Women in Economics: Loretta Mester

Maria Hasenstab: Hello. 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 Loretta Mester, president of the Federal Reserve Bank of Cleveland. President Mester, thank you for speaking with me today.

Loretta Mester: Oh, thanks for having me.

Hasenstab: The percentage of women declines every step through academic and career advances in economics. Can you tell me what it’s like to be a leader in this heavily male-dominated field?

Mester: So, honestly, I don’t really conceive myself as a woman in a field of economics. I happen to be an economist who is a woman, but I don’t, I've never really felt that being a woman made me different than my colleagues. And, maybe I’m naïve about it and, as you go up the ranks, maybe you can then give back a little bit. That’s why I’m kind of glad to be part of your podcast because I have a chance now to maybe influence other women to go into the field, because, as you say, it is very sparse in terms of women in the field. And I think that’s a detriment to the field, and also, it’s a great career. So, I’m trying to encourage women to go into it so that they can actually experience what I’ve experienced.

Hasenstab: Absolutely. Now, you’re the sixth woman to be named president of a Federal Reserve Bank. What’s that like?

Mester: Okay. Well, I’m glad someone’s counting because I wasn’t counting myself. I know that Cleveland has a tradition of women, so that’s kind of neat to be in a bank that, sort of, has championed women as heads of, heads of the organization. But, as I said, I think being a leader of a Fed puts you in a position that may be influencing other people to go into the field, and I think that’s very important. I have to say, given all we’ve learned about society over the past year or two, the Fed is a very special place because I’ve never felt any of the things that we’re reading about in the newspaper here. I think everyone has been very collegial. It really is a place of meritocracy that people’s ideas are listened to. I’ve always felt that, and I’ve worked with women and I’ve worked with men throughout my career, and I’ve always felt that this place is a very special place.

That said, we know that there are problems, and we know that economics, as a field, doesn’t really have a lot of women. And, in fact, what’s disappointing is that even the STEM fields, they have more women representation and more under-represented minority representation than economics, and that’s kind of interesting given that economics, I think, should attract people from all walks of life just because it has, can influence outcomes. Right? We can influence society. There’s a lot of interesting policy issues, educational issues, and it’s a broad field, health economics, labor market economics, macroeconomics. So, you’d think that it would be attractive to a broad swath of the population, and yet, we’re under-represented in the field. And so, that’s something you have to think about. Well, why is that and can we do something about it?

Hasenstab: You mentioned that Cleveland has a strong history of female leaders, and Karen Horn became the first women to serve as a Federal Reserve president in 1982, and Sandra—is it Pianalto?—

Mester: Pianalto, yes.

Hasenstab: … served as president beginning in 2003. And so, you, you spoke to that, but that’s really interesting that Cleveland has that strong history of female leaders.

Mester: I hope that I wasn’t chosen because I was a woman, and I always think that’s very interesting. Beth Mooney, who is head of KeyBank, who served on our Board and is now our representative on the Federal Advisory Council, she was named Top Woman in Banking, and it was funny because I remember introducing her and I’d say, “Now, she’s just named that, but of course, we know she’s the top person in banking.” And yet, two years later, I think she became, sort of, the top person in banking. So again, we’re in this sort of transition, I think. Like, we are identified as women in the field, and yet, we really want to be known as good in the field regardless of whether we’re a woman or a man. So, I, it’s sort of like a yin and yang kind of thing. You feel like you want to be recognized just as, you know, a good economist or a good leader or good banker, and yet, we always have that appellation of good woman banker or good, you know, woman Fed president.

That said, you know, I’ve learned that you can inspire people, and there’s a couple of examples in my career. I got a letter from someone that I went to high school with, which I had not stayed in touch with at all—out of the blue. He sent me an e-mail, and he basically said, you know, my daughter, who is in middle school, had math classes and she was like, “Oh, Dad, why do I want to take math?” You know? “Tell me one person that you know, woman, who’s done well in taking math? Like, why do I have to take it?” So, he was, like, he scratched his head and he was like, “Yeah. I wonder who would be a good person, role model?” And, he was thinking back to his days in high school math and middle school math, and then he remembered me. So, he said—because, most of the people he thought of were men, men, men, and then my name came to the head of his. And, he looked online to see whether what happened to me and he found that I was this. So, he goes, he writes this beautiful letter. He just said, I was able to go to her and say, “Look. Here's someone who succeeded in a math field.” And, he, and he was like, great, you know. And that made her want to go on and do math.

