Adriana D Kugler: Enriching data and analysis in economics with real
life experiences
Speech by Ms Adriana D Kugler, Member of the Board of Governors of the Federal
Reserve System, at the Women in Economics Symposium, Federal Reserve Bank of
St. Louis, St. Louis, Missouri, 4 April 2024.
* * *
Thank you, President Musalem, and many congratulations on the start of your new
position here at the St. Louis Fed. We are all so happy to have you as part of the
Federal Reserve System, and I am grateful for the opportunity to speak here today.1
I will start with the issue that has brought us here-why it is so important for women to be
a full and equitably represented part of the economics profession. There are, of course,
moral reasons for economics to reflect the values of our democratic society-it is the
right thing to do. But there are eminently practical reasons as well. Economics favors
the productive utilization of resources, and bringing more women into the profession
obviously makes better use of the talents and efforts of more than half of the population.
Greater diversity in a workforce yields better ideas and greater productivity, and the
field of economics has certainly been enriched by these contributions.
But today, I would like to focus on the benefits of greater representation of women that
accrue to economic research and policymaking-the way that you can make economic
analysis more constructive and relevant. In a broad sense, different experiences and
perspectives among those engaged in any social science should provide better insights
about how people think and act. But I would like to take this point a step further and
connect this issue of representation to the ways in which we approach economic
research. In particular, I will describe how my own personal experience has been an
important tool for me to use, in combination with the more familiar and rigorous tools of
the economist, in ways that I believe have strengthened my research. In doing so, I also
hope to show that personal experience can be used by you and others in our profession
to provide deeper insights about the questions we grapple with. If this is true, it would
constitute another way in which greater representation of women-and others with
underrepresented backgrounds-will increase and enhance the valuable contributions
that economics makes to society.
In my discussion, I will refer to some of my own past research to illustrate my general
approach to economics. Importantly, though, my comments today are only illustrative of
a general approach and are not commentary on any specific policy questions.
In explaining how I let personal experience and rigorous economic methodology inform
each other, I am going to employ, in a somewhat casual way, two words that you may
be familiar with. I think of a "deductive" approach as beginning with or relying on theory
or general observations and then using data or qualitative evidence to verify those
ideas in specific settings. For me, an "inductive" approach means beginning with
personal experience and specific evidence from a particular context and then moving to
more general lessons that we can draw on as economists about given issues or topics.
In my career, I have found it fruitful to employ both of these approaches at different
times, and often in succession or in alternation, to move from the specific to the
general, developing a theory and then sometimes using specifics to test that theory.
Let me start with a little personal background, since that helped form my approach to
research. I was born in the U.S. but grew up in Colombia. While there, my parents and I
traveled around the country, where I observed a broad range of social problems:
poverty, homelessness, child labor, and a lack of access to health care and other basic
necessities. As a child, when you see suffering to this extent, you wonder about why
and how it is occurring. Later, as an undergraduate, I found that economics offered
tools that could help society understand and, I hoped, address some of these problems.
What I started to see, and then saw more over time, was that in many ways the different
social problems I observed were closely related to the opportunities people have to
work and earn an income that reflects their effort and productivity as workers-in short,
issues at the heart of labor economics. It also turned out that the tools of economics-for
example, math and statistical analysis-were well suited to studying these questions and
helped ground my work in objective reality. So I developed these skills by pursuing a Ph.
D. in economics. During my career, I have conducted research on a range of topics,
including labor markets, productivity, and social safety nets. And, as I will show, I have
employed both the inductive and the deductive approaches that I have described here
to formulate economic questions, rigorously examine data and evidence, and then test
my conclusions.
The first example I want to share with you is a paper I wrote with Scott Imberman and
Bruce Sacerdote on the relocation of families displaced by Hurricanes Katrina and Rita.2
In 2005, I was a professor of economics at the University of Houston, in a city that was
a major destination for people forced to evacuate from New Orleans and the
surrounding area because of the hurricanes that year. Of the million people displaced
by the hurricanes in 2005, Houston received 75,000 evacuees, many of them
schoolage children.
Houston was a fast-growing city with schools that already faced challenges, so people
had questions about what effect this influx of new students might have on our local
schools-now stretched for resources-and the students already attending them. It
mattered to me as a member of the community with my own children attending those
schools. Fortunately, economics provided tools to explore this question.
