Anna Paulson, PhD'94 (Economics), Executive Vice President, Director of Research and Executive Committee Member at the Federal Reserve Bank of Chicago, joins our hosts to discuss the career freedom a degree in economics presented her as a student, and her move from academia to policy. The views expressed are Paulson's and not necessarily those of the Federal Reserve System or the FOMC.
Anna Paulson is executive vice president and director of research at the Federal Reserve Bank of Chicago. She leads the Bank’s research and policy analysis work, overseeing the department that provides analytic support for monetary policymaking and conducts research on banking and financial markets, macroeconomics, microeconomics, and the regional economy. She attends meetings of the Federal Open Market Committee (FOMC), the group responsible for formulating the nation’s monetary policy, and serves on the Bank’s Executive Committee. Prior to joining the Chicago Fed, Paulson was an Assistant Professor of Finance in the Kellogg School of Management at Northwestern University.
Paulson earned her BA from Carleton College and her PhD in Economics from the University of Chicago in 1994.
The views expressed are Paulson's and not necessarily those of the Federal Reserve System or the FOMC.
Kelly Pollock:
Hello, and welcome to Dialogo, a podcast of the Division of the Social Sciences at the University of Chicago. In each episode, we interview an alum of a social sciences graduate program here at the University of Chicago, exploring their career path and reflecting on their time at UChicago. I am Kelly Pollock, Dean of Students for the Division of the Social Sciences.
Paul Poast:
And I am Paul Poast, Deputy Dean in the Social Science Division here at the University of Chicago.
Kelly Pollock:
Today's guest is Anna Paulson, the Executive Vice President and Director of Research at the Federal Reserve Bank of Chicago. Anna earned her PhD in economics from UChicago in 1994. Welcome, Anna.
Anna Paulson:
Thank you so much.
Kelly Pollock:
Yes. We are delighted to have you here today. I wonder if you could start by telling us just a little bit about your current role at the Federal Reserve Bank.
Anna Paulson:
Sure. I direct and lead our research department, and so that means I have a group of about 100 people who are all engaged in the policy mission of the Federal Reserve Bank of Chicago. Many of those folks are economists with PhDs from a variety of institutions, including the University of Chicago. One of the big things that we do, that we do together, that makes us distinct is before every FOMC meeting, we are preparing an assessment of the U.S. economy, trying to think about what's going on with inflation, with growth, with the labor market, and helping to prepare the President of the Federal Reserve Bank of Chicago, who sits on the Federal Open Market Committee, the group that makes monetary policy for the United States, so that he's ready to engage in that policy conversation.
Paul Poast:
Actually, that leads to my first question, which is just to gain a little more detail into exactly that role. Is this something that you're preparing for the President of the Federal Reserve Bank of Chicago, but are each of the respective Federal Reserve Banks, are they preparing similar reports for their own presidents, and so is there... How would that dynamic play out then? Is there a little bit of, hey, our job is just to simply help the president to be able to make an argument? Or is there even some competition between the different Federal Reserves, in terms of the quality of the reports? Love to hear a little bit more about that.
Anna Paulson:
Sure. All right, so monetary policy in the United States is run by the Federal Open Market Committee. There are 19 members, the 12 presidents of the Reserve Banks that are scattered across the country and then 7 folks at the Board of Governors. For the Reserve Banks, each Reserve Bank has its own set of experts, research department, that are helping to produce analysis for their president. One distinct part of that is that we talk to lots of people throughout the region, so the Midwest Region that the Chicago Fed encompasses, and so we're talking to small businesses, to labor leaders, to community advocates, to folks in a variety of industries to get their perspectives on the economy, and we bring that to the table together with analysis of data, models, and a whole lot of combining that mosaic together into a story of what's going on. We're going to have different perspectives in Chicago because we have a lot of manufacturing than the folks in Kansas City might have, where there's more energy, more ag, and so those perspectives come together around that FOMC table to give a holistic picture of the economy.
Kelly Pollock:
Take us back earlier in your life. What got you interested in economics? Was this something that little Anna was like, "I'm going to be an economist someday"? How did this come about?
Anna Paulson:
I think if you would ask me when I was six what I was going to be when I grew up, I would not have said an economist. I was very taken by my mom's... She was a nurse, and so I was like, ah, let me try on that outfit and the cap that she wore. It was all very dramatic, so I would have said I wanted to be a nurse.
What drew me into economics was, in undergrad, I took a few economics classes, and it kind of clicked as a way of making sense of the world, very organized way to think about trade-offs, to think about how do I get the best outcome in a given situation, conditional on what the constraints are that I face? And so, that just kind of clicked with me. That was one piece, right? It was something that really resonated with the way my brain worked.
