Counterparties: Bernanke’s hedonic dabbling

By Ben Walsh
August 7, 2012

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Five days after Businessweek gave him the Bob Dylan treatment on its cover, Ben Bernanke has gotten existential. Or at least relatively so for a former academic economist and current central banker. On Monday, he supported including well-being and quality of life in “economic measurement“:

Economics as the study of the allocation of scarce resources… may indeed be the “what,” but it certainly is not the “why.” The ultimate purpose of economics, of course, is to understand and promote the enhancement of well-being. Economic measurement accordingly must encompass measures of well-being and its determinants…

Aggregate statistics can sometimes mask important information. For example, even though some key aggregate metrics – including consumer spending, disposable income, household net worth, and debt service payments – have moved in the direction of recovery, it is clear that many individuals and households continue to struggle with difficult economic and financial conditions.

Bernanke isn’t necessarily covering new ground here, and admitted as much, citing Bhutan’s National Happiness Index and the work of Nobel laureate Daniel Kahneman, along with current research in the field of the “economics of happiness”.

Mark Thoma thinks Bernanke’s speech only deepens this question: why isn’t the Fed chairman “pushing the Fed to do more at every opportunity?” Conflicting comments from the presidents of the Boston and Dallas Fed over the need for new action  ”underscore the extent of divisions among Fed officials that have been obscured by the central bank’s efforts to maintain a united public face”, Binyamin Appelbaum writes in the NYT. Tim Duy sees public comments from proponents of new action as “[signals of] the strength of the resistance to further easing” within the Fed.

The minutiae of Fed-watching aside, David Leonhardt points out that Bernanke’s comments on happiness and well-being come in the context of the “slowest 10-year average growth rates since the Commerce Department began keeping statistics in 1947 … In addition to slow growth, the bounty from the economy’s growth has largely flowed to a small slice of the population: the affluent”.

Brendan Greeley thinks Bernanke is adapting to a post-crisis reality, in the pattern of John Stuart Mill and Karl Marx. Greeley notes Bernanke would be joining esteemed current company: Robert Shiller a year ago wrote that economics has at its core a “broad moral purpose of improving human welfare”. Bernanke’s policies are already seemingly in disagreement with his former academic self. With the economy stalling, if he agrees with Shiller but takes no further action, he’ll be in disagreement with himself as a “moral scientist”. How many conundrums can we afford in one central banker? – Ben Walsh

On to today’s links:

Bold Rationality
SHOCKING: The monthly jobs report is “overhyped, overanalyzed, and overvalued by the markets” – Barron’s

Rebuttals
“Standard Chartered strongly rejects the position and portrayal of facts made by the New York Department of Financial Services” – Standard Chartered

Charts
Say hello to the lowest level of US public-sector employment in more than 30 years – Hamilton Project

Disturbing
Hospital chain performed unnecessary, dangerous, and profitable cardiac procedures – NYT

Liebor
Gary Gensler: It’s time to replace Libor with a “new or revised benchmark” – NYT

Data Points
Papa John’s CEO says the price of Obamacare is an extra 11 cents to 14 cents per pizza – Politico

Plutocracy Now
“Twice a week, 6- to 11-year-old scions of wealthy families take classes on being rich” – Bloomberg

Welcome to Adulthood
“Please explain your rationale for the rainbow” – a job applicant’s confused attempt to “[add] color to the message” – Business Insider

Right On
Americans, increase national and personal productivity by leaving the office asap – The Atlantic

Stuff We’re Not Linking To
Another person who is not Bill Gates is now richer than Warren Buffett – Bloomberg

 

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Comments
2 comments so far

“Mark Thoma thinks Bernanke’s speech only deepens this question: why isn’t the Fed chairman “pushing the Fed to do more at every opportunity?””

Doesn’t this assume that Bernanke believes additional action will actually increase “well-being” for the long run? Perhaps he believes the Fed is doing/has done what it can and that, like eating a pint of cookie dough ice cream, further action will simply trade long run wellbeing for short run wellbeing and make us worse off in the future?

I have no idea what he actually thinks, but it should be considered a possibility.

Posted by Newy | Report as abusive

“Greeley notes Bernanke would be joining esteemed current company:….” (BW)

What is there that is truly “esteemable” about economists who have spent their entire careers in academia/government, and yet purport to speak with authority about how the real economy functions in real life?

There’s a place in this world for the academic bullshit-artists among us. That place properly has nothing to do with IRL policy-making IMO.

Posted by MrRFox | Report as abusive
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