The bounding, four-legged machine known as MIT Cheetah II does wear a few spots in homage to its wild muse. But Sangbae Kim, associate professor of mechanical engineering, isn’t aiming to reproduce nature in his work as the head of MIT’s Biomimetic Robotics Laboratory. He borrows both liberally and selectively, not only from the biomechanics of the animal kingdom but from the science of human decision making and the cutting edge of mechanical design.
“We have to understand what is the governing principle that we need, and ask: Is that a constraint in biological systems, or can we realize it in an engineering domain?” Kim told MIT News in December. “There’s a complex process to find out useful principles overarching the differences between animals and machines.” Kim’s goal is to design what he calls “robotic first responders” that can cover distances with unprecedented speed and efficiency, capable of maneuvering autonomously past obstacles and performing human-scale tasks. Another of his lab’s creations, HERMES, is a two-legged humanoid robot that can be controlled through full-body teloperation. Such inventions could become essential allies in search-and-rescue missions and other disaster response situations.
The legacy of two graphic designers who made Cambridge their creative home
All Casey images from the Architecture and Design collections of the MIT Museum.
All Cooper images from the Muriel Cooper Papers, Archives and Special Collections Department, Massachusetts College of Art and Design.
Graphic designers Muriel Cooper and Jacqueline Casey made MIT their creative home and strengthened its visual identity, while elevating design within the Institute’s intellectual life. Art school classmates before becoming MIT colleagues in the 1950s, they had much in common: they defied the era’s professional gender norms; they influenced countless young designers; and, when both died in the 1990s in their sixties, they left behind extraordinary bodies of work rooted in innovative European design principles.
Both arrived at MIT via the Office of Publications (aka Design Services). Casey went on to a long tenure in that office, while Cooper became the MIT Press’s first art director. She designed the Press’s memorable colophon (see gallery) and some 500 books. In the 1970s, energized by computers’ potential to shape graphic communication processes and vice versa, Cooper established the Visual Language Workshop, later a founding group of the MIT Media Lab, with Ron MacNeil ’71. Her experiments included an interface immersing users in a 3-D landscape of information. Meanwhile, Casey built a reputation for her striking posters promoting campus arts and academic events. She parlayed Swiss typography and simple graphic elements into designs as playful and brainy as MIT itself, capturing attention with visual puns, puzzles, and metaphors. By engaging viewers’ imaginations and endlessly chasing their own, both Casey and Cooper modeled what design could be at MIT: a true act of invention.
More words and images: Cooper and Casey
“‘Electronic is malleable. Print is rigid,’ [Cooper] told me, then backtracked in characteristic fashion. ‘I guess I’m never sure that print is truly linear: it’s more a simultaneous medium. Designers know a lot about how to control perception, how to present information in some way that helps you find what you need, or what it is they think you need. Information is only useful when it can be understood.'”
—“Muriel Cooper’s Visible Wisdom” (I.D. Magazine, 1994)
“Imagine swooping into a typographic landscape: hovering above a headline, zooming toward a paragraph in the distance, spinning around and seeing it from behind, then diving deep into a map. A virtual reality that has type and cartography and numbers, rather than objects—it’s like no landscape you’ve ever traveled before, yet you feel completely at home. This is Muriel Cooper’s world. It is just one of the creations of MIT’s Visible Language Workshop, the research lab she directed for 20 years….”
—“Muriel Cooper’s Legacy” (Wired Magazine, 1994)
“Muriel seems to have always had the newest gizmo, whether it was a special digital watch or the highest-resolution computer displays available outside NASA—and whether or not she always knew exactly how to use them (she was a bit of a klutz). It also seems that she predicted so much of our connection to interfaces and the need for them to be intuitive and anticipatory.”
—“Muriel Cooper: Turning Time into Space” (Walker Art Center, 2014)
“My job is a constant learning experience. While MIT has its roots in tradition, the University represents all that is experimental, exciting, and future-oriented.”