The question we considered was about "peer effects"-does the performance of your
peers affect your own performance in school? How will students coming from other
schools affect the outcomes for those already in Houston? The research literature
showed some evidence of an effect, but the results were mixed. It is easy to imagine
some reasons why peers could matter. A key challenge was that, even if we could find
a relationship between the outcomes of the existing Houston students and their peers
from Louisiana, that would not prove that the new students "caused" the outcomes of
the existing Houston students. Classmates in the same classes with similar
backgrounds could have similar outcomes for lots of reasons. But in this case, these
new peers did not choose to attend certain schools based on pre-existing trends but
instead were assigned to schools based on their shelter location, which is basically a
random assignment-highly conducive to estimating causal effects. And the magnitude
of this particular event was large enough to provide lots of variation in the composition
of peers. I consider the approach we took to designing this study a good example of the
power of deductive reasoning-developing a hypothesis and then finding the data by
which to test it.
But we didn't just think about the data we started with. We had lots of discussions with
school administrators and teachers. What they had to say about their experiences led
us to explore ways in which the new students were affecting the existing ones, beyond
grades and test scores-for example, behavior in schools and absenteeism. As any
parent of school-age kids can tell you, these are obvious and significant factors in how
students learn, and these discussions resonated for me as a parent with kids in school.
My co-authors and I knew we had to make this part of our research.
Our basic approach in this paper was to relate changes in student outcomes with the
prevalence of evacuee children in their district, controlling for a rich set of factors. Our
conclusions were that in Houston, a large influx of evacuees did not generally have a
large effect on test performance of local students. We did detect some negative effects
in some subgroups, particularly in math. Motivated by discussions with teachers and
administrators, we also found some small negative effects on attendance and behavior.
Using traditional methods in economics, we conducted a number of what economists
call "robustness checks," making sure that our assumption that the relocating families
weren't picking school districts based on pre-existing trends held up, trying different
ways of measuring outcomes or specifying models, and attempting to exclude
alternative explanations, such as changes in teacher quality or educational resources.
Using these familiar methods, we had found that Houston schools were able to absorb
the new students with little aggregate effect on local students. But that finding sent us
back to think about the theories we had developed at the start of the project and the
different reasons that make peers relevant to a student. In a sense, now that we had
some results, what had started as a deductive analysis turned into an inductive one.
And by examining the data more thoroughly, we discovered that a crucial factor in
determining the impact of peers on academic outcomes was the extent to which
students are grouped and interact with classmates of a similar academic ability level.
Adding this dimension to our research, we found that peer effects were, in fact, stronger
among cohorts of students with similar academic ability. It is a nuance to our overall
finding of little significant effect and a result that I suspect would not have been
attainable without the personal experience that I brought to the project as a parent-one
of the factors that had motivated the work in the first place.
Let me offer a second example of this "inductive" approach, based on personal
experience, and the interaction with a "deductive" approach that resulted in research
that I am particularly proud of. As I said earlier, I taught at the University of Houston, a
great school that has a very diverse student body, with people from all walks of life and
at different stages of their lives. There were a lot of commuters, many still living at home
with parents. There were also a lot of actual parents in my classes and people who had
to work full-time jobs while completing their education. I once had a student who
needed to reschedule a final exam because she had to go to court to fight for custody of
her child. I had students who struggled to secure childcare to attend class, others who
struggled with access to transportation to and from campus. The hurdles they often had
to overcome were daunting. And while many obtained loans and other tuition
assistance, the challenges they faced were multidimensional, and I often found myself
thinking that their education would be much more successful if they had support in other
areas of their lives.
I had written two papers on a training program in Colombia that included a stipend for
3
workers. The stipend was intended to subsidize transportation for workers, with an
extra amount for women that was intended to supplement their costs for childcare. The
results found a significant boost to wages and employment from the training program,
especially for women, and we found that the gains stayed with those workers for over a
decade after the program. Moreover, we also found that the program encouraged
workers and even their relatives to pursue more formal schooling-high school and even
college. But these papers didn't allow me to explore the separate contribution of the
stipend to the wage, employment, and educational gains we found. My own experience
with students at the University of Houston suggested that this more comprehensive
support for the workers in training was important, so I decided to follow up on my
research.
