The first Black president of one of the dozen regional Federal Reserve banks in the more-than 100-year history of the U.S. central bank, said the academic field of economics and finance must acknowledge the influence of race in their work in order that solutions to the racial wealth gap can be found.
“In our country, we too often assume institutions are benign. But people shape institutions, which can, unintentionally or otherwise, contribute to outcomes that are far from harmless,” said Raphael Bostic, the president of the Atlanta Fed, in a speech to Princeton University’s Bendheim Center for Finance.
The median white household in America today holds 10 times the assets of the typical Black household. This ratio has not improved from what it was more than 100 years ago, Bostic noted
“Something more fundamental must happen. The fields of economics and finance must acknowledge that the influence of race is multidimensional and persists over time,” Bostic said.
Read: Black economists discuss racial wealth gap
Academics need to “look under the hood” on U.S. institutions to see and truly understand their design.
“With such an understanding we can then find more creative and accurate ways to incorporate race in our models, estimation approaches, and narratives. This, I hope, will yield better insights and result in a set of policy prescriptions that can truly create meaningful and lasting change,” Bostic said.
Too many students of economics and finance are unaware of the checkered history of government institutions.