Interview with the 2022 economic sciences laureate Ben Bernanke on 6 December 2022 during the Nobel Week in Stockholm, Sweden.

Where does your passion for economics come from? 

Ben Bernanke: I got interested in economics in college and it was because I didn’t know what I wanted to do. I was looking at all different fields; physics, literature, history, and the thing about economics was that it sort of combined all of the dimensions of the arts and sciences. It was quantitative and statistical, but it was also sociological because it’s dealing with people and society. I was also very interested in history, so a lot of my economics work has been economic history, for example, about the Great Depression. It was really a compromise of a whole different set of interests that got me into economics. 

What are the key implications of your research? 

Ben Bernanke: Some of the most destructive things that can happen to an economy is if you have a major financial crisis. That happened in the 1930s and that happened in 2008. We know that it can have tremendously bad effects on the regular economy and average people’s living standards. What I’ve tried to do in my work is understand first of all why financial crises happen. What kinds of things cause a financial crisis, and what is the relationship between a crisis and the ordinary economy? My work is about understanding that link and showing that link. One of the implications is that it’s very important to have a strong, stable financial system that will not collapse when there’s some kind of stress.  

How do you maintain your curiosity? 

Ben Bernanke: My curiosity is natural. I’ve always thought history was fascinating. I think economics has a lot of challenging problems in it from a sort of a problem solving or mathematical point of view, but it also has a lot to do with society. Almost any question you can think of in society – from the structure of families to the organisation of monetary policy, for example – can be studied with economics. If you get a little bit tired of one area, you can always shift to something else. It’s a very rich field because it does contain so many different types of questions that you could study. 

Was there a particular person who influenced you? 

Ben Bernanke: I had two very important mentors. When I was an undergraduate in college, I didn’t really know for sure what I wanted to do. I walked into the office of a professor named Dale Jorgensen, who was a senior professor, and I was a lowly undergraduate. I asked him if I could have a summer job, and he gave me one, which was very surprising. I worked with him on the research he was doing on the effects of energy price increases on the economy. This was the 1970s, and of course, we see that today as well. I ran computer programs for him. I used punch cards that went into the computer and studied the model that he had constructed. He was my advisor for the rest of college. My first professional article was co-authored with him. He has been very supportive throughout my entire career. 

He recommended – even though he was a Harvard professor, which is where I went to college – that I go to MIT for graduate school, because at that time in the 1970s, MIT was the best graduate program in the world. And I went to MIT immediately from college. Once again, although I knew I wanted to do economics, I didn’t know what field, what part of economics I would be interested in. I spoke to a professor named Stanley Fisher who was a macro economist or monetary economist, and asked him if I should write my thesis in monetary economics. He gave me a book by Milton Friedman and Anna Schwartz called A Monetary History of the United States, where they tried to explain the relationship between money supply and the economy, looking at a hundred years of US history. Fisher said: “Read this. If it puts you to sleep, then do something else. If you think it’s really interesting, then you should consider monetary economics.” I read the book and I just thought it was really interesting. So I focused on macroeconomics and monetary economics. Fisher was my advisor and I have had contact with him all the rest of my career. He went on to government, like I did. I went into monetary policy making. Fisher became the governor of the Bank of Israel, and then he became the vice chair of the Federal Reserve, being one of the very rare people who has served high in the government in two different countries.  These two people, Dale Jorgensen at Harvard and Stanley Fisher at MIT, did a lot to shape my interests and my career and have been great advisors throughout my entire career. 

How do you cope with failure? 

Ben Bernanke: You have to look ahead. Not everything works. If a certain project doesn’t work out and you don’t get a publication out of it, or the results are not what you hoped, maybe you learn something from that. Maybe you can see a new problem? Why did it fail? Maybe that gives you some insight into where your next step ought to be, or maybe you are just barking up the wrong tree, as they say in English. Maybe the question is not a good question. Maybe you need to rephrase it in a different way. Many scientists, and economists as well, say that a failure could be the seed of a new project or a new idea. At first, you’re disappointed. You feel bad about it. You put so much work into something and it didn’t work out. But if you learn something from it or you get a new idea from it, then it’s worthwhile. 

How do you move past failures and disappointments in your work? 

