In The Success Equation: Untangling Skill and Luck in Business, Sports, and Investing, Michael J. Mauboussin rigorously examines a common mistake when making predictions: failing to recognize luck’s existence or miscalculating its influence, “and as a consequence we dwell too much on the specific evidence, especially recent evidence. This makes it tougher to judge performance…The problem is that we commonly twist, distort, or ignore the role that luck plays in our successes and failures. Thinking explicitly about how luck influences our lives can help offset that cognitive bias.”
Obviously, luck can be an important factor. The challenge that Mauboussin embraces is to explore and thereby understand “the extent to which luck contributes to our achievements, successes, and failures.” He shares what he has learned so that those who read this book will be much better prepared to take luck into full account when making decisions, especially those that have serious implications and could have major consequences.
I thought about all this and about Anders Ericsson’s research on peak performance as I worked my way through Robert H. Frank’s latest book, Success and Luck: Good Fortune and the Myth of Meritocracy, published by Princeton University Press (2016). Briefly, the term “meritocracy” was coined in 1958 by Michael Young and was introduced in his book, The Rise of Meritocracy. It is a scathing satire of the British educational system. Frank agrees with Young and I agree with both of them that “the rhetoric of meritocracy appears to have camouflaged the extent to which success and failure often hinge decisively on events completely beyond any individual’s control.”
Frank goes on to suggest that “successful people tend to understate luck’s role in their success, making them reluctant to support the kinds of public investments without which everyone becomes less likely to succeed; and that is a relatively simple, unintrusive change in public policy could free up more than enough resources to redress this investment shortfall.”
My own take is that anyone’s chances for success are substantially improved if (HUGE “if”) there is equal access to the resources and opportunities that Ericsson examines in his recently published book, Peak: Secrets from the New Science of Expertise, co-authored with Robert Pool. With all due respect to natural talent, “deep” and “deliberate” practice, and self-sacrifice as well as self-discipline, I am also convinced that luck often plays a decisive role, for better or worse.
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Robert H. Frank is the Henrietta Johnson Louis Professor of Management and Professor of Economics at Cornell’s Johnson Graduate School of Management and a Distinguished Senior Fellow at Demos. For more than a decade, his “Economic View” column appeared monthly in The New York Times. He received his B.S. in mathematics from Georgia Tech, then taught math and science for two years as a Peace Corps Volunteer in rural Nepal. He holds an M.A. in statistics and a Ph.D. in economics, both from the University of California at Berkeley. His papers have appeared in the American Economic Review, Econometrica, Journal of Political Economy, and other leading professional journals.