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Psychologically Profiling Larry Summers and Timothy Geithner: Who makes the better Fed Chair?

Drawing on a September psychological profile of Ben Bernanke, profiles of Timothy Geithner and Larry Summers are constructed to provide a unique view into the leadership styles of both men, and illuminate how each may lead as head of the Federal Reserve.

Introduction

Last September, I wrote a piece that I am happy to say received a good amount of attention in which I conducted a psychological profile of Federal Reserve Chairman Ben Bernanke. The piece was inspired by the debate about whether and what a QE3 would look like. David Beckworth had made a statement about how the most important factor in projecting Bernanke’s action was his leadership, and I wanted to put his hunch to the test. There is a small but well-established field called “political psychology” that I was exposed to in a graduate leadership class I took by one of the preeminent political psychologists, Dr. Margaret Hermann. Using one of the schemes for psychologically analyzing political leaders, I put Bernanke through the process. Now that the election is over and public debate about who Bernanke’s successor will or ought to be is starting to heat up, I thought it would be interesting to put the two most talked about potential replacements, Timothy Geithner and Larry Summers, through the same process.

In the interest of brevity, for the nitty-gritty on how I performed the psychological analysis, I’ll refer you to the September piece. In brief, I used a piece of software called Profiler Plus that processes text from the candidate’s speeches and interviews according to the psychological schema selected. In both the Bernanke piece and this one I’ve chosen to use Dr. Hermann’s Leadership Trait Analysis (LTA) schema. Profiler plus determines a candidate’s scores on a number of factors, and LTA uses those scores to assign the candidate to certain leadership profiles, which are constructed on the answers to three questions:

1. How do leaders react to political constraints in their environment – do they respect or challenge such constraints?

2. How open are leaders to incoming information – do they selectively use information or are they open to information directing their response?

3. What are the leaders’ reasons for seeking their positions – are they driven by an internal focus of attention within themselves or by the relationships that can be formed with salient constituents? Put another way, are they motivated by problems or relationships?

The scores on the following seven traits provide the answers to the above three questions:

1. Belief in one’s own ability to control events

2. Need for power and influence

3. Conceptual complexity – “the degree of differentiation which an individual shows in describing or discussing other people, places, policies, ideas, or things.”

4. Self-confidence

5. Motivation for seeking office (Task orientation)

6. Distrust of others

7. In-group bias

Again, for more details, please see the original piece. For the full explanation, feel free to track down Dr. Hermann’s introductory piece:

Hermann, Margaret G. “Assessing Leadership Style: A Trait Analysis.” November, 1999. Revision, 2002. Copyright by Social Science Automation, Inc. Retrieved from: http://www.perceptionmetrics.net/dazocs/LTA.pdf

The Results

The table below shows the scores for each of the three men on the seven traits. Speeches and interview answers were used, and as many off-the-cuff comments captured as possible to focus on extemporaneous (versus prepared) speech as possible. The Bernanke scores are the same from the September piece. The World Leaders and Anglo-American norming sets represent a total of 284 leaders (World Leaders n=284), of which 15 are Ango-Americans. Bernanke, Geithner, and Summers are not part of the larger norming sets.

 

 

World Leaders

Anglo-Americans

Ben Bernanke

2002-2012

Timothy Geithner

2009-2012

Larry Summers

2009-2012

Trait

Mean

Mean

Score

Score

Score

Control over events

.35

SD=.54

.36

SD=.04

.27

.42

.28

Need for power

.26

SD=.05

.24

SD=.04

.24

.30

.24

Conceptual complexity

.59

SD=.06

.60

SD=.05

.75

.63

.68

Self-confidence

.36

SD=.10

.45

SD=.06

.41

.59

.55

Task orientation

.63

SD=.07

.62

SD=.06

.82

.69

.73

Distrust of others

.13

SD=.06

.12

SD=.03

.10

.09

.15

In-group bias

.15

SD=.05

.13

SD=.03

.08

.15

.13

 

Examining the Results

As I said of Bernanke in September:

“He (1) respects constraints, (2) is open to information, and (3) is problem-focused. This makes him an “Opportunistic” leader according to LTA. An Opportunistic leader is expedient. Bargaining lies at the heart of their strategy, and they work for consensus among other important actors. This puts him in the leadership style company of the late Serbian president Zoran Djindjic, former Prime Ministers John Howard, Silvio Berlusconi, Jose Socrates, Jose Maria Anzar, Jose Luis Zapatero, and current Prime Minister Recep Tayyip Erdogan.

