of that mold, growing across the country and recruiting across all types of schools, size, shape, form. You know, I’m a graduate of University of Colorado. Morgan Stanley would have never reached out to me to pull me into their analyst pipeline. Luckily, I found this wonderful company by moving up through the ranks and moving on to Wall Street and moving through other firms and then finding my home at Morgan Stanley, but if I were to put myself in the shoes of analysts we recruit today, I would not have made it to Morgan Stanley. I would not have been pulled in that way, and wouldn’t they have lost out on such a brilliant mind, if I do say so myself? [laughs]

Hasenstab: Absolutely. You talked about how you think it’s important to recruit women to the field. Is there anything that you can do or you would do to help draw more women into the field?

Zentner: I mentor at all ages, and so I start at my friend’s elementary school, my niece’s elementary school or when she was in junior high or high school. I go out and try to speak at those schools and first start teaching that economics is fun. Believe it or not, it’s fun. And I hope I make it fun and I hope I make it understandable for people, because that’s the niche that I believe that I was able to create for myself, that I explain economics in a way—I tell myself if I explain it in a way that my mother-in-law can understand at the dinner table on a Friday night, then I’ve done my job well.

And I think I present it to kids starting at that young of an age as being just a simple choice between resources that you’re given. “Hey, when you go to shop with your mom at the grocery store, if she were to give you $5 and you see this toy that costs almost that whole $5 or you could go into the candy aisle—,” remember I’m talking to a child here, “—and buy three candy bars with it, what are you going to buy?” and then seeing how they work through that choice and, interestingly, what they come up with. And I think that gets the wheels spinning very early on.

And then I take it beyond that to getting at them in college. I feel like it’s my personal responsibility to turn as many women toward the field of economics—and whether they go on and study finance after that and aren’t pure economists, I don’t care. I’ve gotten them a good base. And so I do that in the college. I try to get them into important organizations for us like the National Association for Business Economics, which is our nation’s largest membership group for practicing economists, because building that network as early as possible is important, not to mention that the student membership is pretty cheap. [laughs]

Hasenstab: How does your gender shape your work?

Zentner: Very deeply. Very deeply. Again, going back to the State of Texas when I started forecasting with my first mentor and chief economist, we were doing important study then on the incidents of taxes, so the tax burden, looking at various taxes in the state of Texas and how is that impacting households at different income levels, and that right away, I think, set my channel for the rest of my career. I’m a good macroeconomist, so I cover everything, but I love the consumer. And this is going to be an extraordinarily biased statement, but I feel like women—and, again, another gross generalization. We’re full of those today. Women, being the primary shoppers in the household, being the primary caregivers in the household. In many cases, in mine growing up, my mother was the primary bill payer in the household, I feel like I understand the average household behavior and the average consumer much better than my male counterpart. I also notice that I don’t know of that many economists that are male that consider themselves a consumer economist, whereas coming up through the ranks in my career, I have always considered myself the consumer economist, consumer-focused, and because it speaks to me very personally, and I feel like just being a woman and growing up the way women do and the experiences that I’ve had just predetermines that I’m going to be a good consumer economist.

Hasenstab: Tell me what message you’d like to send to young women considering studying economics.

Zentner: You can’t go wrong. If they’re considering studying economics, you really cannot go wrong, because, again, whether you choose to pursue a career in economics or you’re just using economics as a good jumping-off point, economics is basically understanding how the world works around you, and so employers really value seeing that undergraduate degree in economics, regardless of whether you’re going to be a pure economist or not. You cannot go wrong with a degree in economics.

Hasenstab: That’s a great message. Going back to your college economics classroom when you realized this was a subject you were really interested in, were you a minority in that room? Were there many other female students in the room with you? Did you notice that? Did that affect you?

Zentner: So this is in the early 1990s, so it was quite some time ago. That was an undergraduate course, and it was a course that was required as a core curriculum for many degrees, and so you look around the classroom and there were plenty of women in there, women all over. Where we have issues with retaining women in economics is as you move further up the chain of education, and also as you move further up, the chain of command in terms of their careers. So by the time I went into graduate school, there were five of us, five of us in the program. It’s just a sea of men and few women. Now, I know that, over time, those ranks have grown, but we’re still grossly underrepresented in the field. Now, to be fair—and this is where I’m going to put my statistician hat on—it is true that the number of women in economics have been dwindling inexplicably. But I also look at the number of women pursuing statistics and mathematics, which has really come to dominate even the field of economics, and so I wonder if we’re not seeing some share-taking in terms of those degrees versus economics.

And a good example of this is when I was searching for my first job, right, first and foremost, they wanted a degrees in economics. You’re an economist. Today when I’m looking at a résumé to bring on a young person onto my team, economics does not necessarily need to be the first degree that they have. They could have a degree in statistics, and I just see that they’ve taken a good deal of higher-level macroeconomics and microeconomics courses. They may not even have a second degree that is economics. So I wonder how much that’s skewing the statistics there.

