Buck­ing the crowd

San­ti­tarn Sathi­rathai ac­cu­rately pre­dicted a slump in In­done­sia’s econ­omy — when oth­ers were blind to the warn­ing signs — by con­trol­ling for his bi­ases.

Bangkok Post - - BUSINESS - By Pawee Sir­i­mai

In 2013, San­ti­tarn Sathi­rathai, an econ­o­mist at Credit Suisse, rang the alarm bell on In­done­sia’s in­vest­ment boom, say­ing a golden era was com­ing to an end and a slow­down in eco­nomic growth was brew­ing for South­east Asia’s largest econ­omy.

Some investors were scep­ti­cal and even dis­mis­sive, as the In­done­sian econ­omy was ex­pand­ing strongly and most econ­o­mists had an op­ti­mistic view of the na­tion with the largest Mus­lim pop­u­la­tion in the world.

In a re­port ti­tled “The End of the In­vest­ment Boom”, Mr San­ti­tarn noted that In­done­sia’s econ­omy was re­ly­ing heav­ily on com­modi­ties and that de­pressed coal prices, a lack of ad­di­tional mone­tary stim­u­lus and ris­ing busi­ness costs were likely to ex­act a toll on the coun­try’s real in­vest­ment.

He es­ti­mated that In­done­sia’s GDP growth would be lower than ear­lier fore­cast by Credit Suisse and much lower than the con­sen­sus, while in­vest­ment was set to regis­ter its soft­est growth since 2009. The fore­cast was soon vin­di­cated as In­done­sia faced a sharp drop in in­vest­ment, and Mr San­ti­tarn was awarded Con­sen­sus Eco­nomics’ Fore­cast Ac­cu­racy Award for the first time. He won the same award twice in the suc­ceed­ing two years, also based on his fore­casts for In­done­sia’s econ­omy.

“When you have a dif­fer­ent view from the ma­jor­ity, es­pe­cially when your view is neg­a­tive, peo­ple are not happy about it, as they al­ready be­lieved and in­vested,” says Mr San­ti­tarn, who is now head of eco­nomics for emerg­ing Asia at Credit Suisse.

Un­like his fa­ther, Su­rakiart Sathi­rathai, a former deputy prime min­is­ter and for­eign min­is­ter, Mr San­ti­tarn — a 36-year-old Har­vard grad­u­ate — steered clear of a po­lit­i­cal ca­reer path and chose to be­come an econ­o­mist.

He at­tributes his suc­cess in his vo­ca­tion to his cu­rios­ity about the fi­nan­cial sec­tor, which stemmed from be­fore he en­rolled in univer­sity, track­ing back to the Asian fi­nan­cial cri­sis in 1997.

“At that mo­ment I didn’t un­der­stand what was hap­pen­ing, but sud­denly ev­ery­thing col­lapsed, banks went bank­rupt, some of my friends who were study­ing abroad had to drop out as they couldn’t af­ford tu­ition any­more,” Mr San­ti­tarn says.

He was fas­ci­nated by how the fi­nan­cial sec­tor can change peo­ple’s lives, and those thoughts in­spired him to jump into the fi­nan­cial world.

“Many who were study­ing eco­nomics at that time were dumb­founded by the cri­sis, as knowl­edge in that com­mu­nity was in­ad­e­quate, so I re­ally wanted to un­der­stand what was hap­pen­ing in the fi­nan­cial sec­tor,” he says.

I be­lieve we should al­ways have hope for the fu­ture. SAN­TI­TARN SATHI­RATHAI HEAD OF ECO­NOMICS FOR EMERG­ING ASIA AT CREDIT SUISSE

Mr San­ti­tarn de­cided to pur­sue a bach­e­lor’s de­gree in eco­nomics at the Lon­don School of Eco­nomics. Af­ter grad­u­a­tion, he came back to Thai­land and started his ca­reer as an econ­o­mist at the Fis­cal Pol­icy Of­fice, the Fi­nance Min­istry’s think-tank.

“By chance, I was as­signed to do many projects re­lated to the fi­nan­cial sec­tor such as Asia Bonds, the Chi­ang Mai Ini­tia­tive and the lib­er­al­i­sa­tion of the Thai fi­nan­cial sec­tor,” he says.

The job al­lowed him to work closely with banks, in­sur­ance firms and se­cu­ri­ties com­pa­nies, pro­vided in-depth knowl­edge of the fi­nan­cial sec­tor and mo­ti­vated him to ap­ply for a master’s de­gree at Har­vard Univer­sity.

Dur­ing a sum­mer in­tern­ship, he worked with world-renowned econ­o­mist Joseph Stiglitz. The two met a cou­ple of years be­fore when Mr Stiglitz vis­ited Thai­land for a con­fer­ence and Mr San­ti­tarn im­pressed the pro­fes­sor by bring­ing one of his lesser-known books for an au­to­graph.

“I brought him the book To­wards a New Par­a­digm in Mone­tary Eco­nomics, which is not one of his best-sell­ers, and the book helped us break the ice. He said, ‘Let me know when­ever you come to the US’, and that’s what I did,” Mr San­ti­tarn re­calls.

