Defying the stereotype of the central banker as a serious and staid personality, it turns out those who formulate policy at the Fed have been known to crack a joke or two while on the job. A forthcoming article in Economic Inquiry examines such interludes of humor that took place at meetings of the Fed’s Open Market Committee . Written by Kevin Capehart, a doctoral candidate at American University in Washington, the article has the engaging title, “What’s So Funny About Monetary Policy” .
Here is the summary:
During their meetings, the members of the Federal Open Market Committee (FOMC) make monetary policy, but they also make each other laugh. This article studies the amount of laughter elicited by members of the FOMC during their meetings. The study finds that a member elicits more laughter if he or she expects higher inflation, other things being equal. This finding suggests that members may use humor to cope with the threat of inflation
This is too Freudian by half. Laughter does not typically involve the relief of tension as Capehart seems to think in sympathy with the famous psychoanalyst from Vienna. And even on those occasions that it does, there is a deeper emotional dynamic at work.
To understand the nature of laughter, we need to go back a few more centuries to Thomas Hobbes, the 17th century British philosopher best known for his teaching about the state of nature. While there is much that can be criticized in his political theory, his analysis of the human passions was incisive. He saw laughter as a feeling of sudden superiority about one’s self or in relation to the thing being laughed at. As he put it in his wonderfully Shakespearean English prose:
Sudden glory, is the passion which maketh those grimaces called LAUGHTER; and is caused either by some sudden act of their own, that pleaseth them, or by the apprehension of some deformed thing in another by comparison whereof they suddenly applaud themselves (Leviathan, ch. 6)
This explains why we laugh when someone walks into a glass door. In that instant, we see that person as an idiot and exult in the thought that we are not so dumb as to fail to notice the glass that is so clearly there. Hobbes’ view of laughter also explains why satire is such a biting form of criticism. By provoking laughter, satirists make their audience look down on whatever object they happen to be targeting. In laughter, there is always a contempt that is being expressed – hence, why we assuage friends that we are laughing about by assuring them that we are not laughing at them, but with them.
To bring this all back to the central bank: If Hobbes is right, then the fact that someone there is most liable to get a laugh by raising the prospect of higher inflation means that this scenario is ultimately not taken seriously by our central bankers. It is basically to say that anyone who worries about such things is a lesser mind.