
Talent, luck and success: simulating meritocracy and inequality - wwalker3
https://medium.com/@hongsupshin/talent-luck-and-success-simulating-meritocracy-and-inequality-with-stochasticity-501e0c1b4969
======
newyankee
One of the biggest lie sold in the West is that if you work hard, give
everything you should succeed. This has grave implications on policy and
really blinds people born with a silver spoon to the real problems in society
as they have a 'i deserve it and they don't syndrome'. Contrast this with a
poor society that is growing rapidly where you see islands of wealths with
certain individuals, at least people over there do not harbor illusions of
meritocracy.

In general the more educated and developed a society is, it is much more
meritocratic than others, however i still feel it is not enough especially for
those who have everything stacked against them.

May be sometime in the future we would have a universal human rights charter
that expands and decides what are the basic needs of a human that a society
should provide in exchange for basic responsibilities. This way life will not
always be a rat race and the poorest and unlucky can at least have some
dignity.

~~~
fullshark
Depends what you define as success. Hard work generally does lead to gainful
employment and the ability to afford a home/car which used to be the canonical
symbol of success in America.

If you think success is "be as rich and respected as I desire to be" then that
absolutely will not hold.

~~~
Cthulhu_
Depends on what you define as hard work. There's stories on Reddit's late
stage capitalism subforum about a graduated biochemist entertaining customers
at Starbucks with random facts; it was considered cute by the original poster,
like, wow, a smart barista. While it was sad that he worked hard to get his
papers but couldn't land a job.

~~~
kaolti
I don't see how job opportunities in any field reflect on whether or not hard
work is effective?

~~~
FranzFerdiNaN
It proves that hard work had nothing to do with succeeding. Getting a
biochemistry degree is hard work yet it gave the owner nothing more than a job
a high schooler can do.

------
RcouF1uZ4gsC
One of the biggest issues that discussions of inequality ignore is
generational issues. People view wealth as an individual thing. However, if
you look at American society, probably the majority has been generational.
Each generation worked and saved to better their children's lives.

An example of this is probably in immigrants. Many people came with
practically nothing but he clothes on their back. They took whatever job they
could find and worked like crazy and saved like crazy and pushed their
children like crazy. Their children in turn started out better than their
parents and worked and saved and pushed their children and their children did
even better. After a few generations, the descendants of immigrants have
entered the highest ranks of society.

What drives the "myth" of the American dream is not necessarily that I who
started out with nothing will be well off. It's that through my hard work and
their hard work my children will be better than me and my grandchildren and
their children will be well off even though I started with nothing.

That version of the American dream has worked far more reliably than the
individualistic model. Even once persecuted and discriminated against
immigrant communities in the US have succeeded in this version of the American
dream.

~~~
sametmax
I'm not sure the Y-generation would agree it worked for them.

The student loads have never been such a burden. The cost of housing
skyrocketed. If they want to eat for the same price as their grand parents
they need to eat junk food.

I mean: my grand parent could buy their own house while only one was working,
and a job that didn't require any diploma.

But the flat screen prices are very cheap so they got that going for them.

~~~
new_hackers
There is truth to this, however there has also been major changes to how we
live and the expectations.

"my grand parent could buy their own house while only one was working, and a
job that didn't require any diploma"

Yes, but they probably couldn't buy a house anywhere in the world they wanted.
The house size was probably much smaller than the sizes of today's suburban
houses. I would argue that one could by a small, economical home in the
midwest.

"If they want to eat for the same price as their grand parents they need to
eat junk food."

Again, look at the diet lifestyle choices of Gen Y versus their grandparents.
My grandparent (I'm a Gen Xer) told me stories of eating onions for a month
because his parents were migrant workers and they worked picking onions when
they were in season.