The other piece was it kept so many options open, right? I'm still curious about a whole wide range of things and, as a 20-year-old in college, the last thing I was ready to do was to say, "Oh, I know I want to be a geologist," or something. I had no idea. Economics required the fewest classes for the major at my undergrad institution, so I got to dabble. I got to take philosophy classes and math classes and science classes and language classes, so that was wonderful. Then, as I went on in economics, it still really didn't require me... I still kept a lot of options open, and that was really valuable to me.
I came to the University of Chicago after a couple of years working at a small consulting firm, and I was coming to Chicago... This is slightly embarrassing, but my boyfriend at the time lived here, and we wanted to be in the same city, but not at a stage where it made any sense to actually do that purely on its own. And this did not work out, so this was a good, good thinking.
Chicago, at first I was like, well, if it doesn't work out, I'll get my master's and I'll go back, and I'll go back to my consulting job, and I'll get promoted. But then, as I went on, I mean, first of all I loved Chicago, but also just I could be an academic. I could work in public policy. I could work in industry. I could go back to my consulting job. The fact that it didn't close off any options and let me really go further and then decide where I wanted to specialize was really, really appealing.
Paul Poast:
On that note about deciding where to specialize, I mean, at what point during your time here at UChicago did it start to become clear, first of all, that you weren't just going to take your master's and go back to consulting, but also that you wanted to go in the particular research direction that you ultimately end up going?
Anna Paulson:
In terms of the first part, of why did I stay, I mean, I did well, right? At that time, in particular, one of the things that was distinctive about the University of Chicago PhD program in economics is it let people take a risk on themselves, which was really appealing to me. That meant that you started with a relatively large group of people. A bunch of people left. Some people stayed. But for me, at least, that was a great opportunity, and so I started the University of Chicago. I didn't have any funding. By my second year, I had full funding, and so that... It turned out to be the right decision for me, and for me to make that bet on myself. And I really appreciated that opportunity.
One of the things that I think is distinctive about Chicago is how it's really a set of tools. You're learning about a set of tools. You're figuring out how to engage in a conversation about economics that can be applied to a whole wide range of questions and problems. And so, I followed my nose a little bit.
I started working with Rob Townsend as a research assistant, had the opportunity to go to Thailand, ended up working with him gathering data in Thailand. It was kind of that positive feedback loop, right? I was learning things that were very abstract in the classroom, and then we were designing questionnaires to try to get at those abstract concepts in a concrete way by interviewing rural households about their lives.
I loved being able to see that connection between a pretty primitive house in a village and a letter in a model, and making that connection I think helped me understand the theory part better and appreciate the simplicity of a model. It's abstract by design. You're not trying to describe the real world, and yet it still had power to help explain important things that were real world phenomenon around you. How are people putting food on the table? What were there hopes and aspirations for the future? And so, I really loved that, that connection.
Paul Poast:
What did you ultimately write your dissertation on?
Anna Paulson:
I wrote my dissertation on, and this is I think an example of how you can integrate ideas in economics, right? In finance, there's a very basic idea that you should diversify your investments, so that you're not going to be exposed to one stock and its fates and fortunes, right? You want to diversify risk. And so I applied that concept to how families in rural Thailand decided where to live and what occupations to have.
There, if you take the parents, parents are living in a rural area. Most of them are rice farmers. Their livelihoods are very much driven by how much rain comes in a given year. What I found was that their kids often went to places where they would be well set up to send money home if the rains didn't come where their parents lived, right? So that it looked like they were diversifying a stock portfolio, that they were choosing stocks that were not correlated with one another. You can see why I have a hard time narrowing in and focusing in on things. I took some concepts from finance and applied them to development economics. That's the kind of thinking and ideas that I really enjoy, trying to integrate things.
Kelly Pollock:
Hyde Park in the early '90s was pretty different than today, but I wonder what sorts of things you enjoyed doing while you were on and around campus.
Anna Paulson:
One of the things that really struck me when I was choosing graduate schools was I looked at a few places in the Midwest, and being at the University of Chicago, this was before anybody had seen Harry Potter or whatever, but it felt like how I imagined a graduate experience should feel, right? You're in a quad surrounded by these gothic, impressive buildings. People took economics incredibly seriously, but also had a lot of fun with it. That was, just the architecture, I think, was one piece of my decision, lots of studying, lots of time in the library, as you might imagine, but also trips to Chinatown, trips to Little Village. I remember a camping trip, lots of parties at people's houses.