—Jacqueline Casey, Top Graphic Design (F.H.K. Henrion, 1983)
“In particular, Casey’s posters stood out. As noted in the History of Graphic Design, the ‘posters generally consisted of a striking image or bold typography, accompanied by informational details in small text. She often used typographic wordplay and visual puns in her work.’ Speaking of her designs in 1988, she said: ‘My job is to stop anyone I can with an arresting or puzzling image, and entice the viewer to read the message in small type and above all to attend the exhibition.’”
—“The Humanistic Designer: Jacqueline Casey” (MIT 2016: Celebrating a Century in Cambridge)
“Thérèse Moll, a young Swiss designer who had been an assistant in Karl Gerstner’s Basel office and who briefly worked in the MIT publications office in 1958, is the one person Casey credited with her introduction to the grid and its design philosophy: ‘She introduced the office to European typography … This use of proportions in designing publications series became a useful tool for developing MIT’s image.’”
—“Woman at the Edge of Technology” (Eye, 2008)
“Nicholas P. Negroponte, director of the MIT Media Laboratory, recalling meeting Jacqueline Casey when he was an 18-year-old sophomore at MIT: ‘We had lunch together almost every day for four years. During this time I loitered in the offices of Design Services where I learned all I know about Graphic Design. I learned how a design could be at once Swiss in its cleanness, Italian in its imagination, and playful like Jackie herself… Jackie always says she cannot teach. Ha! She does not need to. She has already taught thousands of young designers through her work.'”
—“History of Graphic Design: Jacqueline S. Casey”
Mark Bathe merges design and biology at the nanoscale
An assortment of DNA nanoparticle geometries designed by DAEDALUS. Colors represent different classes of geometric objects, including Platonic (blue), Johnson (green), Archimedean (red), Catalan (yellow), and other (purple) complex shapes. Image: Digizyme, Inc.
Step into associate professor Mark Bathe’s lab in the Department of Biological Engineering and you’ll find design and biology merging at the nanoscale. Under an electron microscope you might see a cornucopia of three-dimensional shapes—icosahedra, pyramids, and stars—all assembled from synthetic strands of DNA. “There’s no other molecular medium we can design and fabricate with such a versatility of geometries and precision at the nanoscale as DNA,” says Bathe ’98, SM ’01, PhD ’04.
And Bathe has added to that versatility: with graduate student Sakul Ratanalert, he recently developed software called DAEDALUS, which captures the complex rules of DNA construction in an algorithm that makes three-dimensional DNA design easier and more accessible to a wide range of scientists and engineers.
Most people think of the spiraling set of nucleic acids purely as the code of life. The strings of As, Ts, Cs, and Gs (adenine, thymine, cytosine, and guanine) in cells provide the blueprint for how living things behave and reproduce. And for nearly half a century bioengineers have creatively manipulated those sequences to change the way organisms function—breeding new pest-resistant plants, for example, or microbes that ferment medicines and chemicals.
But the double helix of DNA also possesses unique characteristics as a nano-building material. In 2006, Caltech researcher Paul Rothemund discovered that if he synthesized DNA letters in specific sequences, the molecular bonds that glue the As to Ts and Cs to Gs, and which come undone when DNA replicates, could be used to fold the DNA into two- and three-dimensional shapes. With a nod to both the precision and elegance of the technique, scientists dubbed it “DNA origami.”
The beauty of DNA origami is that once the components are collected, all it takes is a little shake and some Brownian motion—the random movement of particles in fluid—for these shapes to assemble themselves. The system uses a single long strand of DNA as scaffolding on which to stick smaller strings of letters. The DNA conforms to the shape as the letters bond to each other.
But the rules for designing DNA origami are difficult, if not arcane, and lining up nucleotides to fold into corresponding 3-D shapes can tax even the most brilliant minds. “It’s been limited to a small group of experts,” Bathe says. His software is changing that.
Rather than manually fiddling with sequences of nucleotides, DAEDALUS users design the target geometric structures they want, and the algorithm generates the corresponding nucleotide sequences to make them. “You give the software a high-level geometric shape, and then it will automatically produce that shape using DNA,” Bathe says.