Even today, it is possible to eat simply (rice, beans, in-season vegetables
and fruits) for a low-price. You won't be eating much meat, and you won't be
eating "luxury" items. But that is very similar to how people ate in the 30's,
40's and early 50's.

~~~
sametmax
He was selling shoes. Their house has 4 bedrooms, 3 living rooms, 2 offices, a
garden, a court, a garage, a basement, a 2 cellars, an attic, and 2 bathrooms.

And yes, not in a big city. But his job paying the house was not in a big city
either.

While housing prices in is little town are indeed way lower than in most parts
of the country, so are the wages.

I agree for the food though. If you have somebody to do the shopping to
several shops and cook, you can get something similar. But today, both spouses
work quite often.

Now I'm just back from the US, and the only decent provider of vegetables that
match what I'm used to eat in France and group everything was wholefood. $4
for a salad is very expensive to me. Granted I'm not native to the country and
only passing by so you have options that are cheaper I don't know about.
Still. I never seen that price on a salad anywhere except Japan. And I travel
a lot.

~~~
garyfirestorm
>$4 for a salad is very expensive to me

i would be extremely happy to eat a meal at $4. these days i end up spending
>10$ on a meal, and I am not even living in a big city in US.

~~~
sametmax
Not the meal. The vegetable itself.

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chongli
Is talent not just a form of luck? It doesn't matter how hard you work at your
low post game, you'll never learn to be seven feet tall. Those who are of that
height are extremely lucky, giving them a huge advantage over other contenders
for that NBA center position.

Other forms of athletic talent are less visible than height but I see no
reason not to attribute them to luck (genetics, access to nutrition, coaching
etc.)

We can apply this reasoning to anything where success can be measured. A great
deal of business success comes down to connections which provide access to
capital and access to markets. All of these things accrue to the well-
connected.

~~~
SheepSlapper
All the things you mention are forms of luck, yes. And there's no way to
control for them outside of some nightmarish eugenics scenario. It's a fact of
life that people are different, and will excel in different facets of their
lives to different degrees.

In a free market system there will always be winners, losers, and a lot of us
in the middle. That's a result of the system BEING an equal playing field,
talent and money are correlated. It'll never be the case that we all go into
the workforce on equal footing, because we all start out in different places,
with different genetics, and different upbringings. That doesn't mean someone
from a poor upbringing can't work hard and raise their market value (thus
making more), but it means that not everyone is going to be a millionaire.

~~~
s73v3r_
I think you're going to have to make an argument that there actually is a
level playing field. I think most of us here would hotly dispute that.

~~~
SheepSlapper
Free markets are as close to egalitarian as is possible with markets. Supply
and demand set prices while skill set and productivity set wages. It's not
perfect, but it's better than anything else we've tried.

Interested in why you think the playing field isn't level, outside of the
"luck" aspects I mentioned earlier (since there's nothing to be done about
that, life doesn't care about fairness unfortunately). I'm open to new info :)

~~~
s73v3r_
I think you're going to have to prove that, for one, Free Markets actually do
lead to those things, and for two, that our current situation is one that
could reasonably be called a Free Market.

"Interested in why you think the playing field isn't level"

I think all one has to do is look at places like the inner city, where poverty
is common, and where the opportunities are simply not there. And I feel it is
extremely defeatist to say "We can't do anything about unfairness". I believe
we absolutely can. We just don't seem to want to.

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namenotrequired
> Since the talent follows a normal distribution, technically it can be
> negative or larger than 1, but for convenience we assume T~[0, 1]

Part of the answer to the original question is in this line. Normal
distribution implies outliers - i.e. some are radically competent. In
meritocratic conditions, you expect some to be radically successful, therefore
creating a huge wealth asymmetry.

I’m not saying we do live in a pure meritocracy, far from it. Only that normal
distribution of talent doesn’t imply wealth should naturally become normally
distributed.

------
sol_remmy
Everyone in this thread directly supports inequality through their buying
decisions and I'm callin' them out.

Anytime you use Netflix, Google, HackerNews is supporting inequality. Every
time you bought a Harry Potter book as a kid you supported inequality. You're
giving more money to the winners.

If you want to reduce inequality, then buy books from unpopular authors. Use
unpopular OSes like TempleOS instead of giving even more market share to
Google/Apple/Microsoft. Drive cars made by less popular manufacturers. Don't
read the New York Times, Fox News, or Washington Post - only blogs or
magazines with a small subscribership. And don't watch anything Disney.

