Ceilidh

Michael Zey
futurist3000@aol.com

In an 80-year-old building on Locust Street downtown, researchers tapped into
an unusual link between the economy and hell.

A belief in hell, they wrote in a headline-grabbing report last year, can be
tied to a nation's economic growth. Some observers scoffed. Others were
intrigued. The main result was this: The premise ran through the media like
wildfire.

Two weeks ago, the research team was at it again. This time, they landed a
mention from talk show host Jay Leno. The gist of their latest report: Ugly
people are paid less.

Provocative, yes. But the real eye-catching aspect of these reports may be
their unlikely source, the stately Federal Reserve Bank of St. Louis.

The nation's Federal Reserve system is better known as a bastion for the
esoteric and highbrow. Its St. Louis bank, however, has recently taken on
topics ranging from the bizarre to highly controversial.

To be sure, the economists at 411 Locust still ponder the "asymmetric effects
of monetary policy," as one recent report read. More tantalizing research is
finding a place, too. Underlying the trend is a move toward more freedom and
openness at all Federal Reserve banks and a desire to connect with the
communities they serve.

"Based on the media attention we've received, people are interested, and I
think that's good for the economics profession," said Michael T. Owyang, a
senior economist at the St. Louis Fed and co-author of the report on appearance
and pay.

"In reports like these, we're not trying to solve complex mathematical
problems," he said. "We're trying to pique people's interest."

Owyang did much more than that in his report, "So Much for that Merit Raise:
The Link Between Wages and Appearance."

He and a co-author cited a 9 percent "plainness penalty" on the wages of
workers with below-average looks.

In addition, they concluded that short men tend to make less than their equally
qualified, but taller, peers. And obese women earn lower wages, too.

The report also suggested some reasons for the disparity, including the idea
that appearance can affect confidence and that employers might think customers
would rather interact with attractive employees.

The report was a hit, finding its way into countless newspapers, network TV
news and Leno's monologue.

A stark contrast to the stuffy world of serious economics, Owyang's piece
rankled some observers who find it odd subject matter for a federal agency with
a highly technical job. "These guys are really doing some very important work
these days," Fortune magazine writer Andy Serwer scoffed on CNN.

Founded in 1913, the Federal Reserve Bank has developed an increasingly high
profile with the average American over the past few decades. A major factor has
been Alan Greenspan, the Fed chief who's become a national icon.

Still, most Americans don't really understand what the Fed does. Along with
regulating the banking industry, it plays a critical role in the health of the
economy. By adjusting interest rates and using other means, the Fed stimulates
or reins in growth.

But the Fed also does research. Teams of 20 or so economists originally were
formed at each of the 12 Federal Reserve banks to study policy issues. The
research was once tightly monitored. Today, these economists have much more
freedom.

While the reports have been met with a snicker at CNN and other news venues,
the ones dealing with hell, appearance and other lighter subjects serve a more
serious function for the Fed, said Cletus Coughlin, deputy director of research
at the St. Louis bank. They generate interest in economics, they entertain
readers and they raise the public profile of the St. Louis Fed, he said.

"The Fed banks are not just workshops for monetary economists," said Joe
Haslag, a professor at the University of Missouri at Columbia and former Fed
economist. "They're places where all kinds of economists work and where they
can do research on the topics they find interesting."

The report on hell and the economy was released in mid-2004. Similar to the
report on appearance and wages, the piece was based primarily on research done
outside the Federal Reserve.

In both cases, Fed economists found several obscure outside studies, analyzed
them, drew conclusions and released their own reports in a glossy publication,
The Regional Economist.

The report, "Fear of Hell Might Fire Up the Economy," cites a study that
concluded a belief in hell was positively related to a nation's economic
growth. Unfortunately, the Fed report was marred by statistical errors in
crunching some numbers. Changes were made, and it was re-released.

In some ways, the lighter topics are indicative of broader changes at the
Federal Reserve, said David C. Wheelock, an assistant vice president and
historian at the St. Louis Fed.

"I think people have discovered that the institution isn't going to collapse
just because an economist wrote about a controversial topic," Wheelock said.

One report, released three years ago at the height of debate over a new
Cardinals stadium, said new sports venues do little to stoke a city's economy.
Another report weighed the benefits of light-rail transit systems.

Owyang said the response to his piece on wages and looks has been overwhelming.
So much so, he said, that the reaction to a more serious report might be a
letdown.

"I recently did a piece on how monetary policy affects different regions of the
country," he said. "Boy, people didn't find that interesting."

To many Americans, the Federal Reserve is a staid, shirt-and-tie-type
organization that deals with stuffy topics. But the St. Louis Fed has recently
received lots attention for its off-beat and controversial reports, including:

Date Title Conclusion
April 2005 "So Much for that Merit Raise: The Link Between Wages and
Appearance" Attractive workers earn more money
July 2004 "Fear of Hell Might Fire Up the Economy" A belief in hell is
positively linked to a nation's economic growth
April 2002 "For Love or Money: Why Married Men Make More" Married men are paid
better than their single peers
April 2001 "Should Cities Pay for Sports Facilities?" New stadiums are a poor
investment for cities
April 1999 "'Voting with Your Feet' and Metro-area Livabilty" Ranked the "most
preferred" cities based on relocation patterns.