I think there's now... One house I lived in, I think it's now been torn down and is part of the hospital, but there were a few houses with four or five PhD students in economics living in each house, and so we would have parties and invite people over, hang out, and all of that was a lot of fun, lot of time at Jimmy's, and some really nerdy but fun at the time events where we would have skit shows to kind of make fun of what we were learning and of our professors, so good, nerdy fun.
Kelly Pollock:
Actual students still have good, nerdy fun at Jimmy's. That hasn't changed.
Paul Poast:
Good, nerdy fun should be the new tagline for UChicago, right? Instead of where fun goes to die, good, nerdy fun. I like that.
Anna Paulson:
Good, nerdy fun. I remember, I think when I first went there with my... When I moved in, my dad and I drove out from, I think I was in Boston at the time, so we drove out from Boston and we went to a hardware store. He bought me lots of tools, so I would have a toolkit for my new apartment. Then we went to pizza somewhere on 57th Street. I'm going to blank on the name now.
While we were having pizza, a rat ran over somebody's foot, and I was like, oh my God, what have I gotten myself into? My dad was like, "This is just perfect. This is great. This is how it should be."
Kelly Pollock:
To prospective students, there are fewer rats now, I think.
Paul Poast:
Yeah.
Anna Paulson:
I'm pretty sure that that was not the... That was the only rat I ever saw in my entire five years at the University of Chicago, so I am not worried about the rat population. I think that one was just there to, I don't know, introduce me to my gritty, urban experience or something.
Paul Poast:
Well, and you still live in Chicago to this day, so obviously it didn't dissuade you from wanting to settle here in Chicago as a whole. Actually, I think that leads nicely into the next question, which is, do you want to share a bit about your journey from UChicago into your career path?
Anna Paulson:
Sure. After Chicago, I went and did a post-doc at Princeton, working more on development economics. Then I had the opportunity to come back to Chicago and to be Assistant Professor of Finance at Kellogg at Northwestern. Everybody starts out grad school, especially in economics, saying they want to do public policy, and then you get socialized into, no, no, no, you're supposed to be an academic. That was kind of the dream, and I was very excited about that, and it was a tremendously rewarding intellectual experience, broad department, really fit my interest and my style of research. It was fun to teach MBAs, a little intimidating to be the same age as the MBAs that you're teaching and whatnot, but you kind of get over that.
I was there for seven years. I was not going to get tenure. Thinking about what I was going to do next, wanted to stay in Chicago. I'd spent a lot of time at the Federal Reserve Bank of Chicago collaborating some with Rob Townsend on some projects, gathering similar data that we did in Thailand, but in Chicago, so I knew a bunch of people there. There was an opportunity to move there, and I started there in the community development part of the bank, as an economist in this little, tiny community development research group.
Our mission was really to study how access to finance influenced small businesses and families and especially low and moderate income households in communities. What I found in that transition is I was so much more productive and engaged in this environment where I was working more with a team and where we were collaborating to produce analysis of whatever the issues we were studying.
I think, along the way, you kind of learn things about in what environments are you productive? For me, it's that environment where I get to work with other people, where I know other people are counting on my inputs. I love writing research papers. I love all of that, but that can also be kind of an entrepreneurial task, and so you have to have a great amount of self-discipline to make that work. I can conjure that up, but it's a lot easier for me and a lot more fun for me when I'm working with other people.
Kelly Pollock:
What would you recommend for people who are maybe in a PhD program right now, who are thinking about careers like yours, like going into the Federal Reserve or some sort of team-based research projects? How can they prepare for that as they're in a PhD program?
Anna Paulson:
I mean, so I kind of came to this later, where I kind of like, "Oh, hey, here's the environment where I'm really productive," so I would kind of turn that research lens on yourself a little bit and to really seek out some experiences during your graduate program, so that you can work collaboratively on a project. Maybe it's a joint research paper. Maybe you spend a summer as a PhD intern at a research institution somewhere like the Fed or something similar or at an industry. Right now, many, many PhD students in economics go to big tech firms and things like that. So, try things out.
There's a little tension, right? You're trying to finish your program and write papers, and you're kind of narrowly focused on that, but in some ways you have the luxury of time during graduate school to explore, and so I would definitely put that experimentation, not just about what subject matter interests you, but also about what are the types of environments where you're just naturally productive?
Now, lots of people are going to come to grad school, and they're not going to need to do that exploration. They're just going to know. So, this is probably better advice for folks who are like me, who are like, ah, I want to do everything. How do I decide?