In a sense, Bathe himself may be a perfect researcher for exploring how these geometries translate across scales. He’s part of an MIT legacy—the son of longtime engineering faculty member Klaus-Jürgen Bathe. Like his father, the younger Bathe earned his PhD in mechanical engineering; but from childhood, his interests skewed towards biology and medicine. “I’ve always wanted to build technologies that impact human health, more than cars or bridges, like my father,” he says. With DAEDALUS, Bathe has built a bridge of another kind, connecting designers of many disciplines with the tools of molecular biology.
Bathe is now working to harness his DNA nanoshapes to deliver drugs inside the body. Taking a cue from viruses that attach to cells to infect them, Bathe hopes to design a variety of DNA structures that deliver payloads of antibodies or even gene-editing enzymes such as Cas9 to diseased cells within the body. “The holy grail would be to edit the brain for treatment of diseases such as autism or schizophrenia, or cancer cells in malignant tumors,” Bathe says.
Maria Yang zeroes in on early stage product design
Yang’s Ideation Lab used a collection of 18 designers’ concepts for a remote control, resketched by a single artist, for experiments on user feedback in early stage design. Images: Courtesy of the researchers
There is a point in the design process where an idea first takes form—where designers move from concept to object, from vague notion to a real volume. If timed correctly, it can be a solid point of departure—a moment when a few small strokes or shades can launch the design and manufacture of products ranging from mobile phones to solar panels to software. If executed prematurely—or too late—it can be a point of no return. This is the point that most interests Maria Yang ’91.
“There are literally an infinite number of designs you could create to address a need, and it’s not always obvious which are right to pursue,” says Yang, associate professor of mechanical engineering. “Designers have to be creative to imagine a space of possible designs, and thoughtfully explore this space. Essential to this process is iteratively making prototypes—a sketch, a foam model, or a 3-D-printed object—and testing them.”
Born and raised in West Lafayette, Indiana—her father is also an engineer and college professor—Yang spent her childhood first knitting and crafting, and then, after cajoling her mother to take her to the hardware store, building telegraphs and dismantling transistor radios. During her doctoral studies in mechanical engineering, she took time to work as a designer at Apple, Lockheed Martin, and a startup incubator that helped companies create first-generation prototypes. “I was always torn between engineering and design,” she says, “and later, between working as a designer and teaching design.”
On the MIT faculty since 2007, Yang teaches introductory and graduate-level product design courses to engineering, business, and industrial design students. “Most of these students fit the classic MIT student profile, with highly developed analytical skills,” says Yang. “But they also have a healthy creative quotient that doesn’t often get a chance to express itself. Studying product design teaches you to be comfortable with ambiguity. And it teaches you to consider the end user, no matter where you are in the design process. These are incredibly valuable skills to have, particularly for engineers.”
At MIT’s Ideation Lab, which she founded and directs, Yang leads research on early stage design, and particularly on the role of visual representations and prototypes in that stage. She invites Boston-area designers to the laboratory to participate in controlled studies in which she and her students observe them at work. The research has yielded some surprises, including a strong indication that the early use of digital design tools like CAD (computer-aided design) can in many cases inhibit a designer’s creativity. “Technology is powerful, but sometimes it can make you less flexible, especially in the early stages of design,” she says. “I find it fascinating that some of our undergraduates still opt to use paper day planners. They say they like being able to flip between pages.”
Yang acknowledges that every designer has his or her preferences, priorities, and quirks. Her research aims to identify certain core practices that can benefit all designers. One of those practices is quantity; she believes designers should suspend skepticism and compile a long list of solutions, however improbable. Another is the prototype. “So many of us have this romantic notion about design,” she says. “Someone has a great idea and then a team of hardworking engineers somehow makes it happen. The reality is very different. And that reality starts with making something real. That, and coming up with a good idea. Because no matter how good you may be at math or engineering, it’s hard to make a bad idea into a good product.”
Some expressions of bias in software—sexual objectification in video games, bigoted rants on social networks—are all too obvious. Others, unfortunately, are harder to see. MIT Technology Review recently reported on implicit sexism in some of the vast word sets engineers use to “train” artificial-intelligence applications—which can lead to objectionable associations in those applications, such as being more likely to connect the word “woman” with “homemaker” than “programmer.”