So, you have unexpected influence when you do get to a position like I am, and I take that very seriously. I want to inspire people to go on. We’re in a field that’s underrepresented, but we can change that. And, people, if they knew the breadth of things that you could study when you go into economics and how you can influence policy on a lot of dimensions, I think they would want to go into the field. So, I’m hoping that your podcast will actually attract people to economics.

Hasenstab: I'm hoping that, too. We all are. Did you know in high school, was math one of your strong subjects? Were you attracted to it at that age?

Mester: Yeah. So, I always wanted to do math. I just liked it from the beginning. I mean, I always, all through my elementary school, middle school, high school. I was in a high school that offered calculus. Back in the day, you know, public schools didn't really have a lot of extra courses, but my public school did have an advanced math sequence. So, I was in that, and I really liked it. And then, when I went to college, I was going to do math, and then, I kind of lucked into economics because it was a time I was going in, there was Watergate hearings and all that stuff, so I kind of was interested in that. And then, economics was actually easy to add as a major because it didn’t really have that many course requirements. So, I added it and did a double major in mathematics and economics. So, that’s kind of how I lucked into it.

Hasenstab: And that’s when you were at Barnard College?

Mester: Yes.

Hasenstab: And, you’ve just talked about how you lucked into economics. Do you think your experience or interest in economics has been shaped by your gender?

Mester: I honestly don't think so. I really think that I was attracted to math. Now, in fact, I didn’t even apply to a Ph.D. program in economics. Again, it was like, lucked, lucked into it. I applied in mathematics, and one of the places I applied was Princeton. And, I got letters from two professors from Princeton saying, hey, come here and do economics because we are a very mathematical/economics program. We’d love to have you here. And so, you know, I thought about it and I thought, you know, math, especially the kind of math I wanted to do, a lot of the problems in it had been solved. So, it would have been a hard field for me to do. And so I ended up going to Princeton and doing economics. Because, it was, again, it was one of these just fortuitous things that they wrote to me and then it kind of changed my mind, got me thinking differently. And then, I went into economics, and I’m really happy I did. So, in that sense, I, I’ve never, like, looked at it from a gender perspective, although I know that we’re underrepresented. I’ve never really felt that way, and I say a lot of the role models I had were not necessarily women. Like, there’s people who help you all through your career, and they can be male or female. And, you know, my advice to people is just, you know, if people offer help, accept it, be open, and listen to what they’re saying. You don’t have to agree to everything that they advise. But, you know, advice is always good. I mean, there’s free disposal of advice. People tell you things. You don’t have to follow it, but it can help influence how you think about things.

Hasenstab: If a professor was writing to you from Princeton and offering you here’s why you should study economics, then that’s not a bad position for you to be in. Did that professor end up being a teacher or a mentor?

Mester: Yeah. So, Hugo Sonnenschein was one of the letter writers, and at Princeton at the time, the theory sequence, when you first get there, the microeconomic theory sequence, was sort of the, the trial you had to go through. So, all the incoming students had to, sort of, go through the sequence, and so, it was a very bonding kind of thing because his courses were hard and his problem sets were notoriously hard. And so, yeah, he was one of the people that you first saw when you got to Princeton and everyone went through it. So, all the first-year students kind of coalesced around making sure that they had all their problem sets done and got through his courses. So, yeah, I’ve stayed in ... I haven’t stayed in touch with him. My husband, my husband and I met at Princeton. He was also a grad student, and, and Hugo was one of his advisors, so, kind of, kept sort of in the circle, so.

Hasenstab: Are there any other mentors or people who inspired you throughout your career that you’d like to talk about?

