Chapter 4 A Scholar's Happiness and Thinking

In the conversation with Chen Zhiwu, happiness is one of the words that appear frequently.Talking about his work, he said: "I like learning too much. Any day I can have some new understanding, I will feel very happy." Talking about the poverty when he was young, he said: "At that time, I spent an extra yuan The happiness brought by money is much higher than if I spend an extra 1,000 yuan today." And this leads to the level that the development of the financial industry can improve the happiness of young people.Talking about the study of economics, he said: "We need to sort out some basic concepts in an all-round way, eliminate many misleading and destructive prejudices in the past, and make more reasonable institutional arrangements to lay a better foundation for the sustainable development of Chinese society. A solid foundation enables the common people to live a richer and happier life.” Thinking carefully, these happinesses are actually linked together, because after all, the ultimate goal of economics research is to improve human well-being.

One day at the end of June 2006, Chen Zhiwu took his wife and two daughters back to his hometown - Chaling County, which belongs to Zhuzhou, Hunan.It was after a series of heavy rains that they were blocked on the road, which gave him the opportunity to revisit a farm on the side of the road.In high school, he lived here for most of each semester, "cutting down the native trees on the mountain and planting fruit trees. Now, those trees have not survived, and so many of our years have been wasted in vain gone." The unexpected encounter with personal history made Chen Zhiwu, who is very interested in history—"modern world history, modern Chinese history, especially Chinese financial and economic history", once again realize the significance of his research: "Understanding What happened in the past, why the securities industry did not develop in China, why the degree of economic and financial development is different between different regions, and even like today or 70 years ago, the interest rates of private lending and financial transactions in different provinces The degree of difference is so great, these are what I want to figure out. Explaining these problems can help us understand how today's Chinese society came to be.”

Chen Zhiwu, born in 1962, has a personal experience of how the traditional rural society in China came to be.In Chaling, a small town on the Hunan-Jiangxi border named after Shennong's "collapse and burial at the end of the tea country", this now-famous economist once lived the life of an ordinary farmer's son. "My family is in the countryside. I started to work in the fields or go to the mountains to cut firewood every day in the first grade of elementary school. I went to college in 1979. In winter, I had to cut firewood 20 to 30 kilometers away, and then I carried about 60 kilograms of firewood home. There are still more than ten kilometers away from home, and I am very hungry."

Chen Zhiwu’s early life experience in Chaling has since been constantly reappearing in Chen Zhiwu’s research: when talking about the operation of the free market, he would think of what he had seen and heard when he went to the market with his parents to buy things; The example of the police shows that inconvenient transportation made rural China basically out of touch with formal justice in the past; when talking about honesty and market turbidity, he pointed out that the commodity market in rural China is mostly based on the village, and the information between buyers and sellers is basically symmetrical. It is a rational choice.

The growing environment of a commoner family also made him have special care for the grassroots: "I have 5 brothers, and the oldest brother is 16 years older than me. When I was in high school, 3 brothers had already worked, so I didn't like them. In that way, I have to work in the fields to support my younger brother. When I was in college, I had a scholarship of about 9 yuan a month, and my brother could also subsidize a few yuan." As a generation who grew up during the "Cultural Revolution", Chen Zhiwu's life is also imprinted with the imprint of the times: "I went to junior high school in 1974, and until I graduated from high school in 1978, I basically did not read in the classroom. Most of the time was either In the mountains, or in the farmland." In 1978, Chen Zhiwu, who took the college entrance examination for the first time, failed.His parents did not put any pressure on him. After repeating his studies for one year, he was admitted to the Central South Institute of Mining and Metallurgy (now the predecessor of Central South University), majoring in computer science.Many years later, he said with emotion that if his parents had disciplined themselves in the traditional Chinese way, perhaps they would not be where they are today. "My parents are both farmers and have never been to school, so they can't give me much advice. Almost all my life decisions are made by myself - from 1979 to the Central South Institute of Mining and Metallurgy, to 1983 to the National University of Defense Technology After graduating from graduate school in January 1986, he stayed at NUDT as a teacher, and applied to study in the United States at that time. Thinking about it now, I am a little scared, because I didn’t even know some basic information at the time, and I didn’t even know much about it when I applied for the Yale Department of Finance. Understand what the subject of finance is.” From this perspective, Chen Zhiwu feels that the gap in knowledge and experience between rural and urban students is much larger today than it was in 1979: “If I were born more than ten years later, today I would You may not have the opportunity to be admitted to key universities, and you may not have the same starting point as urban students.”

