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  • INTERVIEWER: Today is December 5, 2011.

  • I'm Chris Boebel.

  • As part of the MIT150 Infinite History project, we're talking

  • with Professor Andrew Lo.

  • Professor Lo is the Harris & Harris Group Professor of

  • Finance at the MIT Sloan School of Management and the

  • director of MIT's Laboratory for Financial Engineering.

  • His wide-ranging research interests include financial

  • asset pricing models, financial engineering and risk

  • management, trading technology, computer

  • algorithms and numerical methods, financial

  • visualization, hedge fund risk and return dynamics and risk

  • transparency, and evolutionary and neurobiological models of

  • individual risk preferences in financial markets.

  • His awards include-- to name just a few--

  • the Alfred P. Sloan Foundation Fellowship, the Paul A

  • Samuelson Award, a Guggenheim Fellowship, and multiple

  • awards for teaching excellence.

  • He is a former governor of the Boston Stock Exchange and

  • currently a research associate for the National Bureau of

  • Economic Research, a member of the NASD's Economic Advisory

  • Board, and founder and chief scientific officer of

  • Alphasimplex Group, LLC a quantitative investment

  • management company.

  • Professor Lo received a BA in economics from Yale University

  • in 1980 and a PhD in economics from Harvard in 1984.

  • Professor Lo, thanks very much for coming in

  • to talk to us today.

  • LO: Thanks for having me.

  • INTERVIEWER: So let's just start at the beginning.

  • Where were you born, and where did you grow up?

  • LO: I was born in Hong Kong.

  • And shortly after, I moved to Taiwan for about five years.

  • And then, when I was five years old, I came to the

  • United States.

  • And I grew up in New York City.

  • INTERVIEWER: Tell me a little bit about that transition from

  • a cultural perspective, that educational perspective.

  • LO: Well, it was a fantastic experience in many ways.

  • So I grew up in a single-parent

  • household in New York.

  • And my mother worked pretty hard to put the three of the

  • kids through school.

  • We went through public schools throughout, and the New York

  • City public school systems are among the best in the country.

  • Certainly, they were at the time, and so I feel I got a

  • great education, and met some really, really interesting

  • people during my time there.

  • INTERVIEWER: So you were an urban kid for most of your--

  • LO: I was.

  • We lived in Queens, and I commuted to the Bronx.

  • I went to the Bronx High School of Science.

  • I'm very proud of that.

  • I love that school, and I learned a great deal from my

  • classmates.

  • It was a lot of fun.

  • INTERVIEWER: So do you have very early

  • memories from Taiwan?

  • Or does your consciousness start in New York City?

  • LO: No, we have some memories.

  • I've got a number of things that I remember well from

  • those days: playing with fireworks was one of the

  • favorite activities in Taiwan, but for the most part, my

  • childhood was really in New York.

  • INTERVIEWER: So when did you start developing an interest

  • in economics, math?

  • I'm sort of interested in your entree to your field.

  • Were there early signs?

  • LO: Well, actually, starting in high school.

  • I had always been interested in science, of course.

  • In third grade, my third grade teacher, Mrs. Barbara

  • Ficalora, was wonderfully supportive, and made me the

  • class scientist.

  • And so I got an early introduction to doing

  • experiments.

  • It wasn't until high school that I became exposed to real

  • serious scientific reasoning, and also to the field of

  • economics through a course that I took in social studies,

  • where we read Heilbroner's Worldly Philosophers.

  • And that really changed my thinking about the idea that

  • you could apply interesting mathematical principles to

  • problems in economics.

  • INTERVIEWER: Bronx Science is obviously kind of a legendary

  • high school.

  • Can you talk a bit more about your experience there?

  • What were your career ambitions at that

  • point in your life?

  • And what kinds of things were you really

  • studying in high school?

  • LO: Well, for me, Bronx Science was a really

  • transformative experience, because, up until then, the

  • junior high school and elementary school that I went

  • to was really just local, kind of community schools, where

  • you had a wide mix of kids, some of whom are interested in

  • academics, but most of whom were probably not.

  • And so in that kind of environment, to be doing well

  • in school was to be a bit of an outcast.

  • It wasn't until I got to Bronx Science that it became cool to

  • actually do well in school and to be interested in academics.

  • So for me, it was really like an awakening.

  • I had tremendous friends and activities in Bronx Science

  • that I really couldn't have access to in any of the

  • schools that I went to before that.

  • Also, for me, it was a little bit of an interesting

  • experience in terms of the mathematics at Bronx Science.

  • Right around that time, Bronx Science instituted--

  • as all New York City high schools--

  • the so-called New Math.

  • And if you know the history of it, the New Math was an

  • absolute disaster from the perspective of the majority of

  • the students.

  • But for me, it was actually transformative as well,

  • because up until then, I had a particular learning issue, a

  • slight case of dyslexia that we didn't know

  • until much later on.

  • And so for the longest time, I had difficulty with

  • mathematical concepts, multiplication, and really

  • basic things that other kids had no issues with.

  • I had a hard time memorizing the multiplication table.

  • It wasn't until I got to Bronx Science that, because of the

  • curriculum in mathematics--

  • it was transformed from the basic algebra, geometry,

  • trigonometry to sets, rings, fields, abstract algebra--

  • that I turned from a C student to an A student in math, so

  • for me, that was really an important experience.

  • INTERVIEWER: That's kind of an amazing story.

  • LO: I was one of the lucky ones that benefited from the

  • unfortunate aspects of the New Math that was perpetrated on

  • New York City high school students.

  • INTERVIEWER: At least there was one.

  • So you mentioned your third grade teacher.

  • Were there other mentors, significant teachers,

  • experiences you had in high school or before that time

  • that really pushed you in a certain direction?

  • LO: Oh, a number.

  • One of the things that has always struck me is how

  • important teaching is, because a good teacher can have such a

  • positive influence on a student for the rest

  • of his or her life.

  • And similarly, a bad teacher can have tremendous negative

  • consequences for that student.

  • And so I've been very fortunate in that, during the

  • years, I've had some good teachers, many good teachers,

  • a few bad ones.

  • So I have a good understanding of what's involved.

  • And my third grade teacher, Mrs. Ficalora, stands out.

  • In high school, I had a number of teachers.

  • Bronx Science is filled with really extraordinary faculty.

  • In fact, we don't think of them as teachers.

  • We think of them as faculty.

  • Mrs. Mazen, my calculus teacher.

  • I learned more from her about calculus than I think most

  • college courses would teach their students.

  • So there are a number of very talented instructors that I

  • was very pleased and lucky to have.

  • INTERVIEWER: What were your career aspirations at that

  • point, just before college?

  • LO: Well in high school, I think that most of my friends

  • and I were interested in science and math.

  • So at the time, my presumption was that I would go into one

  • of those disciplines.

  • Being the youngest of three children, and having an older

  • brother and sister that were also academically inclined

  • made it relatively easy for me.

  • My brother is a mathematician at the Jet

  • Propulsion Lab at Caltech.

  • And my sister is a biologist at the University of

  • Pittsburgh.

  • So they both followed very academic careers.

  • And in my household, one had to get a PhD just to measure

  • up to the older siblings.

  • So from high school on, I was very much interested in

  • following some kind of a career path in academia,

  • although my interests were somewhat on the more applied