Ben Bernanke has another 10 months in his term as Federal Reserve chairman, but that hasn't stopped the economic punditocracy from obsessing over who will take charge of monetary policy for the world's largest economy come Feb. 1, 2014. But if you're going to spout off and make predictions, you should attach some numbers!
This is my analysis of various candidates for the Fed chairmanship, and a best guess at the probability they will get the job. I worked to make the odds add up to 100 percent, which was harder than it sounds. (I initially assigned odds such that the total probability added up to nearly 150 percent, which means those rough instincts assigned too-high odds across the board). Herewith, the candidates, the odds, and notes on their strengths and weaknesses.
JANET YELLEN: 2-1 (33 percent probability). Yellen, currently the Fed vice chair, has higher odds of being selected than any other individual. She is unquestionably qualified, a first-rate economist who has served at the Fed at the highest levels. Her worldview, of viewing high unemployment as the foremost problem facing the U.S. economy at the moment, tends to align with the Obama administration's (and the president appointed her to the No. 2 spot at the Fed). If she is not selected, it would likely be because of worries that she would be viewed by markets as being too dovish, or soft on inflation, and/or because of worries about whether she is dynamic enough. Would she be effective at the more public-facing aspects of the Fed chairmanship like press conferences and congressional hearings, for example?