Mester: Yeah. I mean, there’s so many of them. I mean, even within the Fed, I was at the Philadelphia Fed for much of my career before coming to Cleveland, and the visiting scholar program, you got to meet so many people, professors who would come in from other universities, and you end up coauthoring with them. So, there are just so many people that you develop relationships with. And, my coauthors are certainly people I've learned from, Mitchell Berlin, who's at the Philadelphia Fed. He runs a banking group within the research department there. We’ve had a very good coauthor relationship. Joe Hughes, from Rutgers University, very good coauthorship. So, again, you have these relationships that you develop over a long time through the intellectual conduit of what you’re doing, and that’s what’s great about the field is just there’s so many good ideas and new ideas and ways of thinking about things. So, that’s why I’m kind of—I hope people who are interested in any aspect of economics check it out because it is a great, great field. I recently gave a speech, and I was looking into some of the results on if you major in economics. You actually benefit because, you can go into so many different occupations and you get, and end up with higher salaries, generally. There’s a premium for an economics degree, and I don’t whether everyone knows that, but that’s something also that, you can have a pretty good life and an interesting career by doing economics.

Hasenstab: Right. Being an economist is just one path after you—

Mester: Exactly.

Hasenstab: … get that degree. It can just make your resume more robust—

Mester: Yeah.

Hasenstab: …and take you in a lot of directions.

Mester: Exactly. And, I think it’s because of the things you learn in economics. You learn how to you make decisions under uncertainty. I mean, that’s one of the things. What are the trade-offs that you have to make when you’re making decisions? The concept of opportunity cost, that’s a universal concept that can be used in any kind of field, and I think that’s why economists are pretty well-prepared when they come out of—if you go in an undergraduate degree, you’re pretty well-prepared for a lot of different fields and occupations, and then, you can decide whether you want to go in economics or do something else.

Hasenstab: That’s great. You know, do you have any struggles that you faced throughout your academic or professional career that you’d want to talk about?

Mester: I think this, the whole publish or perish kind of. That’s something that it does, you have to persevere. You have to be able to navigate criticism. You have to be able to navigate people saying here’s weaknesses in your work and not get discouraged, and I’ve taught classes, and that’s something that you have to teach people—You have to be kind of strong and stand up to that and know that it’s a process you go through. It makes the work better in the end, but that’s a struggle for people and people don’t necessarily like that. That could be part of why there may be—That atmosphere, it’s an aggressive field, I think, economics, especially like the Ph.D. level, and maybe that’s also kind of—People may self-select out of that, and, sort of figuring out, like, how do we change maybe that so it’s a little more welcoming to a broader swath. I mean, from the Fed’s point of view, I think it’s very important that we have a diverse talent pool, and, in particular, when we’re thinking about policy, we’re making policy that affect all people. And so, it’s really important that all people be represented in some way in how we make policy.

So, for the Fed itself, and I certainly, in this bank, we’re championing making sure that we have diversity inclusion opportunity. I always like to put opportunity with it because what we're trying to do is give everyone opportunities to excel, and we want the broadest swath of people so that we have their ideas and they can contribute. And so, how do you do that? In the field of economics, the same thing, you know. We want the field of economics not to only look at very narrow topics. We want the broadest people involved in economics as we can because that makes the field more broad. You know, we ask different questions. I might ask a different question than you. Joe might ask a different question than Mary, and so, we get a much better field if we are much more open and inclusive. And so, how do you get economics to be viewed that way?

And then, on the other hand, we want people to understand, like, I’m all for people choosing their own field, but they need to have a context. They need to know what they’re choosing. So, it’s really incumbent on us to make sure that people understand economics is actually very much, a broad field. Right? There’s so many things you can do with it and so many different topics you can study using the tools that economists have developed.

Hasenstab: You’ve just touched upon this, but I’ll ask it again. Why are you encouraging women and underrepresented minorities to study economics?