D. Fox Harrell, a tenured associate professor of digital media dually appointed in MIT’s Comparative Media Studies Program and Computer Science and Artificial Intelligence Laboratory (CSAIL), detects such invisibly coded-in bias across a range of computational systems, using tools and practices from machine learning, cognitive science, and social criticism. As director of MIT’s Imagination, Computation, and Expression Laboratory (ICE Lab), he also invents new types of digital media to help us do better—not only by avoiding negative bias, but by supporting more powerful ways to represent ourselves in computational systems. “I’m interested in figuring out how we can best capture the kind of nuances that are most empowering to users,” explains Harrell, author of Phantasmal Media: An Approach to Imagination, Computation, and Expression (MIT Press, 2013).
Using frameworks from the Advanced Identity Representation (AIR) Project—an initiative the ICE Lab launched six years ago to develop virtual identity technologies—Harrell has “empirically demonstrated gender and racial discrimination within certain hit mainstream video games,” he says. By identifying and quantifying such biases, he hopes to make it easier for developers—himself included—to design games that avoid them, and to produce games that encourage and support social critique. One AIR creation, Chimeria, is a platform implementing “a model of identity that does not just place people in demographic boxes.” The system treats the elements of a user’s identity (such as visible information in a social-media-style profile, or invisible attributes like a map of what genres of music the user prefers) as dynamically evolving, rather than fixed—which is much closer to how people cognitively categorize in real life.
Most recently, Harrell is collaborating with photojournalist Karim Ben Khelifa on “The Enemy,” a virtual- and augmented-reality experience which invites users to empathize with characters on either side of major global conflicts (including the Israeli-Palestinian conflict, warfare in east Congo, and gang conflicts in El Salvador). Using Chimeria’s approach, Harrell and Khelifa are expanding the expressivity of “The Enemy,” enabling the system to sense and respond to users’ body language. Harrell is also conducting NSF-supported research on how avatars can help students’ ability to learn computer science. “We run public school workshops supporting students from groups currently underrepresented in STEM,” he says. “We learned that if people use abstract avatars to represent themselves [while learning], like a dot or geometrical shape, they often do better. We’ve shown that dynamic avatars we call ‘positive likenesses’ are even more effective—digital representations that look like you when you’re doing well, but then appear as an abstract shape when you’re not.”
If binary 1s and 0s seem fundamentally ill-equipped to contend with the fuzzy borders of identity, Harrell suggests taking a wider view. “In the 17th century, you could have just as easily asked how one can ever hope to capture the nuances of human experience with ‘just oil paint,’” he says. “All technical systems—like computers—are also cultural systems. It’s just that some of these systems are very explicit about the values they embody, while in other systems, the values are more implicit. A lot of my work is about trying to extract and make clear what some of those ‘hidden’ values are.”
“The universe presents me with a problem,” says Lindley Winslow PhD ’08, “and my job is to design the experiment that can address it.”
Sounds straightforward enough—except that Winslow, MIT’s Jerrold R. Zacharias Career Development Assistant Professor of Physics, is tackling one of the biggest problems our universe has to offer. Once and for all, she and her team want to detect dark matter.
There’s regular matter, of course—the stuff that makes up everything from sweaters to iced tea to air (i.e., solids, liquids, and gases). And then there’s dark matter, which accounts for just over a quarter of the mass in our universe… but no one’s ever seen it or touched it (that’s why physicists call it “dark”). We know it has to be out there because its gravitational influence would explain why galaxies and stars move and orbit the way they do. That is to say, the evidence that dark matter is real is only indirect; we’re able to observe its influence on the matter we can see.
Numerous physicists are working to prove dark matter’s existence, using a wide range of methods. For example, Nobel laureate Samuel C. C. Ting, MIT’s Thomas Dudley Cabot Professor of Physics, heads up a team analyzing cosmic rays captured by a large particle detector mounted on the International Space Station.
