Diverse Policy Committees Can Reach Underrepresented Groups

Abstract

Increasing the diversity of policy committees has taken centre stage worldwide. Whereas the equitable and ethical motivations are clear, the economic channels through which more diverse policy committees might be more or less effective are still elusive. In this paper, we design a randomized control trial to test whether the diversity of policy committees increases their ability to influence consumers’ economic beliefs, which in turn affect choices. We vary consumers’ awareness of minority representation in the Federal Open Market Committee (FOMC), the main US monetary policy body. Female and African American subjects trust the FOMC more and update their unemployment expectations more in line with FOMC forecasts after being made aware of the presence of underrepresented demographics. White male subjects, the group traditionally overrepresented on the FOMC, do not differentially react to the identities of the policymakers. Underrepresented groups are more likely to acquire Fed-related information when it is associated with an underrepresented committee member. Our findings suggest that more diverse policy committees may be better able to reach the broader population, thereby increasing policy effectiveness. (join with Francesco D’Acunto and Michael Weber)