Paul Poast:
No, I think that's terrific advice, and I think that's advice that, obviously, you just tailored it to the econ side, but I see that in all of the PhD programs, where it's beneficial for students to be able to not just become solely focused on their dissertation, as important as it is, but to take advantage of other opportunities to, as you say, get a sense of where are you most productive? What style of research work are you most productive? Because I've seen that. I think that was great about you sharing that story of realizing you're better in a team environment. I've seen that with so many PhD students, where it's really about being in a team environment and doing that style of research where they seem most productive, so I think this is great advice for all of our current PhD students to hear.
Kelly Pollock:
I wanted to ask. You're on the American Economic Association's, this is a long title, Committee on the Status of Women in the Economics Profession. I think it's not a secret that this has been a longstanding issue that there are just fewer women in economics. This is true in graduate schools. This is true in the profession. So, I wonder if you could talk some about what is the status? What does that look like right now? But also, what are you doing at the Federal Reserve to think about this? What can and should graduate programs be doing to address this issue? What should we all be thinking about to both address representation of women, but also the climate for women in economics?
Anna Paulson:
First of all, my term at the Committee of the Status of the Women in the Economics Profession ended at the end of last year, so I'm no longer on that board, but obviously this is an important issue. Any time you're in a profession where you're in a minority, you see things a little differently, and I think that that brings... has pluses and minuses, actually.
One thing that I've been really lucky in my career is, possibly with the exception of actually the University of Chicago and the faculty who were there at the time, I've always worked in places where there have been many women and many senior women, so I've had the benefit of having mentors and people who you can have conversations with about, "How does the maternity policy work here?" Things like that, that aren't necessarily as obvious as you might hope. I would say that one of the things that's really changed over the last 30 years is that the profession has a lot more conversations like this and wants to understand much more who feels welcome, who doesn't feel welcome. What are the implications of that? It's normalized having those kinds of conversations.
We used to joke a little bit at the University of Chicago, where it was like free markets, everything works, the invisible hand, and it was kind of like, now go get a job, right? So it kind of worked in that way, too. It was really different at some other programs, where there was a lot more conversation around the invisible rules. What do you wear at your job market talk? What do you talk about at dinner on the interview? Should you order a drink or not? Little tiny things that matter. That conversation, I think, is really constructive and really healthy for everybody, not just for women, but I think that's really helpful.
There's another part of the conversation, which I think is a little bit less constructive, which is a little bit like, are there topics that only women study or that only men study? That, I think, is nonsense, right? We're using tools to understand the world. You want to bring a lot of different perspectives to understand the world, and so everybody's experiences are as valid as anybody else's, in terms of what they bring to asking questions and trying to answer them. But that also means that it's important to have lots of experiences in any given room, especially if you're trying to do analysis that's related to public policy.
I feel like, in my career, one of the times that really resonated for me was, I think it was in 2005. I was at the Federal Reserve Bank of Chicago. There was a dinner event with a local housing advocacy organization, and they were handing out awards and talking about the state of housing markets. Everybody who was working on the community development access to housing side was really grumpy and depressed and was like bad things are happening. And I was baffled, because homeownership rates were at their highest rates, highest levels ever in the United States. They were growing and at their highest levels for Black families and for Hispanic families, and it just... I was like, I don't understand the mood versus the statistics.
Fast-forward a few years, and you're like, oh, now I get it. The folks who were on the front lines saw that a lot of the mortgages that were being underwritten in those days were not going to be sustainable and were not going to work out well for probably the families that were getting them, but also, as it turned out, for the financial system and the country. And so, what I took away from that was the importance of having a lot of voices in the room, and then listening to them, right? That kind of goes back to that experience in Thailand, but also what we do now, where we listen to a lot of people, and we combine insights from business people, community leaders, folks who are working with representing labor, consumers, and pull that together with the analysis and the statistics. I think that's really important.
Paul Poast:
Just building on that, what, from your perspective, do you think is the best way for academia to create an environment where there can be the most voices heard and that those voices feel like they're being heard?
Anna Paulson:
My thoughts here come a little bit from watching my own kids go through college and taking economics classes, and comparing and contrasting that with my own. I went to a tiny liberal arts college, and you could take an introductory economics class that was focused on a question or a topic, sort of a seminar. It wasn't focused on you must know this math, and then you get to study the interesting questions. It was a little bit more what are the questions? Why do we care about health care? Why do we care about immigration? Why do we care about trade? Why do we care about monetary policy? Then contrasting that with my sons' experience, which have both been you've got to take four or five kind of tools-based classes, and then you get to take the electives.
I guess I think that those are both valid approaches. One approach is probably going to get you the people who are interested in the tools or who are really patient and ready, willing to wait to get to think about the questions. Then the other piece is going to pull in the people who are like, "I'm really motivated by the questions, by the topics. Then, that's going to drive my engagement with the tools."