I’ll note that outside of the classroom where women are grossly underrepresented, we are having an issue—and this is from my perspective of being on Wall Street in a financial firm—of bringing in plenty of women into finance, whether they’re, you know, economists coming onto my team or just coming into the firm in finance. We have pretty much a 50/50 split in our analyst class, and we strive to get that split, but there’s more attrition on the female side than the male side as they move up the ranks. Now, some of that is women leaving to have children and then either coming back or not coming back to the field after that. But that is where I think more study is needed, is why can we start out with 50/50 levels of recruitment? But the men continue to move up the ranks, but the women we see start to drop off in numbers as they move up the ranks. I think it’s still an issue in the field.

Hasenstab: You mentioned there were five women out of how many in your graduate course?

Zentner: There were about 100 in the graduate program.

Hasenstab: So about 5 percent of the students?

Zentner: Yeah, which probably sounds about right for the early 1990s.

Hasenstab: But you think it’s improved since then?

Zentner: It has improved since then, but, of course, again, I talked about going through the ranks in a financial firm. It’s the same thing for academia, right? You see plenty of women in the bachelor’s programs, fewer women in the master’s program, then even fewer in Ph.D. programs, and so it just really starts to dwindle as get into the Ph.D. levels, and you can see that in the industry overall. Whether you look at local, state, or federal government or you look in the private sector and you just count the number of Ph.D.’s out there, much fewer women. Now, maybe, like me, they just simply didn’t feel the need to go on to a Ph.D. I stopped at my master’s degree. There’s so many moving parts and pieces that, you know, oftentimes I just can’t explain, because there’s so many difficult choices that women have to make throughout their lives that might weigh on the decision or compete with the decision to go on and get a Ph.D.

Hasenstab: You’ve spoken a lot about your team at Morgan Stanley. Can you give us a general sense of the work you’re doing on your team there?

Zentner: Yeah. I think it’s extremely interesting work, and I think the wonderful thing about our team or the way I run our team is that there’s a lot of freedom of thought and we all come to the table with ideas from me at the managing director level all the way down to our analyst on the team. Everyone’s equal, their ideas are equal, and I think it gives us a much more robust research pipeline.

So, for instance, some of the proudest work that we’ve done under my watch is back in 2014 we put out a massive paper on income and inequality and looked at it in three parts: historically, then the second part was how it had grown just since the financial crisis, and then the third part was things that we should look for to help close that gap on income inequality. We had a wage focus in there, a jobs focus in there, and if you were to lift those lower income groups and provide more disposable income for them, where do they spend—now, that’s interesting, because that last tidbit was our way of translating a very academic, rigorous, massive exercise into something that your Wall Street investor could digest. The unfortunate thing is that the very first headline once we released it from The Wall Street Journal was “Income and Equality is Growing: Morgan Stanley Tells You How to Make Money Off of It.” And that’s not the, that’s not the headline we wanted, but it was extremely rewarding work, and I suppose no surprise there. It had a household and consumer focus, which, of course, has been a career focus for me.

Last year, we did a deep exercise on productivity. Where were we seeing it pick up? Where were firms doing capital deepening? Which firms were doing the capital deepening? We dug into our database of our quantitative equity strategies in order to build it up company by company, which is actually unusual for economists, right. So we weren’t just working with the macro data, the government data. This goes into the way we’ve embraced big data on the team, which is—still I would consider it a budding field of economics pulling in all of that big data into our processes of forecasting and looking at the economy.

This hopefully will shed light on the type of research that can be done at private Wall Street firms. It’s not just all about plugging and chugging quick reports to tell investors where to put their money. We can do the big, rigorous, academic exercises, and do it in a way that’s translatable for the investor, you know, just as much as the field of academia, and it’s very rewarding work.

Hasenstab: Is there anything else you’d like to tell me about being a woman in the field of economics?

Zentner: Yeah, maybe one last thing. I’ve thought about this a lot. You know, we focus so much—and a lot of this podcast was focused on getting greater female participation in the field of economics, understanding how we’re different than our male counterparts, almost trying to figure out how can we overcome impediments that appear to still be in place for women in the field of finance. But there are some positive things out there that I do see and that I do gratuitously embrace for women, and that is that there is such extreme focus on the part of firms to show that they are being diverse, and part of this is being forced by responsible investing with activist investors forcing more diversity on boards, But particularly just focusing on the field of finance, we’ve become extremely competitive in trying to recruit women, retain women, move women up the ranks, and so I want to recognize that companies are trying, particularly Morgan Stanley, and I think we’re doing a fantastic job of trying to overcome some of the impediments to recruiting and retaining women.

And as a woman in finance, I have benefited from that focus. The firm very easily showcases the work that I do not just because I happen to be a great practitioner of economics, because I don’t ever want to try to downplay it and imply that I’ve gotten somewhere because someone just wants to show a woman is in a high position, right? I am the best economist out there on Wall Street. There, I’ve said it. But at the same time, I am also benefiting from a focus to promote women and have women in high positions within the firm, and so I am gratuitously happy for that benefit at the same time that we try to work through the lingering impediments.

Hasenstab: Well, this has been so great. Thank you so much for your time today, Ellen.

Zentner: You bet. Thanks, Maria.

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