In 1979, China's computer education was still in the enlightenment stage.Chen Zhiwu, who randomly chose this emerging major, did not really touch computers for half a year until his graduation thesis in 1983.But looking back on his college days, he still feels quite rewarding.On the one hand, he mastered the objective research methods of mathematics and engineering, which laid an important foundation for him to study economics today.At the same time, the mechanical nature of Chinese-style teaching, which does not focus on application, also gave him a deep understanding: "I have been learning calculus in the first and second grades of university, but I have never figured out what is the use of differential and integral. In 1986, I arrived at At Yale, I took a course on asset portfolio management. I discovered that the first derivative can help us control risks when I was evaluating the risks of bonds. I suddenly realized that the differential and integral are so good. So these years, whenever I have the opportunity to communicate with university teachers or students in China, I always talk about this feeling, hoping that this situation will change.” On the other hand, he used those 4 years to learn English very well. Okay, "At that time, a classmate brought the "China Daily" to the dormitory every morning, and we took turns reading it. Then we listened to "Voice of America". It's like reading Chinese."

After graduating from university, most of the students were assigned to metallurgical research institutes or enterprises, while Chen Zhiwu chose to continue his studies.He said: "Study is my favorite. I almost never really thought about doing other careers besides academic research." At NUDT, he met a group of like-minded friends, including Cui Zhiyuan is quite influential in the domestic social science field. In 1987, they collaborated on the translation of Kenneth?Arrow (Kenneth J. Arrow) "Social Choice and Individual Values" (Social Choice individual Values). "Cui Zhiyuan is a native of Beijing, and he is very passionate about social science. One of the main reasons why I made friends with Cui Zhiyuan is that my English is very good. Through contact with him, reading some books, especially after meeting Friedman (Milton Friedman) Friedman's (Free to Choice), Hayek's "The Road to Serfdom" (The Road to Serfdom), I slowly became interested in studying economic and political issues with mathematical methods. Around the fall of 1985, I basically made a decision to give up engineering.”

At that time, China's first wave of studying abroad spread from Beijing to Changsha, and Chen Zhiwu also began to prepare to apply for American universities. "As for social science, I applied to Yale. In addition, I am also very interested in using mathematical methods to study medicine, so I also wrote a letter to a professor at the Pennsylvania State University School of Medicine. He suggested that I give up based on my background. This idea. At the same time, I also applied for a major at the University of Illinois at Chicago." But he didn't have any hope because he couldn't take the TOEFL and GRE. In April 1986, Chen Zhiwu, who had stayed at the school to teach, received an admission notice from Yale University, and Yale also provided him with a monthly scholarship of about 800 US dollars.

"In my first year in the United States, what impressed me the most was discovering how Sprite tasted so good. I didn't know how much Sprite I drank that year. Since then, I basically didn't touch Sprite." Chen Zhiwu also found that the United States Universities are different from those in China: “Domestic universities only need to pass the final exam, while American universities usually assign assignments that count as final grades. I didn’t realize this until the end of the first semester. Yale has 13 students in each semester. One week, I didn't do any homework until the 8th week, and the teacher gave me "Later" for every assignment, which had a big impact on my grades in the first year. However, I corrected this problem in the second year. In 1990, Chen Zhiwu successfully obtained a doctorate in financial economics from Yale University and entered the University of Wisconsin as an assistant professor. In 1995, he was hired as an associate professor at Ohio State University and in 1996 as a tenured professor.

During his four years at Ohio State University, his research was increasingly published in American Economic Review, Journal of Economic Theory, and Journal of Financial Economics. Financial Economics) and other mainstream academic journals, the content involves asset pricing, mutual funds, dynamic stock price models, stock investment profit strategies and other fields. In 1994, his paper "Population Aging and Capital Market" won the Merton?Miller (Merton Miller) Research Award (named after the 1990 Nobel Laureate in Economics Merton? Miller), "Japan Output-Based Asset Pricing" won the Chicago Board Options Exchange Research Award.He has become one of the most creative and active scholars in the field of financial asset pricing. More and more people know Zhiwu Chen in the circles of financial economics in the United States, Europe, Japan, and Hong Kong, China. In 1999, he was invited back to Yale for tenure.

