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