Women in Economics: Isabel Schnabel

Maria Hasenstab: Welcome to the St. Louis Fed’s Women in Economics Podcast Series where we interview women who are making their marks in the field of economics.

I’m your host, Maria Hasenstab. In this episode, we speak with Isabel Schnabel, member of the Executive Board of the European Central Bank. Isabel, thanks for joining us today.

Isabel Schnabel: Thank you so much for having me, Maria.

Hasenstab: We know that you’re a powerhouse in the world of economics. And now this podcast is a chance to talk about you, your journey into the field of economics, and what you might want people to know about working in the field.

You’re a member of the Executive Board of the European Central Bank, which prepares governing council meetings, implements monetary policy for the Euro area in accordance with the guidelines specified and decisions taken by the Governing Council, and manages the day-to-day business of the ECB. You’ve been at the ECB since 2020, and you’re responsible for market operations, research and statistics. Tell us a little bit about your role and your work.

Schnabel: Thank you so much for this question. As you said, I joined the ECB in 2020, basically just before the pandemic started. The ECB is responsible, together with the other national central banks which are part of the Euro system, for running monetary policy in the euro area, and the ECB, you could say, is at the core of all of this. We have the 20 national central banks, and you have the ECB at the core, and the ECB is run by an Executive Board which consists of six people. I am one of them.

As you mentioned, I have certain responsibilities, and an important one is market operations. What we’re doing there is all the monetary policy implementation, so we are responsible for our asset purchase programs. And then I’m also dealing with the lending operations to the banks – all these things are done in market operations.

Then another very important area is statistics. We are dealing with data production and also data dissemination. We are also working on improving our data portal, and for that, of course, we are looking very closely at what the St. Louis Fed is doing with the fantastic FRED portal. And I’m also responsible for research. We have a great group of researchers who are writing excellent papers and publishing them in academic journals. And, everything that we do in the Governing Council, all the monetary policy decisions, is very much based on academic research.

Hasenstab: Well, that’s awesome, and thanks for that shoutout to FRED. I know you have a FRED sweatshirt, so we hope you wear it and enjoy.

Schnabel: Indeed.

Hasenstab: So you are on leave from the University of Bonn where you’re a professor of financial economics, and you’ve been there since 2015. Tell me about your role teaching economics, how you got into that, and why you enjoy it.

Schnabel: I think for me, being a professor was always kind of the dream job because you have these two parts of your job. You have the research, and you have the teaching, and I must say I always enjoyed that enormously.

What I love about research is that you can think about new theories you can test them on the basis of data, and you can learn something about the world. I always found that fascinating, and I’m still enjoying that a lot.

And the other aspect, which is just as important, is teaching, and I was always enthusiastic about teaching.

Teaching is not just about telling other people how things work, but you also learn a lot while you are teaching because, in order to be a good teacher, you need to speak the language of the person who is in front of you. It makes a big difference whether you talk to a first-year bachelor student or you talk to a PhD student, and you have to adjust your style of teaching to that. And I would say the hardest part is actually teaching people who are real beginners because then you have to learn to express yourself in very simple terms, and for that you have to understand those things pretty well. I always learned a lot when I was teaching, and I also learned what I had not fully understood because I was not able to express it in simple terms.

Hasenstab: You’ve raised some really important points about teaching. So I wanted to back up here a bit and talk about your education when you were on the other side of the classroom. You have a PhD in economics from the University of Mannheim. How did you choose to study economics? Were you always interested in the topic, or was there an inspiring professor or mentor?

Schnabel: I was actually one of those who came closer to graduation, and I did not really know what I could do. I was a very good student at school, so I was basically good in everything, but there was not this one thing that I was really excited about. I was always pretty good in math, but I was a bit undecided. And then what I did is I started an apprenticeship at a bank. These are two-year programs that used to be quite common in Germany, and it would happen before you go to university. Some days of the week you would work at the bank, and then you would also go to school. And what happened there was that, at that school, which was not at a very high level I must admit, I had this fantastic teacher. And he was teaching also economics, and this is when I got really excited about economics. He was enthusiastic about economics, and he made me enthusiastic about economics. So then I knew precisely that this was the subject that I wanted to study, and I must say I never had any regrets on that.

Hasenstab: That is so awesome and really speaks to the power that a teacher can have in a student’s life. Do you remember his name?

Schnabel: Yes, I do. He was called Mr. Kuhlbusch and, actually, it was quite funny because, one day, there was a teacher from that same school who was asking me to send a little message to the school because he was so proud that I had once been at that school, to write a little message for the internet. And then I asked him whether this teacher was still alive, and then he actually sent me the contact. That was quite nice.

Hasenstab: Oh, that’s so awesome.

Before you were at the University of Bonn, you served as a member of the German Council of Economic Experts, and you were a cochair for the Franco-German Council of Economic Experts in 2019, so a lot of really important work there. Tell us about serving on those councils, what you learned in those opportunities, and perhaps how they prepared you for where you are today.

Schnabel: Actually, that was another very important step in my career. I came from academic research, and then I moved a bit into policy consulting. And, of course, that is a different world because when you write papers—I mean, the papers I wrote always also had some kind of policy implications because I was always interested in things that really mattered for the world and for the economy and so but there, you need to give advice, and so what you say may, in the end, actually be implemented, and so you somehow have an even greater degree of responsibility.

And when you start new things, I always find it very exciting because you enter a very steep learning curve. Because you come there, and initially there are many things you don’t know, and that was also the case when I came there because I was very specialized in financial economics, banking, and so on. But there, I had to discuss everything that concerned the German economy, and so I had to learn a lot. I also learned to deal with the government, which is also something that one needs to get used to. How to talk to the government, how to talk to the press because, suddenly, people of course were much more interested in what I had to say, and that was very exciting.