He and Mr Stiglitz worked on a pa­per re­lated to the ef­fec­tive­ness of mone­tary pol­icy in dif­fer­ent en­vi­ron­ments, a text that was later used as the dis­ser­ta­tion for Mr San­ti­tarn’s master’s and doc­toral de­grees at Har­vard Univer­sity.

“I be­lieve that if you want to ex­cel in this field, you have to know all three as­pects of the sec­tor — as pol­i­cy­maker, aca­demic and in the pri­vate sec­tor — so my plan was to start work­ing at fi­nan­cial com­pa­nies, which was the only area where I did not have ex­pe­ri­ence,” Mr San­ti­tarn says.

Af­ter earn­ing his doc­tor­ate, he spent months send­ing out re­sumes, fi­nally snag­ging a job at Credit Suisse in Sin­ga­pore as an as­so­ci­ate econ­o­mist of South­east Asian economies.

His scope ini­tially fo­cused on the Thai econ­omy be­fore ex­pand­ing to Viet­nam, the Philip­pines and In­done­sia.

“Peo­ple think that to be good at fore­cast­ing, one has to be very con­fi­dent,” Mr San­ti­tarn says. “But for me it’s not en­tirely true; you need to have a lot of things, namely an un­der­stand­ing of psy­chol­ogy, busi­ness and the boom-bust cy­cles.”

He says that when peo­ple be­lieve in some­thing ini­tially, they have a ten­dency to look for val­i­dat­ing in­for­ma­tion and not for dis­prov­ing data.

“The one com­mon de­nom­i­na­tor in a num­ber of fi­nan­cial crises and boom-bust cy­cles is that when peo­ple are ex­u­ber­ant or have an ex­treme view about some­thing, whether good or bad, they al­ways over­look im­por­tant facts,” Mr San­ti­tarn says.

He cred­its Philip E Tet­lock’s book Su­per-fore­cast­ing for pro­vid­ing an im­por­tant piece of ad­vice: when fore­cast­ing, one should form two dif­fer­ent views or sce­nar­ios that are the like­li­est to hap­pen.

This is a way to tone down one’s ego, which blinds us from fo­cus­ing on the data with an open mind and ad­mit­ting the pos­si­bil­ity that we could be wrong, Mr San­ti­tarn says.

“We have the abil­ity to see the truth to some ex­tent, not just for eco­nomics but also in life, but usu­ally we are clouded with bi­ases cre­ated by our own ego,” he says. “When serv­ing as the head of a re­search unit, it’s like you’re man­ag­ing a busi­ness where you have to source ma­te­rial, in this con­text data, to cre­ate a prod­uct through data anal­y­sis. And you also have to think about pack­ag­ing, which is how you present it to your cus­tomers.”

As a fore­caster, think­ing about the fu­ture seems in­evitable; but for a lot of peo­ple the fu­ture seems un­pre­dictable and scary, with unimag­ined po­lit­i­cal and eco­nomic shifts and fast-chang­ing tech­nol­ogy.

Mr San­ti­tarn says hav­ing two young chil­dren makes him think more about the fu­ture, not only about the econ­omy, but also about tech­nol­ogy and jobs, such as the fu­ture of econ­o­mists.

“When you have kids, you start think­ing what the world they grow up in will be like, what changes are likely to hap­pen,” he says.

With the ad­vent of ar­ti­fi­cial in­tel­li­gence (AI), econ­o­mists will have to cope with data and work with AI ma­chines, learn­ing skills such as data sci­ence and cod­ing.

Also im­por­tant will be non-cog­ni­tive skills that ro­bots can­not per­form, such as hu­man re­la­tion­ships, lead­er­ship, man­age­ment and un­der­stand­ing psy­chol­ogy.

“Hu­mans have al­ready gone through many in­dus­trial rev­o­lu­tions, and now many peo­ple are wor­ried that ro­bots will take over lots of jobs,” Mr San­ti­tarn says. But his­tory has shown that hu­man imag­i­na­tion is lim­ited only by what’s known or been seen, he says.

“I live in Sin­ga­pore, a very small coun­try where peo­ple are al­ways afraid of be­com­ing ir­rel­e­vant, so we have a type of mind­set where we al­ways have to think about the fu­ture and how we will fit in the world,” Mr San­ti­tarn says.

“These risks should be used in a con­struc­tive way to help mo­ti­vate us to think of new and bet­ter things, not to be afraid, as I be­lieve we should al­ways have hope for the fu­ture.”


Un­like his fa­ther, former deputy prime min­is­ter Su­rakiart Sathi­rathai, Mr San­ti­tarn steered clear of a po­lit­i­cal ca­reer path and chose to be­come an econ­o­mist.

ABOVE Mr San­ti­tarn, a 36-year-old Har­vard grad­u­ate, at­tributes his suc­cess as an econ­o­mist to his cu­rios­ity about the fi­nan­cial sec­tor.

RIGHT Mr San­ti­tarn speaks at a press brief­ing. BE­LOW Mr San­ti­tarn says hav­ing two young chil­dren makes him think more about the fu­ture.

Mr San­ti­tarn plays mu­sic with friends to un­wind.

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