  These quantitative results differ sharply from public perceptions of the impact of monetary policy. To illustrate, Charts 23 and 24 compare the welfare impact of lower interest rates among different age cohorts with people’s self-reported survey impact. These differ not just in scale but sign. It suggests the public perception gap around monetary policy is large. This is symptomatic of a deficit of public understanding, and is likely to have contributed to a deficit of public trust, on the public’s part.   These deficits may not be that surprising. It is very difficult for people to identify, much less quantify, the channels through which monetary policy affects their lives, directly and indirectly. For most people, this information is simply not to hand. If it were, in a simple and personal form, this might contribute to closing the gaps in public trust and understanding about monetary policy. 14  All speeches are available online at www.bankofengland.co.uk/speeches  14  That takes me naturally to practical ways of closing the twin deficits. Inequality issues are likely to continue to loom large in public debate in the years ahead, not least due to the impact of technology on jobs and skills. 39  It seems perfectly reasonable that policymakers should periodically explain the impact of their actions on both aggregate outcomes and its distribution. Indeed, doing so consistently and transparently could I think deliver important benefits, helping close the public perception gap and those twin deficits of trust and understanding about monetary policy.
  Various previous studies have found that employment and financial security can have an important effect on people’s happiness, over and above their impact on income and wealth. 36  For example, it  is well-established that having a job improves significantly people’s confidence and self-esteem, over and above any effect on pay. Those conclusions are borne out here. We find there is a statistically significant role for unemployment and arrears in explaining household well-being, over and above the effects from income and wealth.   The effects of unemployment and arrears on well-being are quantitatively large. To gauge that, we can translate them into income-equivalent terms using our welfare regression. The effects of having a job are, in well-being terms, equivalent to around 3 months’ extra income on average, across all households. 37  This is consistent with powerful effects of work and financial security on happiness. 38  Using this framework, our earlier quantitative estimates of the impact of looser monetary policy can be translated into welfare terms. Charts 22 and 23 show these welfare benefits, broken down into their component parts (income, wealth, unemployment), looking across the age and income distribution. A few key points stand out. First, the effects of monetary policy in lowering the probability of unemployment have a very material impact on household well-being. These effects often account for more than half of the total welfare gain for households across all cohorts.