Interview: Claudia Sahm

In which we talk about the culture of economics, and even a little about economics!

Macroeconomist Claudia Sahm and I share a PhD advisor (Miles Kimball). We go way back. In the unedited, rollicking interview that follows, Dr. Sahm and I discuss the problems of economics culture, and how to fix them. And we even talk a little about economic policy!

Wow, I always wanted to use the word “rollicking”, and I finally got the chance.


N.S.: So, we’ve known each other for a long time. We had the same PhD advisor (Miles Kimball), and he had me ask you a few questions about a statistical procedure you developed. Then I think you randomly mailed me to talk about my blog back in 2011. Amazing how the time goes by, huh? 

C.S.: Yes, back in 2011 I ventured into the economics blogosphere and found you, along with Tyler Cowen, Brad Delong, Scott Sumner, and many others. All men, sigh. You caught me on a bad day. The first post I read of yours was, “What I learned in econ grad school,” in which you bashed macro and specifically, the grad macro class at Michigan that I was a teaching assistant for. AND Chris House who taught the class and who I very much like. Annoyed I sent you a snippy email. Your reply was basically, “who the heck are you?” and “chill out.” So began our friendship. 

Next time I should’ve met you was the following year when you were on the job market. I came to Michigan to interview candidates for the Federal Reserve Board and talk with students about internship opportunities there. You totally ghosted your one-on-one. I always thought you would’ve added some spice at the Fed, but it’s probably for the best that your opinions went out to the world and didn’t get trapped in the Boardroom. 

N.S.: OMG yes. Me at the Fed would have been...not good. And I didn’t ghost, I just cancelled. ;-)

But OK, fast forward eight years, and it’s you who’s become the big macroeconomics-basher. Your blog post, “Economics is a Disgrace”, blew up the internet for a while and caused a lot of people to sit up and take note of problems in the professional culture of econ -- particularly macro. I’m sure after that, you had to say “Who the heck are you?’ and “Chill out” to a number of critics!

So tell me about how you got from there to here. Did you know about the toxicity of the macroeconomics culture already back in 2012? Or did it take a while to realize what was going on?

C.S.: I am not a “macroeconomics-basher.” I love the field and know we can do more good in the world. To do so, we must clean up our act. I believe in ‘tough love.’

To your question: when did I become convinced that macro had problems? The data points were there from the start, but it took me years to see the problems were systemic not people specific. I heard my first ‘story’ about Larry Summers behaving badly twenty years ago as a research assistant at Brookings. So I knew macro could be a little rough and tumble. But it wasn’t directed at me--I worked for amazing economists there--so it felt more like a clown act than a threat. Throughout my career from Econ 101 to today, I have been largely surrounded by people who share my love of economics and who keep high standards for the work without hurting people. 

Sure, macro is heavy on bravado, but that’s what you get when you have very little data to answer very big questions about the world. I became a macroeconomist because I am convinced that economic policy is so important in the real world, especially in macro. I worked over a decade at the Federal, starting in 2007, right before the financial crisis. My determination to support good policy grew even stronger during my time there, as did my awareness of our shortcomings. I have become convinced that we will never achieve our best policy advice until we clean up our act as a profession. I wrote my “economics is a disgrace” blog post out of anger about the treatment of students and as a vivid wakeup call to the profession. 

Economists are a tough bunch to wake up. Over the past several years, I have tried every way I could think of to light a fire I can think of--doing diversity and inclusion at the Fed before it was ‘sexy’--and more publicly for over three years on my blog and Twitter. I shared my experiences. I shared things I saw. I was nice. I was angry. No one really listened until I named names this summer and destroyed my career in economic policy. Sad that’s what it took. So be it.  

I stand by my blog post.I have receipts, even more than when my post went viral. I knew the problems in economics were real. They were NOT about me. They are about all of us. In my first year at the Board in 2008, I had demoralizing experiences with a handful of senior colleagues, who called my expertise into question and made me question whether I belonged at the Fed. Others said I was doing an amazing job as a newbie. It was hard to know who was right. In my mind, the harassers won out. 

Eventually, that self doubt and the stress of the work, led to a very tough time in my life in 2011. I thought I was done. I lost my health, my marriage, and a lot of time as I was getting back on track. I did get back on track. In fact, by the time, I started my macromom blog in 2017, I was doing great. I had just gotten a promotion. By the time I wrote the “disgrace” post I had the Sahm rule and was doing high-profile work on economic policy. I also knew by then that I was not alone. Many women and men, from all career stages and a range of institutions, had had awful experiences. People like the ones who had made my life miserable at the Fed were everywhere. And people who looked the other way were even more common. The culture of economics failed us all. 