Mester: Yeah. So, you know, let me go a little further. I really think that it’s a great career. Okay. So, I do think that there’s many things you can do with it, but I also think it’s important for the field to reflect the people that it’s influencing. Economics is a social science. A lot of economists become policy, either advocating policies, not necessarily only macroeconomic policy or monetary policy, right, but fiscal policies, healthcare policy. So, it’s important that we have representation from all different aspects, and I think we get better policy work. There’s a lot of research that suggests that, if you have diverse groups, you get better outcomes. So, in other words, you know, if people are willing to share their ideas, you actually get better decisions. And, on the other hand, there’s also research that says people don’t really like diversity. You know, it’s tougher, right? Because, if you don’t see—everyone comes at it at a different perspective. That’s a tougher environment, but you end up with better outcomes, and, you know, part of it may be that you feel like you have to make better arguments because you’re trying to convince someone from a different viewpoint of your view. But, whatever the case may be, you actually get better outcomes. So, one of the reasons I care about getting people involved in the field is I think we’re going to get better policy outcomes if we do that, and I think the field itself, will evolve and, you know, be more vibrant and actually develop in better ways because we’ll have more people asking different questions, approaching answers differently. It’s just a much more vibrant field. We don't want the field to stagnate and only look at things in a very narrow way.

Hasenstab: Yeah. That makes a lot of sense. You mentioned earlier teaching some classes. Can you tell me maybe a little bit about your experience teaching? I think a lot of our listeners may know you as a Federal Reserve president and not think that you might have some of that experience.

Mester: Yeah. So, I’m an adjunct at the Wharton School. So, again, while I was in Philadelphia, I had the opportunity to teach a banking course in the finance department there, and it was an interesting course because it mixed undergraduates and MBA students together. It was so interesting because the undergrads were all worried about their grades and worried that MBAs in there would make the grade decision, and the MBAs were worried that young undergraduates, you know, they might skew things. So, they all wanted to be graded separately, which of course I obliged. But, it was a great course because some of the MBAs had experience in banks so they could bring that to the class, and then, some of the undergrads were more technically able, and so, they could bring that to the class. So, it was a very good experience having to kind of get people to interact and sort of contribute to the class. And, I have a great respect for professors because it is a hard thing to do is to get sort of a good vibe going on in your classroom so that people are interested in learning. I think that’s a hard thing, and I really respect that.

Hasenstab: Yeah. It sounds like a really interesting class. Is there anything else about the topic women in economics that you’d like to discuss that I haven't asked about today?

Mester: As a senior person in the profession, I think I need to take on the burden of trying to get people involved in economics and making sure that people feel included in economics. As a young person, I wouldn’t advise them to take that on. I would advise them to, like, be the best economist you can be. Do the things that you need to do to learn economics: Focus on the field. Focus on being an expert in whatever aspect of economics you want to go into. Work really hard. There will be time for you to be the role model later on, but right now, if you’re coming into the field, you know, it’s a great field. Work hard. Work on your research. If you’re doing policy analysis, do the best job you can do. And, I think that will help more women enter the field. Right? The more people succeed in the profession, the better it’ll be for the next generation coming on. But, I would focus on that and not focus so much on, ooh, I’m a woman in the field of economics. That’s true and it’s important, but I would focus on the subject matter and why you’re in it and what’s attractive about it? You know, it’s because of the questions that we ask and the influence we can have on some policy outcomes and focus on that. Because one thing you’ll find out is that I think, if you’re good in your field, you can succeed, and maybe if you’re a woman, you have to be even better in your field to succeed. But, that’s how, that’s your avenue, and hopefully, some of us that have gotten to a position of people asking us to do podcasts, who would have thought that? We can influence more people to go in. And, the more, I think, we diversify in terms of who’s in the field, the better it’ll be for all of us.

Hasenstab: Well, President Mester, I want to thank you so much for your time today. Thank you for sharing your story in your own words. To hear more Women in Economics podcasts, visit stlouisfed.org/womeninecon. That's one word, stlouisfed.org/womeninecon. Thank you, President Mester.

Mester: Thank you very much.