Although there is a lot of merit in implementing an algorithm and not just writing pseudo code, doing it on paper has some advantages.

- Its a lot quicker to sketch an algorithm on paper ( you can ignore some details which are either trivial, or irrelevant to the problem )

- At a certain level you are expected to be able to convert pseudo code into actual code

- The most important part of an algorithm is knowing about it and what problems it solves (and variations). As well as the "trick" that makes it solve something particularly well - dynamic programming for solving sub problems etc... Even if I implement an algorithm or just write the pseudo code, I will forget the details fairly quickly, but the takeaway is that I know that for problems of type X I can use algorithms of type Y, (and sometimes i'll remember I can use Y because of fact C related to that particular problem or algorithm)