So I wrote another paper-jointly with Felipe Barrera-Osorio and Mikko Silliman-based
4
on an experiment we conducted in collaboration with a training program. In this
experiment, we randomly offered stipends to some but not all workers. Students might
use the stipend to pay for transportation to and from the program, or perhaps to help
cover meals during the program, depending on what they saw as their most pressing
needs. I like to call this a form of "wraparound" support; the stipend wraps around the
main program to make it easier for people to participate. Some workers accepted to the
training program were put in a class that focused on technical skills, and others in a
class emphasizing social skills-again using random assignment. We found that
participants saw an increase in employment, hours worked, and wages relative to
workers who did not take the program, and the effects were greatest for women. Labor
market outcomes improved more for those who received technical skills training, though
this difference diminished after less than a year. And, lastly, we found that the effects of
the program were indeed magnified by the stipend program. The "wraparound" support
enhanced the value of the training program and likely helped mitigate the other labor
market challenges faced by participants.
This paper again shows how insights gained from personal experience, combined with
the deductive methods and tools of economics, can be the basis for good research. As I
suspected from my experience with my University of Houston students, providing
education is more effective, and the returns are higher, when students have some
"wraparound" support that makes their lives a bit easier. We took this inductive
approach and demonstrated it using standard tools of economics-randomization in a
carefully designed experiment.
And this approach continued in my past work as a policymaker. At the U.S. Department
of Labor and at the World Bank, I confronted questions that resonated for me with
experiences I had had and earlier applied in my work as a researcher. At the Labor
Department, I worked on workforce development issues, and we were able to include
access to more comprehensive "wraparound" services to promote strong take-up and
retention in these programs. When I was advocating for this approach, I thought about
my students in Houston and those workers in Colombia, all of them trying to overcome
big challenges and build a better life. And I was grateful then, and I'm grateful now, for
my personal experiences, which didn't come from a textbook or a lecture but helped
open my eyes to the answers to some of the important questions that economics strives
to answer.
The research and policy work I have just described predate my time as a member of the
Federal Reserve Board, and the policies I studied then are outside the purview of my
current role. But I continue to apply the general approach of bringing my own
experience, and the experiences I hear from others, together with the rigorous tools of
economics. I listen to people from a range of communities and backgrounds to better
understand the economic data and the statistical analysis we perform while working to
make monetary policy decisions within the framework assigned to us by Congress that
benefit all Americans.
So I will close my remarks by urging all of you to find ways to bring your unique
experiences into your work in economics. I am a woman, a Latina, an immigrant, and a
mother. As a person with this particular background, I have found that I have a unique
perspective I can bring to the economics profession. By all means, build the technical
skills you will need to prove your ideas; that is, indeed, critical in the economics
profession. But don't be afraid to bring up your own perspective, based on your own
experiences, when discussing economic issues. I think this is especially important for
women, whose perspectives are still underrepresented in the profession.
Whether you decide to pursue a path in economics focused on research, policy,
business, or some combination of these, you will make the greatest contribution by
becoming a true expert on the issues you work on. You will accomplish this by refining
your technical skills and, importantly, by bringing your unique perspective to each
problem you seek to solve.
1
The views expressed here are my own and are not necessarily those of my
colleagues on the Federal Reserve Board or the Federal Open Market Committee.
2
See Scott A. Imberman, Adriana D. Kugler, and Bruce I. Sacerdote (2012), "Katrina's
Children: Evidence on the Structure of Peer Effects from Hurricane Evacuees,"
American Economic Review, vol. 102 (August), pp. 2048-82.
3
See Adriana Kugler, Orazio Attanasio, and Costas Meghir (2011), "Subsidizing
Vocational Training for Disadvantaged Youth in Colombia: Evidence from a
Randomized Trial," American Economic Journal: Applied Economics, vol. 3 (July), pp.
188-220; and Adriana Kugler, Maurice Kugler, Juan E. Saavedra, and Luis Omar
Herrera-Prada (2022), "Long-Term Educational Consequences of Vocational Training in
Colombia," Journal of Human Resources, vol. 57 (January), pp. 178-216.
4
Felipe Barrera-Osorio, Adriana Kugler, and Mikko Silliman (2023), "Hard and Soft
Skills in Vocational Training: Experimental Evidence from Colombia," World Bank
Economic Review,
vol. 37 (August), pp. 409-36.