Quantifying Fed laughter

When people laugh at meetings of the Federal Open Market Committee (FOMC), the body that sets monetary policy for the Federal Reserve system, the transcript states: “[Laughter].” As a result, it’s easy to quantify how much funny business is going on at the Fed.

Here’s the overall picture. Between the start of 2000 and the end of 2011, there were 2,774 recorded instances of laughter in the 13,450 pages of transcripts. This means that on average, someone laughed about once every five pages. (We don’t know what happened after 2011 because transcripts are released on a five-year lag—the 2011 batch came out Thursday.)

But not every year is created equal. 2008 was a terrible year for Fed humor, which isn’t surprising—the global financial crisis was no laughing matter. (Incidentally, we suspect that our Brookings colleague Bernanke is responsible for the 2006 boom—that’s when he became Chairman.)

2017.01.13_FOMC joke density final

Of course, these data are deeply suspect, because laughter is not binary—it’s on a continuum, and sometimes people just snicker.

After an exhaustive analysis, we determined that FOMC members laugh less when unemployment is high. The r-squared isn’t much to look at, but the data points produce a nice (and ultimately persuasive, we’re sure) line of best fit.

2017.01.13_FOMC members not as funny unemployment NEW

Our findings suggest that, with unemployment probing 10-year lows, the recent FOMC meeting must have been a hoot.