Janet Yellen: The cheery economist tipped to be the first lady at the Fed

There is perhaps only one thing in their notoriously contentious discipline upon which all economists agree: Janet Yellen is unusually kind and decent. Sir Partha Dasgupta, now a professor at Cambridge who rented his house to her in the late 1970s, says: “If we were neighbours I can easily see myself discussing personal worries with her.”
After a bruising fight within the Democratic party over President Barack Obama’s preferred choice, Lawrence Summers, Ms Yellen is now the frontrunner to replace Ben Bernanke as chair of the US Federal Reserve. Ms Yellen’s trajectory through academia was steady rather than stellar but, at the age of 67, she is poised to take the tiller of the US economy. Yet it is not her warmth that has put Ms Yellen in this position. “I think that Janet is truly brilliant,” says Jim Adams, a professor at the University of Michigan, “and who knows brilliance better than a co-author”.
Born in a working-class area of Brooklyn, New York, in 1946, her father was a family doctor who worked from the ground floor of their terraced house on Ridge Boulevard; her mother had taught elementary school but quit to look after Ms Yellen and her brother, who was four years older.
The family were Jewish, although not particularly observant. Academic success was prized, and Ms Yellen excelled at the local public high school where she was top of the year in just about everything. She picked up from her mother, who managed the family finances, an interest in stocks, economics and the business pages of the newspaper.
Attending Brown University in Rhode Island, she had intended to study maths but switched to economics because it was still rigorous but less abstract. Ms Yellen graduated with highest honours but her one appearance in the student newspaper, in 1966, was as a protester.
The dean of Pembroke – until 1971, the college for women attending Brown – had suspended a girl for failing to sign out of the college in order to spend the night in a man’s apartment. A photograph shows an earnest Ms Yellen with a Jackie Kennedy bob discussing reform of the Pembroke social code.
She went on to Yale to study for a doctorate with James Tobin, the great Keynesian economist and Nobel Prize winner. Joseph Stiglitz, another Nobel winner, also then at Yale, says Tobin’s views on the interplay of financial markets and the real economy made a deep impression on Yellen. “Janet very much understood the power of markets and the limitations of markets,” he said.
Later, she taught at Harvard (where one of her students was one Lawrence Summers). She became a staff economist at the Fed, but it did not last long, because she met a visiting research fellow called George Akerlof – later a Nobel Prize winner himself – in the cafeteria. They married and after a spell in London teaching at the London School of Economics, the couple eventually washed up in San Francisco, where Akerlof and Yellen were the names on the top of a long series of academic articles in the 1980s. Colleagues say they complemented each other: the intuitive Mr Akerlof came up with wild ideas. The rigorous Ms Yellen channelled them into careful, logical arguments.
Ms Yellen seemed destined for a career of relatively anonymous academic success until, in 1994, aged of 48, there was a phone call from the White House. She began a new career serving in succession as a Fed governor, chair of President Bill Clinton’s Council of Economic Advisers, head of the San Francisco Fed and – now – vice-chair of the Fed board of governors.
Before this summer she had seemed an obvious choice for the chair. Bradford DeLong, a fellow economist at the University of California, Berkeley, said she had “shown a better understanding of the state of the economy and the impact of economic policies than most of her peers at the Fed”.
As well as her record, she would offer the president an opportunity to appoint the first woman to lead the US central bank. Yet the White House wanted Mr Summers, a former Treasury secretary. In part this owes something to Mr Summers’ personal links to the Obama administration: he had been an adviser to the president and enjoyed his trust.
One question often asked about Ms Yellen – often with a scarcely disguised sexist subtext – is whether a person described as “lovely” and “delightful” can be tough enough to run the Fed. Her period in the sharp-elbowed Clinton White House was often difficult, according to those who worked with her.
But staff at the Fed found it amusing to see a Yellen appointment depicted as a soft option compared with the supposedly tempestuous Mr Summers. She has relentlessly pushed for the Fed to consider new communications policies during the past few years, and sometimes ruffled feathers among the staff.
“She was demanding of us, it’s true, but never in the light that ‘you will do this because I want this done’,” says Mary Daly, who worked for Ms Yellen at the San Francisco Fed. “She would never ask more of us than she would of herself, and always for the right reasons – to improve her policy decisions.”
But unlike those driven to prove themselves or fleeing personal demons by climbing the ladder of power, Ms Yellen seems motivated by genuine fascination with the questions she deals in. “I know it does sound too good to be true but she really does analyse issues to see where they take her,” says Michael Katz, a Berkeley colleague.
In private, friends say there is another side. “She has a really good sense of humour. Her husband can make her laugh until she’s almost in tears,” says Laura Tyson, a Berkeley professor who preceded Ms Yellen at the CEA. “I think she’s a well-adjusted person. I think she’s had a happy life.”
It seldom happens that a happy person rises to a position of highest authority. The plot could still twist – but, in the next few weeks, Ms Yellen may become the world’s most powerful economic policy maker.

Fonte: FT