A breeding ground for Nobel laureates

The sprawling campus of the University of Chicago in Hyde Park is a five-minute ride from the Natural History Museum in downtown Chicago. The American president, Franklin Roosevelt was born in the area, which was the wealthiest part of Chicago throughout the 1930s and ’40s.
Here, amid the gothic buildings, are located some of the world’s brightest minds. The university has graduated some 100 Korean nationals from its master’s program in business administration. For the ambitious-minded professional thinking of obtaining a masters in business from a university in the United States, keep in mind that the application deadlines for the year 2004-2005 are coming up. The first rounds at the University of Chicago are accepted on Nov. 7, the second on Jan. 9, 2004 and the last on March 19, 2004.
Continuing its series on top MBA programs in the United States, the JoongAng Daily notes the University of Chicago’s influence on Korea’s most influential leaders. Graduates of its master’s of business administration programs have had an enormous impact on the world economy. Many scholars contend that the University of Chicago broke the American economy free from government control and laid the groundwork for it to become market driven.
The University of Chicago, founded in 1890, stands shoulder to shoulder with Ivy League colleges and, according to Jeong Jin-wook, a Bain & Company Korea consultant, who graduated from Chicago in 2000, strong leanings toward academic classicism largely account for the university’s glowing reputation.
The Harvard MBA will have mulled numerous case studies; a University of Chicago MBA will have absorbed the theories behind the machinations of the business world. The theories are especially aimed at finance.
The University of Chicago was the first to introduce theory-based lectures. In the early days of business curriculums, the lectures were tilted towards case studies since the theories were yet to be devised. Chicago professors succeeded in setting up the theories and applied them to the real world.
As much as it emphasizes theories, the school also values intuition because business managers are often faced with situations where they are to make a decision based on their insight on the situation.
“I remember a three-hour derivative goods lecture that was mainly on how dangerous misguided intuition can be. We had no textbook for investment classes. We dealt with various theses class by class,” said Lee Gang-man, deputy chief of Hana Bank, who graduated from the college in 1982. He recalls that his professors would give the identical data that the author of the thesis used, let the students follow the same measurement systems and figure it out intuitively through this experience.
The graduate school of business at the University of Chicago has the highest number of Nobel Prize recipients for economics on its faculty. They are academicians who have spent years establishing schools of thought. “M&M Theorems,” a much cited look at capital structure and dividend policy and the foundation of the theory of corporate finance, is the work of Merton Miller, a former Chicago professor and Nobel Prize recipient. Another professor at the graduate school, Eugene Fama, established the concept of market efficiency, and Fisher Black with Myron Scholes pioneered the Black Scholes model used to calculate the value of stock options. Portfolio theory and the capital asset pricing model that appear in finance textbooks were taken from a 14-page thesis presented by Harry Markowitz during his business doctorate course at the University of Chicago. While the award citations list the specific accomplishment of each recipient, the word “pioneer” is the common descriptive.
One draw back of being in such company, is that many professors coming from this prestigious background do not believe in the principle of putting students first, which is widely supported at other colleges in America. Depending on your viewpoint, this could be a detriment to learning or an inspiration to get a few moments to learn from the best. The professors here consider the university as more of a research school and therefore seem to hold students in low regard, saying that they should be gratified to learn the theories before their real-life introduction to the market.
Ga Jong-hyeon, the deputy chief of SK Communications, recalls Mr. Fama: “One time when a student asked a question,” he said, “the professor humiliated him by playing down the importance of his inquiry. Then when I asked a question, he told me that it would take another year for me to be able to understand the answer.”
But the exchange of ideas flourishes. The professors present their theses in an open environment where students are invited, and fierce arguments often ensue. According to one alumnus, the debate between Mr. Fama, who believes in strict financial market theory, and Richard Thaler, who contends that it can be altered according to human behavior, was like diamond cutting diamond. From time to time professors invite a colleague for a tumultuous verbal battle before students. Alumni say it is common for many professors at the college to begin their sentences with “I” or “we” as a subject since they are the very ones who created the theories.
“It was an unbelievable experience to sit in front of Robert Fogel, the person who actually devised the concept of gross domestic product, which I studied in elementary school,” said Lee Chang-won, a deputy chief of Deutsche Bank’s Seoul branch. “During the lecture, professor Fogel, a Nobel Prize recipient, would say that in the beginning, when he was working on the concept along with a few others, he was looking towards applying it to 70 to 80 percent of economic activity, but that he thought the figure was now actually only about 10 percent.”
The surrounding neighborhood fell on hard times in the 1950s. According to Korean alumni who were studying on the campus during the ’80s, the area was still dangerous and women would carry whistles to beckon help if needed. “It was common to see graduates from the University of Chicago and Wharton School of Pennsylvania arguing over which one of the two places was more dangerous,” said a Chicago alumnus.
But these days, Hyde Park has regained its reputation as a safe town, with new cafes and restaurants opening up. Most Korean alumni agree that they had to bury their heads in the books day and night, but their years at the University of Chicago were hardly without fun. “There was no such thing as sports teams but we were able to fill our free time with various club activities,” Mr. Jeong said.
Most of the Korean students said the beginning of their studies was confusing, mostly because of the lack of experience. But they quickly adapted. The professors drilled theories into their heads. A week of learning at Chicago covers what Korean colleges tackle in a year. But soon, the students find themselves achieving their goals.
Mr. Lee said, “By the time I graduated, I was a veteran steeped in the thorough knowledge of business theory. After returning to Korea I resumed my position at my company and was also able to teach at colleges for more than 10 years, which brought me much wealth.”