Ben Bernanke: Again, you have to look forward. Everyone, even the most accomplished scientists or politicians or writers, are going to have failed attempts. Even great novelists throw away a manuscript, or a painter would throw away a portrait, because it wasn’t up to his or her standards. I think it’s important to try to learn from what went wrong, to ask if you’re looking at the right question and then keep your eye on the future, because the past is the past. You had success, you had failure, but what matters is where you’re going from this point. I think that’s probably the best way to deal with failure. Everyone has to deal with failure, and you recognise that you’re not special, you’re not different. You have to deal with that as well. 

What advice would you give to a student or young researcher?

Ben Bernanke: Research is driven by curiosity and interest, and a desire to know and to understand a certain question. If you really enjoy working on a certain topic or reading about a certain area, that’s a very important consideration. Researchers work many long hours. Often they are doing things that by themselves are kind of dull because they’re part of a bigger project. If you’re not motivated by the question, if you’re not really interested in what you’re studying, then it’s impossible to do. You really have to find something that makes you excited and interested to learn more about. You see an opportunity to learn something that nobody else has done before.  

More generally I think that both for researchers and for people in other fields as well, it’s a combination of what you’re interested in. They always say in college graduation speeches, “you should follow your passion”. That’s true. You should follow something that excites you and interests you. But you should also think about: “What am I good at? What can I do better than other people? Where can I improve myself?” I love baseball, but I could never be a great baseball player because I don’t have that talent. If I tried to be a baseball player, it would be very frustrating. It’s important to be both interested and excited about the thing you’re working on, but also to feel that you have the potential to do good work, whether it’s in science or whether it’s in business or wherever it might be. And the combination is what makes for success. 

Can you tell me a bit more about your childhood and teenage years and how this influenced your interest in economics? 

Ben Bernanke: I spent my childhood and teenage years in a small town in South Carolina named Dillon. I went to public schools and my father was the town pharmacist. I had a fairly small town, ordinary childhood. It was the 1960s, and in South Carolina in 1960s, there was a lot of racial discrimination. White people and black people couldn’t drink from the same water fountain or couldn’t go to the same schools and so on. That was part of my life growing up. It was a good thing that I had some black friends. One in particular, helped me get into Harvard and put me on my course to a successful academic career. 

One thing I learned in Dillon was that people work really hard to put food on the table for their family. I worked as a construction worker for one summer, and I was a waiter on tables, and I worked in my father’s drugstore. Working in the drugstore wasn’t so hard, but the construction work and waiting on tables was very difficult, and the pay wasn’t that high. It impressed me that – if you’re not highly educated – to earn enough money to make sure your children can go to school and that there’s enough food, is very hard. You have to work very hard. So, when I became an economic policy maker and an economist, it was very important to remember that there are real people behind the numbers. That when unemployment goes up, real people lose their job and that makes a big difference for their ability to put food on the table. Living in a small, not very rich town gave me some appreciation of how hard people have to work to earn enough money to support their family. 

Do you have advice for young people with a similar background who might want to follow a similar path to you? 

Ben Bernanke: It depends on what they really want to do. I was fortunate to be able to go to some very good universities. I went to Harvard and MIT and that gave me a good start. Obviously, I worked with some very good professors and so on. But I don’t want to give the impression that you can’t be a successful academic or business person or whatever you want to do, only if you go to the very top universities. There are many good schools and colleges around the country. What’s more important than the name of the school is the professors you work with and your own dedication, your own willingness to work hard. It’s more important what you do there and who you work with and what you learn. That’s an important consideration. Does this college or university match my interests? Do I have the ability and the interest to really make use of what the school has to offer? I think you can get a really good education in a lot of places. It’s more about the student than it is about the college. 

What skills do you need to succeed as a researcher and policy policymaker? How can young students develop these skills? 

Ben Bernanke: There were close links between my research and my policymaking experience. When I was a researcher I studied history, I studied the Great Depression, I studied financial crises, and as a policy maker, I had to deal with some of the same problems. When I was in the government, I was a Federal Reserve chair during the financial crisis in 2008. While of course, there were many problems that were not anticipated, certainly some of the things I learned by studying earlier episodes, helped me think about it. More generally, some of the ability to analyse, to see what’s in common between two different kinds of situations, to think logically, are skills that help in almost any profession. Certainly, I took to my policy making a lot of what I had learned and a lot of the skills I learned as an academic. It is not always the case, that academics can move smoothly into policymaking, because they’re very different. In some ways, policymaking involves a lot more people skills, because you have to deal with the political side, you have to work with colleagues in the institution and so on. As an academic, you can stay in your own laboratory and work by yourself. But if you can make that transition, the analytical skills and the knowledge you gain as a researcher, can really help you be more effective in a policy making role. 