Both of those seem fine. I guess I think it would be helpful to see more opportunities for people to engage with the questions and the topics and the things that are the meaningful questions that the tools are meant to address. I think that that might bring different voices into the conversation and just change subtly the emphasis, right? Not how much typology and differential equations do you know? Even though you might need to know statistics and all of that stuff in order to do a good... to have a successful career, but maybe that's not where you want to start.
Paul Poast:
Right. Real analysis isn't always useful for capturing reality.
Anna Paulson:
Very, very true.
Kelly Pollock:
One thing I love, that the Federal Reserve Bank of Chicago does to bring people in the door and get them interested in questions, is the Money Museum, which-
Anna Paulson:
Oh, yeah.
Kelly Pollock:
Both of my kids... My sons are 13 and 10, and they love the Money Museum.
Anna Paulson:
That's so awesome. I remember once actually having to, recording a video to explain something in the Money Museum, and I had to be... I think I said there were 13 reserve banks, and they're like, "Hold up. We're going to have to record over that. There are 12 reserve banks." I'm like, "Oops, sorry." But, yeah, the Money Museum is great, and it is really nice, I think, to be able to have tangible experiences that bring people... We should have lots of opportunities for people to have the careers that they want at many stages in life. I think that's kind of a strength of the U.S. education system, but I think that's a really important one.
Kelly Pollock:
For anybody who's in Chicago, you can go in for free and see lots of money.
Anna Paulson:
Yes, exactly.
Kelly Pollock:
You do have to show ID, because there's lots of money, and you have to go through security because there's lots of money.
Anna Paulson:
Yep, and then you can test your skills to see if you can figure out what the counterfeit bill is and a lot of other good stuff.
Paul Poast:
I think, also, the Federal Reserve gives away... What do they call it, Fed Shreds?
Anna Paulson:
Yes.
Paul Poast:
But it's shredded bills in little packets of it.
Anna Paulson:
Yes.
Paul Poast:
Yeah, that's great.
Anna Paulson:
Yeah, yeah. No, I think I've talked to... I remember talking to my kids' kindergarten class about the Fed and bringing in Fed Shreds, and then the teacher being a little bit annoyed when the kids ripped up the bags, and there's confetti [inaudible 00:27:36] money all over the classroom. I'm like, "Oops, sorry. They weren't supposed to open those up."
Paul Poast:
So, at this point, one thing we like to ask our guests is just is there something that we should ask you? Is there something else that you think would be worthwhile to bring up, given the audience for this podcast, the Alumni Network, or any topic of any nature that you think we should be asking about?
Anna Paulson:
One thing that I found so distinctive about the University of Chicago economics program, and I think it's still distinctive and it really mattered to me, was how seriously people took economics, not just to understand... Sometimes to a ridiculous extreme, right? Not just to understand economic growth or labor markets, but to really try to understand a wide variety of phenomenon, and kind of turned it on themselves sometimes in ways that were ridiculous, but I found that just a really compelling part of the graduate experience.
It was like the Berlitz program of economics. You were going to be immersed in economics, and so your classmate might be trying to apply the theory he learned to decide it was going to be good for him to leave his milk that was souring in the refrigerator to set the right incentives for his roommates to steal his milk, like slightly ridiculous, but then also it was so wonderful to be in a place where people were all really deeply immersed in the subject they were studying. That's really exciting, lunch conversations, hallway conversations, seminars, classes. I've never been in an environment like that before, and that was just tremendously fun and stimulating and exciting.
Paul Poast:
Bringing it back to the idea of nerdy fun.
Anna Paulson:
Totally nerdy fun, and definitely not for everyone either, right? I've had friends who were junior faculty at Chicago, who are like, "Oh my gosh, could we just talk about the movie that we saw? This is too much." You definitely need to escape from time to time, too, but I found that a really unique thing about the University of Chicago and maybe about economics in particular, but the idea that people were just living and breathing it 24/7 was really cool.
Kelly Pollock:
How can people follow you on social media?
Anna Paulson:
I have LinkedIn and Twitter, and papers and things that I write show up at our Chicago Fed website.
Kelly Pollock:
Excellent. We'll put links to those in the show notes. Anna, thank you so much. It was an absolute pleasure to speak with you today.
Anna Paulson:
Oh, it's a lot of fun, and really fun to think back to those days at the University of Chicago, which I remember very, very fondly, lots of time in the library late at night, but also friends I've made that I still have, and then just the intellectual stimulation. It was incredible and has really been an important part of my career.