(Page 9 of 45) - Paper Autonomy, Private Ambition: Theory and Evidence Linking Central Bankers' Careers and the Economy authored by Adolph, Christopher.

engender conservative ideas about inﬂation and monetary policy. At least three diﬀerent mech-
anisms could produce pre-existing preferences for hawkish monetary policy: 1.) bankers may be
socialized to believe that inﬂation-ﬁghting is the primary purpose of monetary policy, 2.) wealthy
private bankers’ material interests may induce anti-inﬂation feeling,

and 3.) conservatives with

anti-inﬂation views may self-select into ﬁnancial careers.

Of the three possibilities, socialization seems most promising. It is reasonable to suspect cen-

tral bankers’ approaches to policy problems are inﬂuenced by prior work experience, and that the
monetary policy convictions of career-based peer groups inﬂuence central bankers.

The premise

that work experience inﬂuences attitudes is widely held by organization theorists (Hambrick and
Mason 1984, Gunz and Jalland 1996, van Maanen and Schein 1979). Experiments show that
industry-background and past functional roles within organizations inﬂuence executive decision-
making (Dearborn and Simon 1958, Beyer et al 1997, Melone 1994, and Hitt and Tyler 1991)
and in particular what information decisionmakers perceive as relevant (Rosman, Lubatkin, and
O’Neill 1994). Though there is scant recent work, students of political elites noticed in the 1970s
that career socialization had pervasive, lingering eﬀects on the behavior of policymakers (Putnam
1976). One scholar of comparative elites went to far as to assert that “[v]alue-socialization is not
parental, or even based on early political experience, but apparently takes place from working in
a given ﬁeld or institutional setting” (Barton 1973, p. 242; quoted in Putnam 1976).

For a political example of career socialization, consider American Supreme Court justices.

Long viewed as wise arbiters of legal precedent, justices have turned out to be political beings
whose policy preferences systematically inﬂuence their decisions (Segal and Spaeth [1993] built
the coﬃn for the legal theory, and Bush v. Gore hammered the nails). In part, justices owe
their policy preferences to their career tracks; for example, justices with prosecutorial experience
are more conservative on civil liberties decisions, controlling for the judge’s partisanship and
appointing president’s ideology (Tate and Handberg 1991). Since Supreme court justices generally
lack career concerns, this seems to follow socialization (and perhaps some self-selection), with
the experience, training, and environment of prosecutors imparting conservative policy beliefs.

For ﬁnancial-sector-trained central bankers, the socialization argument is similar: work

within a sector that fears inﬂation and considers the struggle against it the only acceptable
monetary stance should shape the central banker’s own attitudes on monetary policy.

Hence,

See Scheve (2002a,b) for cross-national evidence that asset wealth leads to anti-inﬂation attitudes, and Burden

(2000) for evidence that policymakers consider their material interests in passing laws

Some speculate that central bankers might someday form (Kapstein 1992) or perhaps already constitute a

cohesive community collectively puzzling through policy choices; this perspective would relocate the socialization
process within the central banking community itself. This paper does not suppose the existence of a policy
community of central bankers, though the argument made here would jibe with the notion of several distinct
communities (ﬁnanciers, bureaucrats, and economists) intersecting the world of central banking. In particular,
the growing cooperation among central bankers and academic economists on monetary policy research has struck
several observers (e.g., McCallum 1999), but as the data collected here show, economists remain a minority of
central bank leaders, and comprehensive explanations of central banker behavior will thus need to reach beyond
the economic community.

Private bankers have a long-standing reputation for conservatism on inﬂation, though I am unaware of any

systematic surveys of their attitudes. In the US, members of Congress and the Federal Reserve believe that “[i]f
one’s goal is to minimize inﬂation ... a sure way to achieve that goal is to have private bankers—who are among the
world’s ﬁercest inﬂation hawks—appoint the regional bank presidents” (S. Greenhouse, “Showdown: The populist
versus the Fed.” New York Times October 12, 1993, D1). And in many cases, banks’ fear of inﬂation surely has
a rational basis. For example, Santoni (1986) provides evidence that the stock prices of banks react negatively to