Luckonomics, Anyone?

It’s true that we just published an article about the importance of “deliberate practice” when it comes to succeeding in life.

But I’ve also been long intrigued by how large a role luck plays in any given person’s success. In the vast majority of the “success literature” I’ve read (including rags-to-riches autobiographies as well as the biographies of politicians, athletes, businesspeople, etc.) and the vast, vast majority of the media appearances and lectures I’ve seen by successful people, luck is almost never mentioned as a major contributor. It’s always dedication, hard work, brilliance, grace under pressure, etc.

And yet when I look back at my own life and career, I see that many of the good things that happened were the products of what I could only call luck (or at least randomness).

So I was very happy to see a few mentions of the Luck Effect in the media recently:

During NBC’s coverage of the Kentucky Derby on Saturday, the former jockey Gary Stevens – who won the Derby three times – said that “luck is 100% of this race.”

And there were three separate mentions of the Luck Effect in the 4/29-5/5 issue of the Economist.

In an article about how Goldman Sachs continues to bring innovations to various financial markets, the Economist‘s (unnamed) journalist writes, “Outsiders – and perhaps even insiders – find it hard to judge whether Goldman’s business is sustainably good or has thrived thanks to a dose of unsustainable good luck and skill.”

In an article about the sundry troubles faced by Tony Blair’s government, especially the kerfuffle raised by home secretary Charles Clark’s release of 1,000 foreign criminals, the Economist wrote broadly of Blair’s fortunes to date, especially as compared to those of predecessor John Major: “For the past decade, the economy has been tranquil, thanks to good luck as well as good management.”

And in an article about N.F.L. commissioner Paul Tagliabue’s left the league in such good shape (btw, I have long concurred; I think the N.F.L. is one of the best-run businesses in America – although it is admittedly a slightly easier task when your business is a cartel), the Economist ticked off the N.F.L.’s secrets to success, including: “The N.F.L. is also lucky – and its athletes much less so – because it is the most violent of the four sports. Since the average player does not last more than four years as a professional, labour strikes are difficult and the union is weak.”

Honestly, this last citation of luck doesn’t strike me as luck at all: the N.F.L. is simply smart enough to realize – and exploit – the perishability of its work force. (FWIW, a few years ago, I wrote about the N.F.L.’s efforts to school its rookies in the realities of pro football.) That said, I appreciate that the Economist is working hard to promote the importance of luck. Not long ago, there was a nice book on the role of luck in the financial markets, Fooled by Randomness, and Malcolm Gladwell wrote a good profile of its author, Nassim Nicholas Taleb. Maybe it is time for a full-fledged look at the subject: Luckonomics, anyone?

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  1. wcw says:

    BARRA, as I recall, did a simple simulation of what would happen if a) there were such a thing as investing skill (some academics plausibly argue that there is not), and b) if there is bad and good luck.

    In their toy model, the effects of luck absolutely swamped skill under reasonable assumptions.

    Isn’t this why we have stats?

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  2. wcw says:

    BARRA, as I recall, did a simple simulation of what would happen if a) there were such a thing as investing skill (some academics plausibly argue that there is not), and b) if there is bad and good luck.

    In their toy model, the effects of luck absolutely swamped skill under reasonable assumptions.

    Isn’t this why we have stats?

    Thumb up 0 Thumb down 0
  3. zenofguitar says:

    How do you define luck? Is it, possibly, the
    result of the creation of opportunity? Maybe creating more possibilities for good things to happen? Also, how do you define success?
    Monetary gain and being famous, or perhaps succeeding at composing a 1 hr opera that is thematically unified?

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  4. zenofguitar says:

    How do you define luck? Is it, possibly, the
    result of the creation of opportunity? Maybe creating more possibilities for good things to happen? Also, how do you define success?
    Monetary gain and being famous, or perhaps succeeding at composing a 1 hr opera that is thematically unified?

    Thumb up 0 Thumb down 0
  5. leliathomas says:

    Is it luck, really, or the willingness to put yourself out there that makes it look like luck (say that five times fast!)?

    You said you could look back on your own life and find luck or randomness as a part of it, but was it that or just the fact that you did what others were afraid to do or unknowingly went out on a limb that happened to work?

    Some things in life are unexplainable–or at least I believe they are–but others are just what you decide you have the courage to do or will do through your fear. I’m 19, live in a small series of towns in southern America, and I’ll be moving to Melbourne, Australia, this June to attend university for three years. (Big move, obviously.) Some might call that luck. I call it going after my dream (to attend college overseas) and doing what I have to through my fears.

    Moreover, isn’t “luck” just another word for “fate” or at least a term associated with fate? Just because we flip a quarter 25 times and happen to land on heads 15 out of the 25, it’s not necessarily fate. It may be something that we’re not seeing, such as the maybe the heads side weighs more than the tails or the angle or interference involved at the time of flipping the coin. There are innumerable possibilities, many not visible to the human eye. (To the electronic one then, maybe?)

    Just thoughts. Oh, and Wikipedia has an interesting page on luck.

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  6. leliathomas says:

    Is it luck, really, or the willingness to put yourself out there that makes it look like luck (say that five times fast!)?

    You said you could look back on your own life and find luck or randomness as a part of it, but was it that or just the fact that you did what others were afraid to do or unknowingly went out on a limb that happened to work?

    Some things in life are unexplainable–or at least I believe they are–but others are just what you decide you have the courage to do or will do through your fear. I’m 19, live in a small series of towns in southern America, and I’ll be moving to Melbourne, Australia, this June to attend university for three years. (Big move, obviously.) Some might call that luck. I call it going after my dream (to attend college overseas) and doing what I have to through my fears.

    Moreover, isn’t “luck” just another word for “fate” or at least a term associated with fate? Just because we flip a quarter 25 times and happen to land on heads 15 out of the 25, it’s not necessarily fate. It may be something that we’re not seeing, such as the maybe the heads side weighs more than the tails or the angle or interference involved at the time of flipping the coin. There are innumerable possibilities, many not visible to the human eye. (To the electronic one then, maybe?)

    Just thoughts. Oh, and Wikipedia has an interesting page on luck.

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  7. cching says:

    Hi Guys,

    You might want to take a look at the work of Prof Richard Wiseman, of the University of Hertfordshire. He’s written a delightful little book called “The Luck Factor” http://www.amazon.co.uk/exec/obidos/ASIN/0099443244/ref%3Dase%5Flaughlab-21/026-7779347-7024400
    which is based on his research into the lives of people lucky and unlucky people. It seems that if you think you are lucky then lucky things tend to happen to you, and visa versa.

    Here’s his website: http://www.psy.herts.ac.uk/wiseman/

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  8. cching says:

    Hi Guys,

    You might want to take a look at the work of Prof Richard Wiseman, of the University of Hertfordshire. He’s written a delightful little book called “The Luck Factor” http://www.amazon.co.uk/exec/obidos/ASIN/0099443244/ref%3Dase%5Flaughlab-21/026-7779347-7024400
    which is based on his research into the lives of people lucky and unlucky people. It seems that if you think you are lucky then lucky things tend to happen to you, and visa versa.

    Here’s his website: http://www.psy.herts.ac.uk/wiseman/

    Thumb up 0 Thumb down 0