Taking a much different tack, Winslow’s experiment to directly detect the dark stuff involves creating a remarkable magnet here on Earth. The brainchild of MIT theoretical physicists Ben Safdi and Jesse Thaler and Princeton’s Yonatan Kahn PhD ’15, the magnet will be built by coiling hundreds of loops of metal wire into the shape of a doughnut that’s several inches across. Winslow will then place it in a special refrigerator, dial down the temperature to near absolute zero, and run a current through the doughnut.
With this arrangement, you’d expect a magnetic field within the doughnut only; “you should have zero magnetic field,” explains Winslow, “in the doughnut hole.”
Which means that if—and this is a big if—Winslow and her colleagues are able to measure a magnetic field in that hole, something else must be creating it. The job facing her team, which also includes MIT professors Janet Conrad, Joseph Formaggio, and Kerstin Perez, would then be to prove the “something else” is due to dark matter. The experiment, which goes by the acronym ABRACADABRA (seriously), is no simple feat. The design challenge most worrying Winslow is how to keep her doughnut perfectly still. “How do we isolate this magnet,” she asks, “from things like construction of the new building next door? These are very precise experiments where small vibrations can lead to effects that you don’t expect.”
Winslow says the process behind making a magnet to such exacting specifications relies on trying something smart, and then, when it fails (which it inevitably will), looking to see what went wrong, revising it, and trying something smarter. “We’ll build version one, and we’ll have to iterate that design again and again.” But Winslow admits that sometimes you hit a roadblock you just can’t maneuver around, which means “you have to completely scrap the design you’re working on and try a different approach.”
With the setup so delicate, the reasons for failure so abundant, and her dark target so elusive, Winslow’s experiment is no slam-dunk. But there are likely to be big payoffs along the way. For instance, by making “one of the strongest and most precisely known magnetic fields ever built,” Winslow expects the project could improve MRI technology. Of course, she’s not in this for the MRIs. Rather, Lindley Winslow is in this to cast the bright light—of a magnet pulsing with current, of iterative trial-and-error design, of sheer human ingenuity—on dark matter, that invisible something.
Want creative thinkers? Help kids create, says Mitch Resnick
A student and mentor confer at MIT’s Scratch Day, an annual event gathering kids and adults on campus to share projects and learn from one another. Photo: Kelly Lorenz
The Lifelong Kindergarten group at the MIT Media Lab, led by Mitchel Resnick SM ’88, PhD ’92, is known for its educational innovations: the Computer Clubhouse Network, an after-school environment where kids from underserved communities learn to express themselves creatively with new technologies; a 30-year collaboration with the LEGO company begun by Resnick’s mentor, the late MIT professor Seymour Papert, which yielded the robotics kits branded as LEGO Mindstorms; and Scratch, a visual programming language and online community where kids construct and collaborate on interactive stories, games, and animations. Driving all the group’s endeavors is a fervent belief in the power of learning through design. Resnick will expand on these ideas in a forthcoming book for the MIT Press titled Lifelong Kindergarten: Cultivating Creativity Through Projects, Passion, Peers, and Play.
How do you describe your group’s design-oriented approach to learning?
MR: The best learning happens when people are designing meaningful projects that build on their passions in a playful spirit—starting with an idea, making a prototype, getting feedback, iterating, experimenting. There’s something special about making and creating things. A former MIT professor, Don Schön, famously talked about design as “a conversation with materials.” When you create something based on your ideas, that gives you new ideas.
What is the difference, educationally speaking, between a kid building what’s on the LEGO box, versus making whatever’s in his or her imagination?
MR: Too often, kids are led into situations where there’s one correct solution and one path for getting there, and that’s not a very good foundation for developing as a creative thinker. But a blank slate can also be intimidating. We’re always trying to provide kids with opportunities to decide on their own goals and pathways, but also enough structure to help them succeed. For example, we currently have a National Science Foundation grant to develop what we call microworlds—a hip-hop dance microworld, for example—with collections of Scratch programming blocks well-designed for creating a particular type of project. This is based on an idea from Seymour Papert about simplified, constrained worlds that still have flexibility within them. Design always has constraints, but we don’t want it to be a straightjacket.
