Janet Yellen: The Social Scientist in Charge at Treasury
Janet Yellen, appointed as the 78th secretary of the U.S. Department of the Treasury in January, has a long history of work in and alongside the social sciences above and beyond her role as an academic economist and policy maker. From an early age, Yellen – the first women to serve as a Treasury secretary, just as she was the first woman to chair the Federal Reserve – has been making the connections between numbers and charts and people and everyday issues. She is also the first academic to serve as secretary in more than two decades.
Yellen is an award-winning academic economist, graduating summa cum laude from Brown University in 1967 with a degree in economics. According to a profile in Brown’s alumni magazine, Yellen switched from her original major — in philosophy — after she learned about the Fed’s impact on the overall economy. “I was fortunate,” she once said, “to take economics during my first year at Brown, and that was love at first sight, and I never looked back.” She immediately realized her ability to address “things fundamental to human welfare, opportunity, the ability to support one’s family and achieve one’s goals…” through the subject.
At Yale, where Yellen earned her Ph.D., she wrote her dissertation under the supervision of 1981 Noble prizewinner James Tobin, who argued that central banks can help lower national unemployment. Yellen described her late mentor as someone who pushed his students to produce “work that would not only meet high intellectual standard, but would [also] improve the well-being of mankind.” Yellen also studied under Joseph Stiglitz, another Nobel laureate, whose work also focused on income distribution, globalization, and macroeconomics, among others. After receiving her PhD from Yale in 1971, Yellen worked as a professor of economics at Harvard University and later, the Haas School of Business at the University of California, Berkeley. Between the two roles, she was recruited in 1977 to work with the Federal Reserve Board of Governors and assigned to research international monetary forms. She met her future husband, George Akerlof, in the Federal bank cafeteria. Akerlof and Yellen married in 1978 and moved to London, where Akerlof had accepted a teaching position at the London School of Economics and Political Science. In London, Yellen lectured in economics.
Yellen’s publications and research address a host of social and behavioral science issues, including topics ranging from job satisfaction to advertising — and even out-of-wedlock births. In her 1996 paper “An Analysis of Out-of-Wedlock Childbearing in the United States,” Yellen and her co-authors argued that the increase in out-of-wedlock births was caused by a ‘technological shock’ of legal abortion and oral contraception. Her 1985 paper “Unemployment through the Filter of Memory,” co-authored with Akerlof, measures the psychological painfulness of unemployment by comparing peoples’ recollections of their unemployment with the experience of it.
Her research and the economic models she created have helped to form the foundation of a New Keynesian philosophy for macroeconomics that stressed the role, hopefully positive, that governmental economic and monetary policies have on real people. She brought this stance with her to the Federal Reserve. In 1994, she was appointed by President Bill Clinton to the Fed’s Board of Governors. Three years later, she was named chair of the White House Council of Economic Advisers. After serving as president of the Federal Reserve Bank of San Francisco in 2004, she was appointed vice chair of the Federal Reserve by President Barack Obama in 2010, then served as the chair from 2014 to 2018. “In a field noted for its conservatism and adherence to free-market orthodoxy,” John Cassidy wrote for The New Yorker shortly before she was nominated to lead the Fed, “she has long stood out as a lively and liberal thinker who resisted the rightward shift that many of her colleagues took in the eighties and nineties.” Once in charge, she oversaw a slow set of interest rate increases to see if unemployment could fall further without raising prices. Now, these policies are widely seen to serve as the foundation for a strong labor market and expansion that drove unemployment to its lowest rate in 50 years before the pandemic.
Now, Yellen serves as a liaison between Congress and the White House on fiscal spending packages. In true Keynesian fashion, Yellen is focused on furthering social progress paralleling the human costs with financial ones when strengthening the U.S. economy. She has confirmed that her economic plan will focus on helping the neediest families and businesses who she believes she can relate to. In her opening speech to the Senate Finance Committee, she spoke about her father and his work as a doctor treating the ‘whole’ patient. She said, “I’ve always tried to approach my science the same way my father approached his: as a means to help people”. She cites her upbringing, raised by two parents who were college students during the Great Depression, as an influence on her economic stance.
In addition to her new role at Treasury, Yellen is professor emeritus at the Haas School of Business. She was also named Eugene E. and Catherine M. Trefethen Professor Business and Professor Economics, and she has been awarded for outstanding teaching twice in 1985 and 1988. Prior to her role with the Treasury Department, Yellen was a Distinguished Fellow in Residence with the Economic Studies Program at the Brookings Institution. According to her profile by the U.S. Department of Treasury, during 2020-21, she served as the President of the American Economic Association. She is currently a member of the American Academy of Arts and Sciences and the Council on Foreign Relations. She was also a founding member of the Climate Leadership Council. Lastly, as the 2017 recipient of the Paul H. Douglas Award for Ethics, Yellen is celebrated for contributing to the practice and understanding of ethical behavior and fair play in government.