So enough was enough. Early in the summer, after a week of painful mentoring calls, I lost it. Why did people have to devote so much time to putting themselves ‘back together’ again? Why shouldn’t the people hurting others be the ones to put in some time? They have to stop, and the culture of economics has to change. 

In my “disgrace” post, I shared my experiences in vivid detail to get people’s attention. I shared others but in less detail with victims’ names redacted. No one knows their names except for me (and some details are fuzzed). Retaliation is real and they have suffered enough. I wrote my post for them and for the others out there. 

I am not alone in sounding alarm bells. Others have for decades. One recent effort brought numbers to the table: The American Economics Association conducted its first climate survey of economists in the winter of 2018-19. The results are disturbing. For example, HALF of women had experienced discrimination or unfair treatment due to their gender. And HALF of Black economists had similar experiences due to their race. One Black woman economist wrote that, “I would not recommend my own (Black) children to go into this field. It was a mistake for me to choose this field. Had I known that it would be so toxic, I would not have….” Of course, some economists refuse to see the problem. One person in the survey said, “Devoting any time or attention to "diversity" and "inclusion" and "climate" is a ridiculous "politically correct" waste of time in the field of economics.” So yeah, economics has a big problem. 

The American Economics Association has tried over the past three years to address our problems--after A LOT of pushing. We know have a code of professional conduct and a policy on harassment and discrimination. They even have a process to file complaints and they hired an ombudsperson. They have done other things to push change. I have MANY concerns about how the roll out has gone. But even I admit, it’s so much more than I expected to happen. 

N.S.: That econ culture turned me off from day 1 as well, and I didn’t get anywhere near the worst of it. I’ve been thinking for a long while about why it’s so bad, and the best answer I can come up with is that it all comes down to hierarchy. As I see it, economics culture is really fundamentally about hierarchy; the profession is essentially self-judged, no one is checking on it to see whether it’s doing something useful, or threatening to take its resources if it doesn’t deliver. Money and respect just steadily pour in from outside, and the people at the top are able to determine how to allocate those money and resources. So everybody sucks up to the top people, even those who hate and resent them. And that hierarchy allows people to indulge their cruelest instincts by punching down on the people below them in the hierarchy. There are people in any organization who have the impulse to be cruel, but in econ they can get away with it. I see sexism in econ, and other forms of discrimination, as fundamentally an outgrowth of that hierarchy-driven cruelty.

How much does that fit with your diagnosis of the problem?

C.S.: I agree economics has a strong hierarchy. Elitism in economics stifles our research and policy work. Solid research continues to pile up. Here and here are two recent examples I called out elitism as one of many problems. I got a lot of pushback on my concerns about elitism. I agree it’s hard to disentangle merit from privilege. But it’s not hard to see that both must be at play. 

So why is economics so hierarchical and so determined to protect its power structures? I think it’s how the hierarchy is reinforced: aggressive criticism of anyone who does not fit the mold and refuses to play the game. My blog post shines a bright light on the top of the house, the gatekeepers in economics. I named names and gave examples of the systemic problems in our culture. Enforcing the hierarchy means valuing a certain pedigree in training, rewarding certain research techniques, and clinging to a certain definition of an economist. None of that is particularly unique to economics, but economics embraces it in a way that is very unhealthy.

Hypercompetitiveness and toxic behaviors are rife in economics. Tellingly, parts of the discipline where toxicity is strongest in the United States, like macroeconomics, tend to be led largely by White men. That group has enjoyed privilege for generations in our society and in economics. Plus, testosterone is one hell of a drug. I get it that some people are wired to see every shiny bauble as a conquest. However, we are taught in kindergarten that it’s not okay to destroy people, and that gets you sent to the principal's office or sometimes even expelled. Those hard-nosed principles are missing from economics when it’s time to mete out punishment. Some economists seem to have forgotten that rolling people is not okay, and it's bad for our science. So economics is exclusionary, shuts down people who go against the grain (Noah, that’s you), and worst of all it denies that it has a systemic problem. Diversity in the degree of hair loss is not good enough. 

To be fair, many, many White men economists are open minded, welcoming, creative, and admit we have a problem. We simply need more people to accept that we must do better. And we all need to pitch in. We must hold everyone in the profession accountable. That’s hard, but the cruelty must stop. Everyone must work to make it stop.I know we can do better.

N.S.: Ha. I do go against the grain a little bit, when I have the energy for it. 