What is Lifelong Kindergarten’s main focus now?
MR: The Computer Clubhouses started almost 25 years ago in Boston and now there are about 100 of them around the world. We still act as advisors and try out new ideas there. And we’re still actively collaborating with the LEGO company, exploring how kids learn through play. Right now, though, our group is most focused on supporting the rapid growth of Scratch. Every month there are more than 10 million unique visitors to the Scratch website, half of whom are from outside the United States, and every day 20,000 new projects are shared in the Scratch online community. It keeps us busy. We’re constantly adding new features and possibilities—developing a mobile version of Scratch, localizing Scratch to fit the needs and interests of kids from different parts of the world, and connecting Scratch to the physical world with robotics and sensors.
That raises an interesting point. Scratch and LEGO both involve designing and building, but one output is virtual and one is tangible. How does that change the learning experience?
MR: I don’t think virtual versus physical is the most important issue. I’m more focused on whether the child is in charge of the design process. If I go to a toy store and see a dinosaur that dances when you sing to it, I figure the designers at the toy company must have learned a lot creating that toy, but I’m not so sure the kids are learning a lot by interacting with it. Similarly, online, some kids might be playing pre-packaged games, while other kids are creating their own stories, games, animations. Kids will have the richest learning experience when they’re the ones doing the designing. It matters less what the medium is. Ideally, we want to provide kids with opportunities to design in different media and contexts; that way, they’ll get a deeper understanding of the design process.
In his 2012 book Design After Decline, Brent D. Ryan, an associate professor in MIT’s Department of Urban Studies and Planning, called for new design approaches in deindustrialized cities struggling to rebuild. Ryan expands his urban design thinking to propose a worldwide theory of “plural urbanism” in The Largest Art (forthcoming in October 2017 from the MIT Press), from which this excerpt is taken.
In a 2006 essay, “The End(s) of Urban Design,” architectural critic Michael Sorkin declared that the discipline of urban design was at a “dead end.” [. . .] Sorkin depicted urban design not only as intellectually bankrupt, but also as shamefully unable to confront the urgent problems of the day.
The decade or so since Sorkin wrote his essay has been one of turmoil, at least superficially, in the urban design discipline. Events like continued urbanization and the world’s warming climate pose challenges for urban designers in tandem with other professions. But within the discipline itself, the fundamental dilemma posed by Sorkin, of a discipline unable to reconcile “theoretical debate” with “human needs,” has remained unresolved. The “end(s)” of urban design remain where they were 10 years ago.
The Largest Art provides a new theoretical and practical understanding of urban design. It does so by reexamining the discipline’s relationship to urban space and urban populations and by reframing urban design as a “building art” that accepts those elements of cities that are beyond designers’ direct control—other buildings, other owners, other actors—and that then incorporates these elements into urban design. By incorporating the city’s plural elements— those many elements imagined for more than a single design or by a single designer—urban design becomes a plural art that is more powerful and wide-ranging, more influential and beneficial, even as it becomes more democratic, participatory, open-ended, and infinite. Understanding urban design as a plural art may sound utopian, but it is actually the opposite—it is eminently practical. [. . .]
Many theorists and practitioners have recognized elements of urban design’s plural nature in the past. Famed urbanist Jane Jacobs identified urban design’s plural qualities when she called for redevelopment to reconcile “life with art,” as did MIT professor Kevin Lynch when he spoke of “city design” instead of urban design. [. . .] Ultimately this book may be understood as a manifesto, a call for urban design’s true plural nature to be understood and acknowledged, and for urban design’s independence from other building arts, particularly architecture, to be recognized once and for all. In doing so, this book moves urban design past its “ends” and reopens the door for an urban future in which design can encompass all cities.
For nearly a decade, a program with roots at MIT D-Lab has been empowering communities around the world to create and implement practical solutions to the problems they face.