“His style as a function of responsiveness to constraints, openness to information, and motivation suggests he is “reactive” leader who focuses on assessing what is possible in the current situation given the nature of the problem and considers what important constituencies would allow. This is a fitting style for an economist and a Fed chair. Because he is neither elected nor accountable to an electorate, he can be focused on the specific problems of the Federal Reserve. And, his economics training gives him a high degree of rationality and appreciation for structure.”

All three men are open to new information and problem-focused, which I consider desirable for the head of the Fed. These traits tend to lead to longer decision-making processes, so may be undesirable for other positions. For example, a lieutenant colonel leading 15 Marines in Anbar likely needs to make decisions more quickly, and therefore having traits that tend to create longer decision-making processes leads to a poor leadership fit. Likewise, someone who is on the other spectrum from problem-focused means they work to reach decisions primarily by forming coalitions. Thus, a relationship-focused leader fits much better into a parliamentary system than does a problem-focused leader, who benefits from a more executive-dominated process.

Given the Fed’s historically limited role (which Bernanke is changing, a process I addressed in the September piece), the head has the benefit of long periods during which to consider challenges and choices. Therefore, having someone who consumes a wide variety of information while remaining focused on a problem takes full advantage of the Fed’s timeline.

The scores for Larry Summers show he is more similar to Bernanke than Geithner across the LTA profile, and therefore he is also considered an opportunistic leader. Both men respect constraints, which means having a tendency to more frequently work within established parameters. Being opportunistic leaders, Bernanke and Summers tend to be reactive to problems by assessing what is possible given the situation and working with important constituencies to find resolution.

As I mentioned in the Bernanke profile, while he does have a tendency to stay within parameters, his focus on problems is abnormally strong, and therefore sometimes overwhelms his preference to respect constraints.  Summers’ problem focus is also quite strong, but it is a full standard deviation and a half lower than Bernanke’s, so the likelihood of his task orientation overwhelming his respect of constraints is significantly lower.

Where Summers departs from Bernanke is his well above average self-confidence and a significantly stronger focus on his own group than Bernanke. This means Summers is less likely to work others into the decision making process who he does not consider part of his own group, while his self-confidence may mean less hesitation to act according to his beliefs.

However, despite Bernanke’s recent record of pushing constraints and Summers’ high self-confidence, restraints are the biggest differentiator between Geithner and the other two men. Geithner challenges constraints, which means a fundamentally different kind of leadership can be anticipated if his trait trends continue. Because his scores for belief in ability to control events and need for power are quite high (1+ SD above the mean of Anglos),and his self-confidence score is quite high (the highest of the three men), not only does he challenge constraints, but his skill in doing so is solid in both direct and indirect influence because he knows what he wants and takes charge to see that it happens.

Challenging constraints and being open to information and problem focused makes Geithner a “generally strategic” kind of leader. General strategists focus on maintaining personal maneuverability and flexibility while avoiding obstacles that may hinder both, suggesting Geithner would be very aware and active in the political dimension of Fed policy making.

Obama’s Choice

The comparison has conveniently lined up quite nicely for us. With Bernanke as the baseline, Obama has the choice of Summers, more cautious and self-confident than Bernanke, and Geithner, more activist and even more self-confident than Bernanke. As mentioned above, Bernanke is a bit of an odd-ball when it comes to his LTA. While it would seem he would be quite the cautious actor, his has really expanded the role of the Fed. This can be explained with LTA, however, by his truly dominant problem focus orientation that drives him to increasingly ignore the voice in his head telling him to respect constraints. With a lesser focus on problems, a Summers choice would bring a Fed head whose leadership would likely be less activist than Bernanke’s Fed. On the flipside, a Geithner choice would mean a Fed head whose leadership style would likely be more activist than Bernanke’s.

It is crucial to point out that this analysis says nothing of the nature of the policies of Summers or Geithner would pursue. Therefore, while I am fairly confident in predicting a more activist nature of a Fed under Geithner, I am not predicting, either way, a more activist Fed policy. If one believes Geithner would seek more aggressive Fed policies, than this analysis suggests that because of his leadership style, the Fed would likely expand its role in the economy. If, on the other hand, Geithner chooses to either maintain the Bernanke policies or roll them back, his leadership style means the rate at which that happens could be quite quick and assured. The same logic should be applied to Summers.

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Aaron Menenberg Policies of Scale

Aaron Menenberg is Foreign Policy and Energy analyst, and a Future Leader with Foreign Policy Initiative. He also co-hosts Podlitical Risk (@podliticalrisk). He is a graduate student in international relations at The Maxwell School of Syracuse University. Previously he has worked at Praescient Analytics, The Hudson Institute, for the Israeli Ministry of Defense, and at the IBM Corporation. The views expressed are his own, and you can follow him on Twitter @AaronMenenberg. He welcomes questions and comments at [email protected]