But OK, here’s one more hypothesis. Physics, math, engineering, and so on have all traditionally been dominated by White men (biosciences too, until recently). Yet although those fields have all had issues of sexism and racism, none of them developed anything like the toxic, hierarchical, down-punching culture of econ. So I’m wondering -- does politics have something to do with it? In the 70s and 80s, the econ profession got sort of tied up in the conservative fightback against the Great Society. A lot of young conservative guys probably joined the field hoping to be the next Milton Friedman, dreaming of putting lefty kids in their place by telling them government interference in the economy is bad and blah blah. And people who dream of a job denying poor people money tend to be a certain type of person -- hierarchical, un-generous, dominant, unwilling to recognize systematic exclusion, etc. Obviously not every economist who came up in the 70s and 80s was a right-winger; today, the field leans pretty strongly toward the Democrats, and toward redistributionary policies. But might there have been enough of those guys -- the same kind of guys who now lurk on anonymous econ forums -- to sort of poison the culture? 

C.S.: I don’t know about the culture in other disciplines. I have heard stories of abuse and harassment in fields ranging from philosophy to math to biology to anthropology. And out in the wider world you can find women and men of color, people with less formal education or from families not considered elite, who are abused and harassed by people in power and by institutions designed to exclude them. I find the punching down in economics and in society abhorrent. People in power must use it responsibly. Punch down is the worst. 

One thing I find peculiar in economics is the way in which we rationalize it. Even today, you can hear economists (always from the dominant, powerful group) argue that people from these other groups are choosing not to be economists. The “equilibrium’’ we are in is stable and thus must be “optimal”. It blows my mind that they are not intellectually curious enough to ask, “well, why is it that systematically a group does not want to join our ranks?” Could it be that something about the profession repels others who do not fit the mold. I believe it does and I have a talk, “Women in Economics: What Does the Research Say?”  that I’ve given to many groups. 

I do a lot of mentoring too. When young adults come to me who are considering economics but are concerned about its hostile culture. I tell them “economics needs you, but we do not deserve you.” I want them to join us and change us. I also want them to go in with open eyes -- I did not -- and know from the start when people try to hurt them, “it’s not you; it’s them” who is the problem. 

You asked about politics and the legacy of Uncle Milt. I did touch on politics in economics in my blog post. I think politics is a poison pill to evidence-based economic policy. I am disturbed when economists are attacked simply for advising one political party or the other. That discourages economists who want to bring evidence and expertise to policy makers, regardless of the party affiliation, and might leave us with blind spots and hacks. Good intentions are not enough for good policy.

I doubt that those views on politics won me fans at some progrssive think tanks, including Equitable Growth where I worked at the time. But they knew how I felt. Early in this crisis I asked to take time off to do a detail at the Trump Council of Economic Advisers. I had been there in the Obama Administration, and I knew how much they could use another macroeconomist. Heather Boushey and some of my mentors convinced me to stay. Later I formally volunteered to go to CEA. It didn’t work out (progressive think tanks were not the usual feeders into the Trump Administration). I continued to sometimes send them my macro analysis. 

Being public in my “disgrace” post, on many issues, including politics, turned into a personal fiasco. In my most recent blog post, “economics truly is a disgrace,”  shared the retaliation I experienced at work after my “disgrace” post. Sigh. Equitable Growth tweeted on their official Twitter account  (good lord)  that I had been unhappy there and tried to quit before. Yeah, in addition to revealing non-public personnel issues, they missed a key  detail: I wanted to go serve my country at CEA. I try hard to separate my politics from my economics. Not everyone does. I respect that choice. However, my respect ends when economists attack others purely on politics and disagree with policies simply because of the side it comes from. I have seen it among right of center, left of center, and libertatiran economists. It may be human nature to be tribal, but it undermines our science and muddies our policy advice. By the way, I quit after a few horrible months and am self employed now. Beliefs have consequences, and I accept it. 

I experienced the toxic politics in economics this fall, and frankly it’s going to be a long time before I want to work in any Administration. Recently, I turned down an interview for a Deputy Assistant Secretary job at Treasury. It was weird to turn down what had been a dream job--working for Janet Yellen again--but even weirder that I got the invite as the Dem establishment was bashing me in the press. It was not a hard decision to say no. Their loss.  

N.S.: Thanks. Well, I’m sure we could talk about econ culture all day, but we should probably at least touch on some actual macroeconomics before I take too much of your time!

You’ve been a big advocate of the “just give people money” approach to COVID-19 relief. And that really seems to be the consensus among macroeconomists. But I have two questions about that. First, does the same principle apply after the pandemic is over? When we’re faced with a more traditional recession, shouldn’t we switch over to spending on things like infrastructure, since government spending multipliers are typically larger than tax rebate multipliers?

And second, people have thankfully stopped worrying about deficits the way they used to. The rise of MMT seems to herald a new era of people just not caring about government debt or deficits at all. But is there ever a point where we have to start worrying again? Under what circumstances would that happen?

