YELLEN: Would More Diversity Among Economists Have Helped Prevent The Financial Crisis?

Janet Yellen, the first female chair of the Federal Reserve, is giving welcoming remarks this morning at the Fed's National Summit on Diversity in the Economics Profession in Washington.

In her speech, Yellen noted that both economics and finance recognize that diversity is fundamentally important to good outcomes, and that the Fed "is committed to achieving further progress, and to better understanding the challenges to improving diversity throughout the economics profession."

The meat of her speech is at the end, when she focuses on how and why the economics profession fails to recruit a more diverse population in college and graduate schools, and whether better recruitment could have prevented some of the major failures of the profession (failure to predict the financial crisis, for one) in recent years. Here is the key passage (emphasis ours):

The AEA has also done important work documenting and investigating the "leaky pipeline," trying to determine why some groups are more likely to abandon economics education and work before, and even after, receiving Ph.D.s. In reviewing the data on the representation and advancement of certain groups in the profession, there are differences in outcomes for women and minorities. To what extent are these disparities caused by differences in the experiences of those groups or due to broader and more general challenges faced in academia? Do the leaks from the pipeline that may be more noticeable for some groups reflect a broader lack of opportunity in academia? When economists delve into why there isn't more diversity among them, they end up asking about what is being taught in college, how economists are being trained in graduate school, and other questions that bear on the health and the future of the economics profession in general.

These are not idle questions. All of you know that there has been a fair amount of public debate in recent years about the health of the economics profession, prompted in part by the failure of many economists to comprehend the dire threats and foresee the damage of the financial crisis. When the public asks whether economists did all they could have to understand those threats, in part they are asking whether our profession did enough over the years to test ideas and assumptions that turned out in some cases to have been mistaken or misplaced. And part of that question is this one: Did the economics profession recruit and promote the individuals best able to bring the energy, the fresh insights, and the renewal that every field and every body of knowledge needs to remain healthy?

Here full speech is here.