The brainchild of MIT senior lecturer and D-Lab founder Amy Smith ’84, ENG ’95, SM ’95, the first International Development Design Summit (IDDS) was held on MIT’s campus in 2007. Its goal: to teach a diverse gathering of students, carpenters, mechanics, doctors, and other aspiring makers how to develop lasting, localized solutions for people living in poverty, in close collaboration with members of the communities they aimed to help. When the month-long conference ended, participants returned home to continue work on their projects.
The program has since blossomed into a global consortium of thinkers and doers, formalized in 2012 as the International Development Innovation Network (IDIN) through a grant from the US Agency for International Development. Comprised of 12 international partners and headquartered at D-Lab, IDIN provides year-round support to summit participants as they continue developing prototypes and products and launching their own social ventures.
To date, there are more than 800 IDIN network members making an impact in 65 countries around the world. Thanks to just a few of the 100-plus projects developed through IDIN, women in India have access to safer birthing techniques and reproductive care; low-income communities in Brazil have tools to help them save money and achieve their financial goals; and farmers in Tanzania are producing high-quality avocado oil from excess crops that would otherwise go to waste.
Nearly two-thirds of IDIN network members go on to teach others what they have learned about co-creation. After attending IDDS, Johana Sanabria left her career in industrial wastewater treatment to help start an IDIN-supported innovation center in her native Colombia. Its mission includes community design education. “In many of our workshops, it’s the first time for a student to think that way,” she explained in a recent interview. “That we can create something that we think is useful, but if it’s not affordable to someone else, then it’s not actually useful.” She added, “Working to open C-Innova helped me find my passion for working with the community . . . to help them leverage the resources they have, and build solutions with them, side-by-side.”
Andrew Lo harnesses the tools and technologies of finance for the common good
From fighting cancer to promoting stability, Andrew Lo harnesses the tools and technologies of finance for the common good. Photo: Joe Pugliese/August Image, LLC
A few years ago, while preparing to participate in a roundtable conference on finance, Andrew Lo happened upon the website of the American Psychological Association. “Their mission statement focuses on applying their knowledge of psychology for the benefit of society,” says Lo, financial economist, hedge fund manager, and the Charles E. and Susan T. Harris Professor at the MIT Sloan School of Management. “Reflexively, I compared it to the mission statement for the American Finance Association, which simply focuses on what we do and how we do it. It was quite a contrast. And I began to reflect, as a financial economist, on what our true mandate was.”
Lo has spent the better part of his professional life exploring that mandate. He is best known for his Adaptive Markets Hypothesis—a theory that incorporates human behavior, emotion, and even Darwinian evolution to better understand financial markets and assist investors in making constructive choices. Much of his research is aimed at mediating the impact of technology, global markets, and conflicting human emotions in an effort to make the world’s financial infrastructure more shock resistant: building safeguards that can avoid or mute the effects of computer-driven “flash-crashes”; drafting viable and effective regulations for an increasingly complex and technology-driven global financial infrastructure; and developing algorithms that can predict and ultimately help curb irrational and potentially damaging investment decisions.
But Lo’s boldest proposal to date may be his bid to help fight cancer. In 2012, he and his research collaborators launched the idea of a megafund that would use collateralized debt instruments to help bring life-saving cancer therapies to market swiftly and safely. On the business end, it was the type of proposal one might expect from a finance professional who oversees some $7 billion—the amount Lo manages in a series of mutual funds and managed accounts at AlphaSimplex Group, where he is chairman and chief investment strategist. What was novel was his analysis—and remedy—for the roadblocks that keep vital cancer therapies from reaching patients in a timely fashion.
“The drug development and approval process is increasingly challenging,” says Lo, who has lost several friends, colleagues, and family members, including his mother, to cancer. “The average cancer drug costs $200 million to develop, takes 10 years, and has only a 1 in 20 chance of being approved. Even if approval means large profits, the odds are just too risky for most investors.”
Troubled as he was by Big Pharma’s slow incubation periods and low success rate, Lo was even more disturbed to discover that many drug development decisions were driven by financial considerations, and not by science or patient need. “As the son of a cancer patient, I was outraged,” he says. “But I understood that a basic financing problem needed to be solved. Investors don’t like risk, whereas truly innovative therapies are usually very risky investments. You tend to strike out more often when you’re swinging for the fences.”
