Sunday, August 02, 2009

Up Close and Personal with Prof. Kenneth Rogoff

Here is an interesting profile of Ken Rogoff, a self-described recovering chess addict whose chess and academic careers have been intertwined.

Rogoff used to play chess at the Boylston Chess Club. Below, he is 2nd from the left in this 1975 photo.


Saturday August 1, 2009, from:Up Close & Personal with Prof Kenneth Rogoff


“We’re not just going to see mid-sized banks go under in the next few months, We’re going to see a whopper, we’re going to see a big one, one of the big investment banks or big banks.”– Prof Kenneth Rogoff, Financial Times, Aug 20, 2008

LESS than one month after he made the above remark in a Singapore conference organised by RAM Holdings Bhd, investment bank Lehman Brothers collapsed on Sept 15 and Fannie Mae and Freddie Mac were nationalised on Sept 10. And Harvard economics professor Kenneth Rogoff, who predicted the fallout in the financial sector, went into hiding for two weeks.
Britain’s Financial Times calls him a crisis nerd. He calls himself “a conservative economist.”

Prof Kenneth Rogoff the present-day economic guru, and (inset) as a 16-year-old representing the US in the under-21 chess championship.

Rogoff did not realised the impact his views had around the world until he was mid-flight to Sweden via London. He happened to glance at the headlines of The Guardian a fellow passenger was reading.

“I was shocked and nervous when I saw the headlines. I kept replaying the statements I made in Singapore. Could the press have misquoted me? It seemed so extreme when you see yourself on the newspapers. I asked myself, what is going on? Did I say something I did not mean to say?
“I was not trying to make headlines although I know how to do it. It was just a straight discussion.”
His remarks generated “400 emails from political leaders, famous investors and crazy religious people all over the world.”

“I was scared. I hid. I didn’t want to be hounded and I didn’t want to go on TV and be asked which bank I mean.”

That was one year ago. Last week, on July 20, during the first year anniversary of his remarks, Rogoff was in Kuala Lumpur for the first time, in another seminar organised by RAM.
The fear is replaced by a glint of mischief in his eye, mixed with amusement. He laughs and jokes about that incident which sent him into hiding for two weeks.

“I research financial crisis. I don’t predict, or cause a crisis.”

Rogoff enjoys his work tremendously today, not because of how things have turned out in the global financial landscape. But 15 years ago, when he was doing theoretical work, he would not have said that, he says.

“There are different aspects of economics. In my most basic research, you can go for months as a time filling in the details. Every two to three years, you have the Eureka! moments which you live for, and a model crystalises. That is one element.”

Today, he writes, teaches, speaks publicly and is consulted all over the world.
“I enjoy people and I enjoy teaching policies. I learn so much from policy makers because they understand their problems so deeply.”

Rogoff is in the midst of co-writing a book about the economy This Time Is Different with Carmen M. Reinhart

Rogoff comes across as consistently controversial. He dropped out of high school at 16 to play chess, which he had earlier found difficult to grasp. His father, a radiology professor had given him a chess set at six, but it was a game he did not take to until he was in his teens.

When he finally learned the game, he mastered it to eventually become “the most promising young American since (Bobby) Fischer roamed the Manhattan Chess Club in sneakers.”

When he quit school to make a living out of chess, his parents were dubious. “I did not do it for the adventure. My parents, being true liberals, insisted on living in the city where their children could have a genuine American inner city high school experience. It was a good place to learn how to deal with all kinds of people but I was not learning anything else. But that was not the reason I dropped out. I was already a top chess player and rising very fast. I really enjoyed the game,” he says.

At a time when he was touted to be the top player in the United States, living off his prize money, he quit chess to go back to college. He dropped out of graduate school because he lacked direction in life only to later become among the top student in the field.

Today, Rogoff is one of several economists with a large following around the world. He writes, speaks publicly and is consulted for his views.

Ironically, Rogoff did not embrace economics easily until he started his first job with the Federal Reserve.

The choice of studying economics was itself not a conscious decision. While playing chess in Greece, he had, at 17, befriended John Geanakoplos (now Yale economics professor). But the real evangelist was Jeremy Bulow (now Stanford economics professor) who had a huge influence on his decision. The three were to become roommates in Massachusetts Institute of Technology (MIT) graduate school.

But Rogoff continued to be torn between being a professional chess player and research economist. He repeated his high school experience when he dropped out of MIT after one semester. One year later, he returned to MIT and was glad they took him back. He also counts himself very fortunate that Yale accepted him when he decided to return to college despite dropping out at 16.

“It was only during my first job at the Federal Reserve that I embraced economics and took a professional view of the whole thing.

“I’m not someone who instantly picks up on everything, but I am patient and persistent. It takes me a long time to get a grasp of things. Maybe that’s why I am able to explain things clearly because I need a lot of time to really understand something myself.

“Most of my classmates went to universities to join the academia. If you are a top student, you don’t go into the International Monetary Fund (like I did). But my research was different. My first academic paper was Why countries should have an independent central bank.”

Until today, his ties with chess continue to feature. Rogoff still gets letters from some of the top 30 players seeking advice on how to quit chess. “I cannot play chess now because if I play, I become an addict. I’m always asked why I quit and how I quit.

“I quit because I wanted to do something more with my life. I feel now I have done that. It was not easy for me to say that 15 years ago when I was doing theoretical work.

“The second reason I quit was because I was unhappy with my social life. I like girls and chess tournaments are rather male-oriented. The third reason was I did not want to travel so much.
“But when I went into theoretical work, there were not many women in that field and I travelled all the time. I then realised it was me, and not chess

Rogoff wants his life to be inspiring, to count for something. On what motivates him, he says it is important to do things which he finds interesting and enjoyable.

“To be creative and successful, you have to enjoy what you are doing. If you do not find the work you do interesting, it is difficult to make it interesting for someone else.

“There are all sorts of duties which are not interesting, but which have to be done. There will be false starts and I’ll be depressed for months, but if I were to flee from one thing to another, I will not find anything. So I try to be responsible. I try to think of ideas or define ideas which are helpful.”

Because he spends so much time working and travelling, he says he needs to exercise and meditate for relaxation. “I learned this when I was playing chess. You have to have stamina for so many days and hours. You have to train and until today, although I don’t play chess anymore, I continue to train.”


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