As his career progressed step by step, Chen Zhiwu's genes of Hunan people who like challenges began to appear. In 1998, he founded the Value Engine company. "I have done research on the capital market for so many years, and I am very interested in putting these theories into practice. On the other hand, by starting a company, I can feel what the challenges faced by entrepreneurs and management can also help me in my work. Don’t be too detached when researching.” However, it was a less successful venture. In 2001, he founded Zebra hedge fund company with two partners.Almost 100% of this hedge fund, which adheres to a market-neutral strategy, is judged and operated based on Chen Zhiwu's model. "So far, the actual investment performance is generally consistent with our original design goals." The Zebra hedge fund now has a dozen full-time employees, and its clients are mainly institutional investors from France and other places.Later, Chen Zhiwu reorganized the fund again.The two entrepreneurial experiences have indeed provided help for Chen Zhiwu's research: "For example, the principal-agent relationship, the academic circles do not have much research on its impact in the real economy. After doing these things, I feel that it has important implications for economics. , especially in the theory of financial economics is far from enough." Starting from this, Chen Zhiwu paid special attention to the study of integrity. In the eyes of the two daughters, Chen Zhiwu is no different from an ordinary father.Every morning, he sends them to school; every week, he spends about half a day dealing with the affairs of the hedge fund company; every year, there are about 90 to 100 class hours of teaching tasks; other than that, his work focuses on research. Beginning in 2001, Chen Zhiwu turned one of the research focuses to the market development in China's transformation.Chen Zhiwu believes: "In my opinion, the academic value of most academic papers in the field of social sciences in China is very low, and economics is relatively better. The best way to distinguish the level of a country's academic field is to compare the top academic papers of this discipline Comparing academic journals with non-governmental popular publications, if the content and readability of the articles in the journals are not much different from those in popular publications, it means that this subject has not really become a professional knowledge or professional research in this country. The team has not yet been established. Looking through the first-class journals of Chinese economics, sociology and political science, you will find that a person who has not received much training in the corresponding discipline can basically understand what they are talking about. In terms of perspectives, perspectives, and research methods, what they write is not much different from that of popular newspapers, which shows that these subjects have not become real learning in China.” Now, the 202nd-ranked economist in the world spends about three months in China every year. He knows what's happening in China like the back of his hand and is willing to offer his opinions. "The issues I'm researching now are, first, the legal, news media and other supporting structures around the development of the capital market, which I have been very concerned about for many years; the second is financial history, especially China's past few hundred years of borrowing and lending. What is the relationship between the market and other markets and the development of the securities industry; the third is the related and interactive changes in international economy, international finance and international information.” Because he prefers to conduct comparative research, "including vertical and horizontal comparisons between China today and other countries today, and between China 100 years ago and other countries 100 years ago", Chen Zhiwu has a broader view of China perspective, so there are always thought-provoking interpretations.From the Chinese people's enthusiasm for martial arts movies, he can see the lack of protection mechanisms for property rights and contract rights in China; from the rationality of the existence of usury, he talks about the feasibility of liberalizing private finance; from the development level of the tertiary industry in various countries, he talks about public opinion supervision and information transparency It is necessary; from the comparison of Chinese people who are hardworking but not rich, and from the comparison between China and India, it explains that the competition in the world today is mainly institutional competition. Engage more in jobs with higher economic added value, and the quality of economic growth will be better." He called on "China has crossed the river by feeling the stones, and it has passed a long way. It is time to consider reforms in institutional mechanisms." Although economists always have a sense of managing the world, Chen Zhiwu believes that this does not affect the independence of research. "For scholars, whether they are economists or other academic circles, the first task is not whether our views will be adopted by the government today or tomorrow - we do not judge our contribution to society by this, but rather First of all, I have to ask myself, have I fundamentally improved my understanding of society and the entire academic community by researching these issues. Scholars cannot decide what articles they write or what issues they study based on whether the government will adopt them.” Therefore, he I believe that I have the responsibility to provide other scholars, the industry, and government decision-making departments with the most objective research results in the most objective form: "The experience of rich countries in the world today has repeatedly shown that market economy plus private ownership, especially land private ownership, It is not only a way to make a country and her people richer, but also a fundamental institutional arrangement to finally solve the inequality of the rich and the poor and the income gap. I believe that the market economy is a fundamental way to help China continue to develop further.”