Crafting Consensus - Can language change the economy? Essex academic investigates

  • Date

    Tue 2 Mar 21

Book cover

Homogeneity amongst top policy makers damages debate, means ideas are not properly scrutinised and policies articulated are unclear – according to research at the University of Essex.

Dr Nicole Baerg, from the Department of Government, has recently published a book analysing the language central bankers use when announcing policy and she suggests the findings have much wider implications across many other sectors including health and education. 

Crafting Consensus – Why central bankers change their language and how speech changes the economy is published by OUP and looks at empirical evidence from the United States, Germany and Latin America. The book highlights the need for committees throughout the policy-making world to have diversity of opinion within them to ensure clear directives and well-constructed communications can be used to disseminate the consensus reached.

Dr Baerg said: “Large institutions are starting to understand that individuals are sensitive to transparency in messaging and clarity of language and so are waking up to the need to help journalists and others understand what is being discussed and agreed so they can better report to the general public.

“Within the COVID 19 setting, we have seen how unclear messaging has led to confused reporting and then a lack of adherence to advice. So, who do we need in the scientific and other expert committees? Really smart people, from different disciplines with different ways of thinking. This will then force people to think differently, will protect against collusion, bullying or factional tactical approaches.”

Dr Baerg has combined machine learning, experimental surveys, and statistical analysis to show how the level of transparency on a committee is constrained by the preferences of the committee members. She then shows how the way that information is presented helps explain variation in the economy, especially inflation outcomes.

At a time when governments across the globe are pulling together experts into committees to inform and frame policy to move on from the COVID-19 pandemic, the conclusions drawn from Dr Baerg’s research could not be more pertinent.The internal conflict created by a diverse Board or Committee leads the members to hold each other to account and thereby achieve greater horizontal accountability. This accountability leads to change in the way messages are put together which affects their actions and thus affects the policies going forward. 

This is a strong argument against homogeneity in organisational structures and provides a clear path away from strategic vagueness towards more clearly articulated and argued positions on which policy can be formed and communicated.

Panel event 

Dr Baerg will be discussing the findings in her book and how they are relevant to promoting women and minorities onto corporate boards as part of events organised by the Department of Government to mark International Women’s Day. 

Wednesday 10 March 2021,  4.00pm to 5.45pm    

Book presentation: Nicole Baerg’s Crafting Consensus 

Register for the event

Interested in political economy? Wondering how to turn your dissertation into a book? Want to meet successful female scholars who are conducting important research in a field dominated by men?

Dr. Nicole Baerg’s book will be discussed by three brilliant political economists Dr. Despina Alexiadou, University of Strathclyde; Dr. Carola Binder, Haverford College; and Dr. Amy Pond, Technical University of Munich, and moderated by Dr. Laura Montanaro.  

 People registering for the talk will receive a promotion code from OUP to enable them to buy the book at a reduced rate.

Praise for Crafting Consensus

Jeffrey Frieden, Professor of Government, Harvard University: “Monetary policy has been the most important tool of economic policy in the developed world for decades. Scholars, journalists, investors, and other observers watch carefully what central banks do and say. In Crafting Consensus, Nicole Baerg brings the latest theoretical and empirical tools to bear to analyse how the structure of central banks affects their actions and their words. Her theory clearly links central bank organisation to the clarity and effectiveness of monetary policy. She backs up the theory with a range of empirical evaluations. A textual analysis of the Fed’s decision-making, a German survey, and cross-national Latin American evidence all provide empirical force for Baerg’s argument. This is a clear, compelling analysis of central bank organization and behavior, of interest to anyone interested in economic policy or political economy.”

Cheryl Schonhardt-Bailey, FBA Government Department, London School of Economics and Political Science: “Baerg’s Crafting Consensus is unique in challenging common assumptions about monetary policy committees. On accountability, she argues that diversity among monetary policy committee members encourages internal conflict, and thereby ensures that they will better hold each other to account (ie greater “horizontal accountability”). Baerg’s argument reads like a rigorous adaptation of Janis’s classic Groupthink, but here, the important product of a diverse committee membership is greater clarity in monetary policy announcements, and thereby, more effective communication by central banks.”

For more information on how to buy the book visit Oxford University Press website.