When Arnold C. Harberger, chairman of the economics department at the University of Chicago, turned down President Bok's offer to direct the Harvard Institute of International Development (HIID) in a letter to Dean Rosovsky this week, he briefly noted the reason: Harvard could not guarantee him as large a quota of Latin American graduate students as Chicago has provided in the past.

The explanation, according to reliable sources within the University of Chicago, seems overly simple at best, highly unlikely at worst.

Sources at Chicago yesterday offered an alternative scenario: they say that Harberger probably never intended to accept the offer at Harvard. Harberger felt his administrative reputation at Chicago was in decline, members of the department believe, and he thought a prestigious offer from Harvard might reverse the trend.

Several eminent professors retired in the last few years--Milton Friedman is one--and some economics faculty blame Harberger for not working actively to replace them. Though most economics professors at the University of Chicago respect his economic knowledge, they criticize his administrative negligence.

Sources close to the department said Harberger used the Harvard offer to "improve his status" at Chicago, and possibly "jack up his salary here" by proving to the university that he is a valuable commodity.

But Harberger never figured on Harvard faculty and student opposition to his appointment, which didn't make him look any better.

Harberger returned to Chicago last month from Harvard and asked the Center for Latin American Studies in Chicago for funds to support his Latin American Economic Studies Institute. He was turned down. Whatever his alliance with Harvard accomplished, it apparently didn't give him any more leverage at Chicago.

Many at Chicago back up Harberger's own explanation of his decision, however.

D. Gail Johnson, provost of the university, said the higher number of Latin Americans "did have some influence."