Lo’s solution to the drug-development riddle involves a pooling of risk, clever debt structuring, and, most importantly, enlightened leadership to ensure that drug development choices are dictated by patient need, and not just by investor greed. “As a financial economist, I’m not qualified to lead this effort,” says Lo. “A cancer patient needs a financial economist like a fish needs a 401(k) plan.”
Lo’s bold idea has since been explored in a series of “CanceRx” conferences at MIT. The blueprint calls for investors in the cancer megafund to purchase debt securities—the majority being long-term bonds, along with a smattering of derivative instruments. The capital would then be channeled into a pool of promising cancer research projects selected by a multidisciplinary team, including physicians, researchers, biopharma experts, and financial engineers. “If there are 150 statistically independent projects in your pool, your chances of picking at least three winners is 98 percent,” he explains. “This is a very low-risk investment that can offer investors an attractive rate of return. More importantly, it’s a formula that will create a fast lane for the some of most transformative treatments for cancer patients.”
The Power of Financial Engineering
The concept of using megafunds to spread the financial risk of costly and innovative research also holds potential, Lo believes, in myriad fields including manufacturing, energy, and even in confronting climate change. “We definitely need a new financial model to help finance longshots,” he says. “MIT recently announced a breakthrough in nuclear fusion. We’ll probably need another 10 years and about $5 to $10 billion in additional investments. We could use these new financing methods to reach the goal of the ‘gift of Prometheus’— bringing the power of the sun to the Earth.”
Lo’s range of activity stretches well beyond socially beneficial investment vehicles. As director of MIT’s Laboratory for Financial Engineering, Lo conducts research in two fundamental elements of contemporary finance: the explosion of technologies and instruments that have transformed the way money is measured and moved; and the idiosyncrasies of human behavior that dictate our often-irrational financial decisions. Technology, Lo notes, now enables automating trading programs to execute millions and millions of trades per day. This high-frequency trading—which is estimated to account for 50% of all global trading activity— provides investors with the liquidity they need in a financial universe where shares can be exchanged in a matter of milliseconds. Yet the rapid proliferation of trading tools, automation, and sophisticated financial instruments has also left the entire system more vulnerable than ever to wild fluctuations and potentially catastrophic crashes.
“Our global financial system has become so complex that no one individual is capable of conceptualizing it,” says Lo. “And this is frightening. But it also presents us with an opportunity to come up with a series of measures to assess systemic risk and to minimize or prevent it. There is no single measure that will tell us everything we need to know. But by bringing together all relevant stakeholders and developing multiple systemic risk measures, we can draft a series of regulations based on those measures that do the greatest good for the greatest number of people.”
While Lo believes that financial technologies need human oversight to be most effective, he also thinks that humans—in this case individual investors—could benefit from a little bit of cyber-shepherding. Too many investors, he observes, sell assets during moments of panic, only to regret not having stayed the course. Lo believes the industry can engineer a series of algorithms that can help investors better assess their long-term goals, their true tolerance for risk, and even communicate with them in moments when emotion might cloud their better judgment. Imagine a robo-call from your investment advisor telling you to sit tight during a sharp market dip.
“The science of human emotion is much more evolved than it was 10 years ago,” he says. “Neuroscientists are now beginning to map the biological basis for decision making and emotion. Once we understand these things better, we can come up with algorithms that can recognize the circumstances when you as an investor might be contemplating a rash decision, and call or text you to help you keep steady.”
Technology, Lo believes, is a two-edged sword; it’s up to us to ensure it’s used and not abused. The same goes for emotion, particularly in finance. “The emotion of greed, for example, can be good,” he says. “But only if it’s properly channeled and managed. Left to its own devices, greed can be incredibly destructive. The same is true for powerful technologies. I believe we, as financial economists, have the means and the responsibility to help people apply technologies and manage our emotions wisely, to their own benefit and to the benefit of society. This, if anything, should be our mission statement. We can do well by doing good, and finance doesn’t have to be a zero-sum game if we don’t allow it.”