C.S.: Before we switch gears, I want to stress that my efforts to improve our culture are not a sideshow or a hobby. I truly believe that the quality of our work depends on how we work with each other. The exclusive and abusive parts of the economics profession create blindspots; impede the flow of new ideas; and silence new voices. That’s very bad for our knowledge we create and the policy advice we give. 

I fell in love with economics as an undergraduate because I was told it could do good in the world. After more than a decade working in DC, I know that to achieve that goal, again we must clean up our act. Our advice matters. The policy decisions at the Federal Reserve, at the White House, and other government agencies that are informed by economists touch the lives of millions of Americans. Our track record is not good. Duh. How can we serve others, if we hurt our own? 

Now onto the money. you’re right, I have tirelessly advocated for Congress to send money directly to people in this crisis. On March 11 Jason Furman and I briefed House Democrats. My advice was, “go big, go fast, and go broad.” I told them payments checked all the three boxes. They are not targeted but in a crisis everyone needs to know that the government has their back. Money talks. Moreover, sending money to the vast majority of Americans, along with other more targeted aid that Congress does in nearly every recession, such as better jobless benefits, extra food stamps, and aid to state and local government, should be autopilot and not need approval from Congress. I wrote a proposal on automatic payments in a book full of great ideas to create new programs or strengthen existing automatic stabilizers. 

Now, you asked does my thinking extend to other policy ideas, like guaranteed income, and economic frameworks, like Modern Monetary Theory. I don’t know, but I have thought hard about that question in 2020. And will more in 2021.I appreciate everyone who has invited me to conversations on these topics. I have met many creative and innovative thinkers during this crisis. I have also thought about how much I should use this crisis to inform my thinking about future recessions. This time is different in some ways and similar in many others. We can learn so much from a very big event. The New Deal after the Great Depression led to some of core safety net programs like unemployment insurance and Social Security. Again, the jury in my head is still out what lesson we need to take from this crisis and apply in the future. 

My belief in direct payments is grounded in high-quality economic research, including mine, about money sent widely to people in the 2001 and 2008 recession (summarized in my policy proposal to make them automatic). Research on the 2020 payment shows they mattered to families and the economic recovery. In addition, I have learned this year from policy experts (mostly non-economists) how poorly some other safety net programs are administered--with unemployment insurance at the top of the list. Maybe that’s part of the reason that direct payments work so well. In this crisis, It took weeks, sometimes months for the unemployed to get their benefits and many didn’t even bother to apply. If that program worked better and workers knew it was there if they lost their jobs, then we would not need to send money to everyone. 

I learn from others and I learn from digging into the data myself. I have started a research project for the Institute on New Economic Thinking on the benefits of automatic direct payment in recessions and recoveries. I will be using cutting-edge distributional macro models to assess whether it’s a faster path back to full employment and who it would support most. We must find a way to push against rising inequality. 

The part of Modern Monetary Theory that I find most compelling so far is its goal post of full employment. That’s part of the dual mandate (along with price stability) that Congress gave the Federal Reserve. That mandate grew out of the Civil Rights movement. In fact, Martin Luther King Jr. and Coretta Scott King were some of the strongest advocates. The Fed has struggled since day one to achieve. After all these years, they have not even defined it. So anyone who grapples with full employment is a person I want to learn more from.     

Finally, you are much more optimistic than I am that the thinking on deficit spending has changed. Yes, the CARES Act was massive at $2.2 trillion. The economy was in free fall and a deadly pandemic was killing people. What I worry about, after seeing it after the Great Recession, is whether Congress has the will to stay the course until everyone is back on their feet. The crisis has unfolded at light speed relative to past ones. And, hand wringing over the deficit and an activist federal government has appeared rapidly too. Yes, Congress just passed a $900 billion relief package but it took months and months. It created a massive amount of anxiety for Americans who really need more support. It put the dysfunction of DC on full display. 

The Biden Administration with a Democratic House and Senate (!!) has promised that more help is on the way. I am thrilled to see $2,000 checks on the table. And  importantly, it looks like unemployment insurance could be strengthened, including adding automatic triggers on and off to the federal enhancements (like the extra weekly benefits and expanded eligibility. Hallelujah. All that said, I am pragmatic and know that the price tag would be big. Maybe too big for even moderate Democrats, let alone Republicans. 

And then there are the economists to worry about. Even economists--especially academics vs policy wonks--do not agree on what are the best policies at this point in the recovery. The mixed messages make it hard to do evidenced-based policy. In the grand scheme, I am not sure it matters. Many policymakers and the public are already worried about the historically high levels of federal debt. (I believe that’s more about the size of the government than the deficit, but that’s another conversation.) We will learn so much about the pandemic, the economy, and policy actions (or lack thereof) in the coming months. 2020 was disastrous. I worry that 2021 could be a disappointment. I sure hope I am wrong but I am a pretty damn good macro forecaster.