Charlie Warburton and James Brookes

Economists have repeatedly shown that readability of central banking communication matters. But they typically measure readability in a crude way – using the simplistic but influential Flesch-Kincaid metric. The Flesch-Kincaid Grade Level is based on word and sentence length and is commonly interpreted as the number of years of education required to understand a text. However, recent advances in computational linguistics toolkits empower us to consider finer-grained markers of language comprehension missed by Flesch-Kincaid. Here, we revisit Jansen (2011) which found that Fed Chair testimonies with lower Flesch-Kincaid Grade Level scores – indicating higher readability – were associated with lower market volatility. Our results show that compared to more sophisticated linguistic metrics, Flesch-Kincaid is a relatively poorer indicator of readability.