What skills are important for students or researchers to develop? 

Ben Bernanke: Every single fact that you learn in school or college will someday probably be outdated. The only way to continue to be effective and to be at the forefront of your field, whatever that might be, is to learn how to learn, how to think analytically, how to be critical, how to understand whether someone’s statement is true or can be verified. In general, the ability to learn and to think analytically is much more important than learning a set of facts, because the world is always changing. The demands on your abilities are always changing. You have to have the kind of skill that lets you adapt to new situations. 

Do you think it’s important to revisit or reanalyse subjects that people may have studied a lot already? 

Ben Bernanke: I studied the Depression because I just thought it was incredibly interesting. I had thought about it even back in my childhood. I had heard some stories from my grandmother about their life and the Depression, and it struck me as being such a strange situation that the economy just stopped working in a way. Why did that happen? The Depression had been studied, of course, but I didn’t think it had been solved by any means. I thought that we still needed to learn a lot, and I wanted to contribute to that effort. I think that since I wrote this paper 40 years ago – not just because of my efforts, but because of other people as well – that economists know a lot more now about the Depression than they did 40 years ago. Of course, it was an incredibly important event, not just because it helped shape the 20th century, but because it foreshadowed some of the problems that we’ve had in the world since then. I think that there was a lot to do. I was glad to be able to contribute to understanding that episode. 

In recent years, a lot more organisations have begun investing in the environmental, social and governance (ESG) movement. Is it important to invest in climate conscious actions? Do you think we’ll see more of these in the future? 

Ben Bernanke: I think it’s important for people who are taking investment decisions or business decisions to think about the impact on the environment and on society. I do think it’s also important to make sure that you’re not just putting the name on it, but that you really have to spend some effort to make sure that what you’re doing really and truly is helping, and it’s not just for show. The very wealthy people, who give their money to philanthropy, say: “Giving away money effectively is harder than earning it”. Because if you really want to be effective, you’ve got to learn about the types of needs that there are, and make sure that your money is working effectively to help improve the situation. While I do think that investment and business decisions should take into account environmental, social, and other considerations, I think it’s not so easy to make sure that you’re really being effective, and that’s a big part of that kind of investing. 

Can you tell us about the object that you are donating to the Nobel Prize Museum? 

Ben Bernanke: I brought a copy of my memoir. When I left the Federal Reserve in 2014, I’d been in the government for 12 years almost. I’d seen a lot of difficult situations ranging from the housing bubble to the financial crisis, to the Great recession. I had spent a lot of time testifying before Congress and talking to the broader public, and I thought I wanted to tell my story. So I wrote a memoir about the time, mostly about my time in government. I talked a bit about some of the earlier parts of my life as well.  

The book is what I gave to the museum, because I think it’s important to recognise that you can take what you learn in an academic or scientific context and bring it to application, whether it’s to a new industry, a new product, or to governmental service. I hope my memoir talks about how I took what I had learned and applied it in a very difficult economic situation. 

How does it feel going back to academic research after so long as a policymaker? 

Ben Bernanke: It’s quite different. I find that my research has changed some. When I was younger, I was doing mostly very technical research, more narrowly focused as young researchers tend to do. Now that I’ve had both the academic experience, but also the public policy experience in Washington, a lot of my work has been more broader based and more about broader issues. But I’ve continued to do more technical research as well. I think it’s important to keep abreast of new methodologies and what’s happening in the field. I’ve enjoyed it and it’s nice to have the pressure off, because I don’t have to meet some kind of “publish or perish” type of standard. I can write what I want to write about. I write books aimed more at the broader public, like my memoir, for example. I also write technical articles that are just aimed for research journals. It’s been an enjoyable transition. I can work as quickly or slowly as I like, and it’s been a good experience. 

Do you think it’s important to have hobbies outside of your research? 

Ben Bernanke: It’s important to keep your mind and your interests alive and alert. Some scientists work very many hours and they’re very focused on what they’re trying to do, which of course, is how you win a Nobel Prize, I guess. They don’t have a lot of time. I think it’s good for your mental health if you’re having a more balanced life, even for your creativity and your ability to be effective in solving problems. If you have some things outside of work, they give you a more balanced experience, including physical activities, cultural activities, reading about other fields and so on. 

When I was an academic, I worked long hours, but I never spent all my time on my research. I always tried to mix in other activities, very different activities as well. I thought it made me healthier and actually better able to do the work, because I wasn’t so narrowly focused on that research. 