For more information, visit www.uchicago.edu.

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Cushioning an egg can help learning

“Drop an egg from the second floor without breaking it!” This was the task Shin Yong-soon, deputy chief of Shinhan Bank, was given while he was studying for his MBA at the University of Chicago. Five members of his team wracked their brains to solve what seems like an ideal assignment for physics or mechanics students. His team came up with various ideas, such as attaching a parachute to the egg or devising a shock proof cushion.
“The lecture was really about creativity and good team spirit,” he said.
When he entered Chicago, there was great scepticism about the MBA degree worldwide. Lectures that mainly depended on case studies fell short of teaching the essence of leadership to business students. It was during this period that Chicago established various leadership programs and the egg problem happened to be one of the teaching methods.
“We were taught to use our imagination, and faith in each other was considered crucial for true leadership,” he said.
In one training session, a team member stood high above his colleagues. He had to jump, and the others were to protect him from injury.
“It was impossible to make the jump without complete trust in the rest of the members. Although the task entailed much danger, it was quite an efficient way of building trust within the group,” he recalled.
Mr. Shin also said that unlike the stereotype of MBA students at the University of Chicago, that they are “self-centered” and “cold-blooded,” the school teaches respect for human nature and cultivates communication skills.
Mr. Shin, who graduated from Seoul National University, has worked for Intel Corporation of Korea, Hyundai Information Technology and was appointed deputy chief executive of Shinhan Bank in 2000.

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MBA students steeped in theory during study at University of Chicago

Albert A. Michelson was the University of Chicago’s first Nobel prize recipient. He was also the first American to win a Nobel prize for the sciences. Awarded in 1907 for measuring the speed of light, he leads a long string of people from this university recognized for their accomplishments with one of the world’s highest honors.

Seventy Nobel recipients have been associated with the University of Chicago at some point in their career, whether as faculty members, researchers or students. Of those, 25 were in physics, 22 in economic sciences, 14 in chemistry, 11 in physiology or medicine and three in literature. In the economic sciences:

Daniel L. McFadden, 2000
James J. Heckman, 2000
Robert A. Mundell, 1999
Myron S. Scholes, 1997
Robert E. Lucas Jr., 1995
Robert W. Fogel, 1993
Gary S. Becker, 1992
Ronald H. Coase, 1991
Merton H. Miller, 1990
Harry M. Markowitz, 1990
Trygve Haavelmo, 1989
James M. Buchanan Jr., 1986
Gerard Debreu, 1983
George J. Stigler, 1982
Lawrence R. Klein, 1980
Theodore W. Schultz, 1979
Herbert A. Simon, 1978
Milton Friedman, 1976
Tjalling C. Koopmans, 1975
Friedrich August von Hayek, 1974
Kenneth J. Arrow, 1972
Paul A. Samuelson, 1970

by Lee Im-gwang