You have to learn a lot about institutions which, of course, matter a great deal when discussing economic policy. But at the same time, I could make a great use of all the knowledge that I had gained over my academic career, so it was this perfect mixture of the academic work on the one hand and then the very practical consulting work on the other hand. And I think you were right in saying that this was an important preparation for my current job because, at that point, I was still not taking decisions, but I was more helping others to take decisions. And then the next step was moving to the ECB where I’m the one who’s actually taking decisions which is still another step.

Hasenstab: Yes. And you’ve detailed here now in a couple answers about how important it is how you’re describing the work you’re doing, economics, how you’re teaching, how your words are so powerful. I think that’s so important.

You recently spoke at the St. Louis Fed’s Homer Jones Memorial Lecture where you gave a speech titled “The Last Mile.” And in that speech, you described how the last mile of a long-distance race may be the most challenging time of the race even with the finish line in sight, and you’ve likened that scenario to inflation, how the disinflation process, as you continue to approach your goal, it may feel even more challenging. To me, that scenario is so interesting. We’re seeing economic scenarios, comparisons to all parts of our lives, right? Is that how you view the world?

Schnabel: Well, I think economics is just a very important part of our life. If you think about it, almost everything we do can be described in economic terms, and economics matters more for people’s life, I think, than many realize. And this is also what I love about this subject, which is that I’m working on something that really matters for everybody’s life, and it’s really important for people’s wellbeing. The kind of decisions we take make a big difference, and this is what is so exciting about economics.

Hasenstab: Absolutely. This podcast series launched back in 2018 as a way of lifting up and inspiring women to consider economics as a field of study and an opportunity to pursue a career. Why do you think it’s important for more women and members of underrepresented minorities to enter the field of economics?

Schnabel: We discussed before how relevant economics is and how far-reaching economic decisions are, and therefore I believe it’s very important that also in the field of economics, the society is represented in a balanced way, and it cannot be that all these very important decisions are only taken by part of the population. And so I think diversity, in general, matters, it’s not only about gender. Gender is an important component, but diversity matters in order to be representative of a society as a whole. But, of course, also because we know that diversity of thought matters, and there are numerous studies showing that if there is diversity, that better decisions are taken. I deeply believe that diversity improves economic decision-making.

Maybe one other aspect which is that—and again, there are studies on that—one can see that women tend to have a different focus. They focus on different aspects of economics, so it could be that they are more concerned, at least on average, about topics like inequality or climate change. And we know that these are very important topics. But this is not to say that we not also need more women in fields that are traditionally more male-dominated like macroeconomics and finance and, of course, also central banking. I’m also very much supportive to have more women there. And as you know, in our Governing Council, there’s just the President, Christine Lagarde, and me as women, and there are 24 men, so I would say that is not a good balance. We should improve on that, and I hope that is going to change.

Hasenstab: Absolutely. And I like when you said that diversity of thought matters. When you just mentioned you and Christine in a room with 24 other men, how does that feel? Are you aware of it? Does it affect how or what you might say? Do you feel almost an opportunity to be more vocal to make sure you’re representing your diversity of thought?

Schnabel: Let me say that it makes a big difference whether there is one woman or two women. That already makes a big difference, when there’s already another woman. And, of course, if it’s the woman who’s running the show, it makes an even bigger difference. I think that’s one of the qualities of Christine Lagarde, that she has changed the tone of the discussion in this very male-dominated field, and I very much appreciate that.

In many instances in the past, I was the only woman in the room.

That was also the case in the German Council of Economic Experts, and it happened to me many, many times. And I do think that this has an impact on the style of the conversation, and I must say that I feel more at ease when there are more women. But this is not to say that I do not love working with men as well. I have an excellent relationship to my male colleagues in the Governing Council, and I really like working with them. But I do think the atmosphere does change a bit when the share of women is higher.

Hasenstab: Yeah. Absolutely. Thank you for that.

Is there anything else you’d like to discuss today about women in economics, any other things you want to share?

Schnabel: Maybe one point is the importance of mentorship. So that’s something that is often underestimated, how important it is that one has someone who is supportive in one’s career. And I must say I was extremely lucky that I had a PhD advisor, Martin Hellwig, who is a very renowned economist but who’s also an extremely nice person. And he supported me throughout my career.

There’s maybe one anecdote I would like to tell. I was a first-year PhD student, and he came up to me and he said, “I was invited to this conference. Could you replace me?” And, of course, I said, “Yes, yes, I will.” And then I looked at this conference program, and for me that was so intimidating. It was one of these very small, exclusive conferences where there were only top economists. I was this first-year PhD student, and I was supposed to discuss a paper by Douglas Diamond, who now is a Nobel Prize winner.

And, of course, I was a bit scared I must admit, but the point I wanted to make is that I’m still impressed that Martin Hellwig put this trust into me, that he believed that I could do this. And I think we all need people who trust in us and who believe that we can do that. And my feeling is that this is even more important for women because I’ve often seen that women tend to underestimate themselves, and so they very much need the encouragement of others. I think, also, for those who are more advanced in their careers, it’s very important to give this trust to the younger people, also to the men but especially to the young women who may not be confident enough to pursue a certain career path even though they are perfectly able to do that.

Hasenstab: That was so important what you said there: We all need people who trust in us and believe in us, and that’s awesome that you’ve had that throughout your career. Isabel, thanks so much for sharing your story today.

To hear more from the Women in Economics Podcast Series, visit https://www.stlouisfed.org/timely-topics/women-in-economics. You can also hear Women in Economics on Apple Podcast, Spotify, and wherever you like to listen to podcasts.

Isabel, thanks so much for sharing your story today.

Schnabel: Thank you so much for having me. It was a great pleasure.