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?


wcw

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?

zenofguitar

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?

leliathomas

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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cching

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/

mikej

Old-time baseball executive Branch Rickey is reputed to have said "Luck is the residual of design." I think there is some considerable truth to this.

Mack

Moreover, isn't “luck” just another word for “fate” or at least a term associated with fate?

Um, no. Luck implies randomness. Fate implies preordination. They couldn't be more different.

Good luck in Oz.

dd

A friend of mine and I just had a discussion about this the other day, regarding musicians and entrepreneurs..

Like you said, they almost always attribute their success to dedication and skill, but we both know some very skilled, very dedicated, but decidedly unsuccessful people.

And so many of the successful people have stories of when they just happened to be at the right place at the right time and met the right people with the right connections... but they either don't recognize it as luck, or are unwilling to admit it.

I definitely agree that it's an interesting subject to consider.

Ericv

Luck and probability are two different things.

There are some probabilities we can control. There are others we can't. None of them are purely random--we just can't track the cause and effect for all of them.

Beelzebub

Didn't John Paul Getty say that the secret to success was to "Rise early, work hard, and strike oil."?

Cheers,
Michael Giesbrecht

noto

I agree, Luckonomics is long overdue. While we wait on the social science, however, Woody Allen's best film in years (Match Point) dealt with the importance of luck:

"The man who said 'I'd rather be lucky than good' saw deeply into life. People are afraid to face how great a part of life is dependent on luck. It's scary to think so much is out of one's control. There are moments in a match when the ball hits the top of the net and for a split second it can either go forward or fall back. With a little luck it goes forward and you win. Or maybe it doesn't and you lose."

zbicyclist

How would we operationalize "luck" in a way that is different from "random"?

For that matter, although I'm a religious person I feel that "God's Providence" can be modeled pretty much as a random process. When I die, I might get more insight into a more complete model ;)

There are some differences between "luck" and "random", but they might not be easy to operationalize. One thing I see in ordinary usage is that there are some superstitions often associated with luck -- e.g. "I'm wearing my lucky shirt". But there don't seem to be any superstitions apparent in the examples Dubner used above.

A second difference is the notion of "lucky streak", which in the statistical literature is known as "hot hand" -- for example, if a basketball player has just hit a jump shot, does this increase his probability of hitting the next jump shot? In this context, "lucky sreak" is the opposite of random. Dubner's examples do deal with these cases. However, note that in the Goldman Sachs example it's not Goldman Sachs that's ascribing this to luck, but those jealous of Goldman Sachs. That's consistent with the old rule: if your rival wins, it's luck. If you win, it's skill.

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scott cunningham

Luck also plays a role in not getting caught for murdering one's mistress, as Woody Allen shows in _Match Point_.

polypeptide

What if human minds are inextricably evolved to subjectively overlay causes on what are really statistical distributions?

Take these two theses:

1.) In any large population there will be a random distribution of whatever you measure.

2.) Human minds are constructed to see patterns (“causes”) in everything because there is a survival advantage to this particular abstraction of reality.

Given these, every person, subjectively, will see, experience, and ascribe “reasons” for success/failure (which itself is subjective.) We even have a cultural catalog of pre-conceived, socially validated reasons to draw from (e.g., hard-work, discipline, tenacity, good-looks, faith, demons, etc.)

But the original question remains: what if we are designed to subjectively superimpose reasons over what can better be explained as mere statistical outcome? If so, then all (many?) of our reasons are post-hoc rationalizations.

I'm not talking about “fate” here, simply the inescapable, subjective need we have to understand the world causally because it feels right. In other words – our subjectively casual reality is itself, a subjective feedback loop.

It's possible that if we took away all of the culturally validated reasons, things would pretty much turn out (statistically) the same. Or, alternatively, it's possible that if we took the reasons away, human minds would lose their “reason” (literally and figuratively) and things would be completely different. I don't know the answer, but my instinct tells me that we over-ascribe reasons when statistical distributions would more consistently define reality – even if that premise is subjectively difficult to accept.

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Justin McHenry

This has already been said to some extent, but if people who are successful don't mention luck a lot, it may be because they feel that they worked hard to be in the position to take advantage of luck when it came along.

Yes, some people grind away forever at something and never get the lucky break, but more often people quit before their lucky strike hits. For many successful people, the difference is that they did everything they could to build the foundation for success and then they stuck with it until the lucky break came, oftentimes past the point where the rest of us would have thrown in the towel.

Everyone has a certain amount of luck--whether we're fully prepared or dedicated enough to transform that little spark of luck into something bigger is what makes the difference.

(Of course some people have horrible luck before they are even born and have a huge hole to climb out of--for them, owning a small home with a postage-stamp size lawn might be equal tremendous success. Success is relative to where you started from. But that's sort of a different topic.)

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jsquire

The world of sports lends itself to this fairly well. A few years ago, while tearing up my NCAA bracket for the umpteenth year in a row, I realized the people who win the office tournament pools don't always know more, they're just luckier. So the next year I entered the office pool ten times, assigning probabilities to the outcomes of games based on Sagarin ratings and making picks with a random number generator, and made sure I had ten different Final Fours. I won that year and the next. If you think about it, this is why casual fans throw their $5 into the pool in the first place--they see it as not too much different than the lottery. I killed that by investing $50 to cover all reasonably likely outcomes. As a result they started limiting entires to two per person, because no one wanted to enter a contest they couldn't win.

Many Olympic events are one-shot deals and luck can have a huge effect on fame. Jesse Owens might not be a household name if not for some blind luck. He lost to sprint rival Eulace Peacock more than he won, but Peacock suffered a season-ending injury early in 1936, and Owens had clear sailing to four gold medals. I was on a state-champion track team in high school, and we were actually better the next year but didn't repeat our title because we had good luck one year and bad luck the next. You could list these kinds of examples forever.

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joesynergy

I am a firm believer in "The harder you work the luckier you get". A person will fail a 100 times trying to be a millionare and then on the 101st time they will become a millionare. People say that person is lucky but what about the 100 times they failed.

As for the NFL, they would be just like every other sports league except that everyone loves to bet on it and everyone loves to play fantasy football. Gambling is the sole reason why the NFL is dominating every other sport and where it is today.

www.acsh.org

Since luck is randomly distributed, indeed, the one who did the "deliberate practice" comes out looking... well... lucky.

Or as Morton Blackwell of the Leadership Institute wrote, "the initiative passes to those who are best prepared."

Speaking of preparedness, see my bird flu preparedness related blog- The REAL ABC's of "Bird Flu" - commenting on tonight's ABC bird flu Movie:
http://www.acsh.org/factsfears/newsID.743/news_detail.asp

kkwan

Luck seems to point to the outcome against odds. If you live after a crash with a semi you are lucky but not if you survive your daily commute. It is perceived as luck but is just an 'normal' outcome that is perceived as fortunate or unfortunate. I suppose it would be a high (or negative) value associated with a low probability.

And of course the more you try the better your overall probability of success (but not the success of each play). "You can't win if you don't play." Unless you are in Vegas where the odds are invariably stacked against you.

Closet Libertarian

Luck could be defined as a better than deserved outcome.

If you chose to work at Microsoft as a secretary in the 1980s and happen to become a millionaire you were lucky. If you invested $1,000 in Microsoft because you saw potential, you were rewarded for your risk, but were you lucky? Maybe.

Mack

If you live after a crash with a semi you are lucky

That version of 'lucky' always seemed odd to me. You're lucky to have lived... not so lucky to have been struck by a semi. Kind of a wash in the luck department, neh?

As the bluesman said, "If it wasn't for bad luck, I wouldn't have no luck at all."