If you could give someone one piece of advice, what would that advice be? 

Ben Bernanke: First of all you need to think about developing your thinking skills, your analytical skills, recognising that the issues and problems that you’re going to be dealing with over your life – whether they’re scientific problems or personal problems or whatever they may be – require the ability to analyse, to logically dissect a problem and figure out what’s the best approach. So, analytical thinking, I think is really essential.  

Then to be successful in the field, I think it’s important to combine both the passion, the intrinsic interest in the area – whether it’s a scientific area or a professional activity, like medicine or being business person, a lawyer or whatever you might be interested in doing – with a sense that you have a set of skills, that you either have or you can develop; that you can make yourself feel successful and make progress in that area. I think it’s important that you have both the passion and the feeling that you’ve got the necessary talents that will get you where you want to go. 

People often look for mentors when developing their skills. Do you think there’s a certain way to identify and find a mentor? 

Ben Bernanke: There’s usually a logical group of people that you could look at. If you’re a starting lawyer, for example, they’re going to be some partners in the law firm that would be a logical place to look. Or if you’re a young professor in a university, there’ll be some professors who have been there for a while who can be helpful. You want to look at people who are, broadly speaking, in your same area of interest, but have had more experience and know both how to solve either research problems or professional problems, but also can give you a few hints about how to shape your career, how to get promoted, how to move ahead, how to find interesting problems to work on, what kinds of job you should take when the opportunities arise. 

It is important to have mentors. You could have one mentor who is really important in your life for a long period of time, or you could just have a group of people. You go to that one person for a certain type of problem and another person for another type of problem. But all of us, whatever we’re doing, look to the generation above us, the older people who’ve had more experience, to help give us the benefit of that experience. 

When you are approaching a problem that you know is going to be difficult, how do you tackle that problem? 

Ben Bernanke: If we’re talking about an academic issue, one thing I would do is try to learn as much as I can about how other people have solved similar problems. I would look at the research literature to see what kinds of approaches have been used. Then I would try to think about what is it that is deficient about those approaches? Where do they go wrong? Where do they fall short? Can I think of a different way to approach the same problem? But I don’t think about it as approaching a really difficult problem. I try to think about it as looking at different parts of a problem, and in each case, trying to figure out sort of the underlying intuition. What is it that makes sense to me?  

For example, my research that was cited by the Nobel Prize Committee was about the effects of the collapse of the financial system on the Great Depression. Working on that required looking at lots of different literatures and reading a lot of history. But the basic idea – that if the banking system fails and everybody is going bankrupt and that’s going to hurt the economy – is not such a difficult thing to come up with. That motivated me to get into the details of that question, and to try to understand how other people had approached it and what I had to add to that. You’ve got to break it down. You’ve got to see what other people have done, and you have to be motivated to keep looking.  

I don’t know if it’s true that Thomas Edison tried hundreds of different types of materials before he found the one that made the light bulb work. But many types of science are sort of like. You have to look on lots of different possibilities before you find the thing that works. 

How did you react when you heard you’d received the Nobel Prize? 

Ben Bernanke: I thought I was being kidded. I didn’t think it was likely. What happened was that my wife and I had turned our phones off, as we always do when we go to bed, not anticipating any such information. And the committee couldn’t get in touch with me. They couldn’t get in touch with us. They tried our son, who is a doctor, and he says “he doesn’t take 4:30 AM calls”. So he put it on voicemail and went back to sleep. Finally, our daughter, who is also doing medicine in Chicago, heard a news clip, and she called us and gave us the news. It just was very hard to absorb for a while. I didn’t expect it to happen. But I was of course very gratified and began to think about what this experience would be like and how this would change my career. 

How does it feel to know that your research has had this lasting impact? 

Ben Bernanke: It’s very gratifying that people still read my research. I had a very long period where I wasn’t doing academic research, where I was in the government, but lot of people are still citing the earlier work, and that’s gratifying. What’s best about it is, not that I have solved some major problem once and for all, but rather that I’ve been part of the construction of how the profession as a whole is trying to understand for example banking crises or what causes a macro economy to fall into a depression. I have been someone who has put a block in that wall, who has helped build that understanding over time. The directions that I found interesting have been fruitful enough that people are still looking at those approaches. The gratifying part is not that you’ve solved the question once and for all, but rather that you’ve been part of a professional process where, working together directly and indirectly, economists have tried to better understand these really important problems. 

Watch the interview