~~~
dsacco
I'm not going to respond to most of your comment, but this suggestion is
pretty weird:

 _> Use unpopular OSes like TempleOS instead of giving even more market share
to Google/Apple/Microsoft_

...Why? You could also just use Linux or BSD. TempleOS seems like a very odd
suggestion for people looking to cut out non-free operating systems cold
turkey.

Edit: In case this isn't clear, I'm responding to the commenter's
commercialism thesis. I mean free as in beer, not as in speech.

~~~
dasil003
The GP is about popularity not freedom.

~~~
dsacco
No it isn't, it's clearly about commercialism. The commenter makes specific
examples and includes the phrase "buying decisions".

------
joshuaheard
Luck = Skill + Opportunity. That is, you must have the skill set to become
successful, but also be in the right place at the right time to apply these
skills.

~~~
troupe
Fortunately, you can increase your skill through training, reading, etc. You
can increase your opportunity just by trying when you fail. Someone who only
applies to a single job is less likely to be employed than someone who keeps
on applying until they are hired.

But then that would mean that luck is greatly a matter of how hard you are
willing to work and that doesn't seem to be a popular opinion these days.

~~~
s73v3r_
Because it's not. Donald Trump has not worked hard a day in his life; nor have
his offspring. Yet they have quite a privileged position.

~~~
troupe
Typically if someone has a lot of money, they or someone worked hard for it at
some point. But yes, people do win the lottery so there are people who haven't
worked for it. But the fact that there are some people who didn't have to work
hard doesn't change anything I said.

America is a great place for people who want opportunities to succeed. It is a
horrible place for people who are mainly focused on whether or not anyone else
has more than them because the land is full of people taking advantage of
those opportunities.

------
solidsnack9000
_In a meritocratic society, there is positive correlation between talent and
success. But how steep should this relationship be? If the talent-success
slope is very steep (i.e., a small talent difference causes a large capital
gap), you might end up having a wide distribution of wealth (severe economic
inequality). On the other hand, if the slope is quite flat (i.e., a big talent
difference makes little difference in capital), the society has weak
meritocracy, which may disincentivize people from achievements. The right
degree of steepness depends on how one defines fairness and how much
inequality a society can handle._

This discussion misses one important element of returns to talent: more
capital in the hands of more capable people should result in better allocation
of resources, and consequently better outcomes for society as a whole. Too
little inequality would, according to this view, result in destruction of
capital over time, and in consequence impoverish the society.

~~~
Retric
You assume the ability to gain capital has anything to do with the ability to
invest well. A quick check of sports stars shows this is very far from the
case.

Talent is not universal, being a great Doctor has little to do with being a
great painter _or_ investor.

~~~
quotemstr
> Talent is not universal, being a great Doctor has little to do with being a
> great painter or investor.

You might like to think so, but g says otherwise.

~~~
Retric
Correlation != a 1:1 relationship. Top Hollywood actors might do better than
the average person _on average,_ but plenty of high income people live in vast
amounts of debt.

~~~
solidsnack9000
It just has to be better on average, though, for the broader social
implication to hold: allocating capital to able people isn’t just about
rewarding them, it’s about what they go on to do with that capital.

~~~
Retric
That would only be relevant if their was absolutely no other way to allocate
capital _and_ maximizing ROI was the only relevant metric. Building, a X$ Yat
may count to GDP as X$ worth of healthcare, but society does not care about
them equally.

What's important is the outputs of society, not the accounting that occurs
between effort and consumption.

~~~
solidsnack9000
All people engage in consumption, though — less able people as well as more
able people. The issue is, when they aren’t, what are they doing with that
capital? This relates not only to how people run a business but also how they
engage with civic projects, charities and institutions like schools and
universities.

There are marked differences in styles of consumption. Some of the things the
Romans did, for example, are simply too destructive and wasteful for our
tastes today.

If you’re saying, we can allocate capital not to more or less able people, but
in some other way — to institutions or something — well, that’s true; but
there still will be capital managed by individuals. When talented,
constructive people rise to the top of the heap and run laundromats, computer
companies, and other businesses, we are ultimately all better off for it,
because those services are (a) available and (b) good. But to run such
businesses people do need to accumulate capital.

~~~
Retric
My point is there is no reason to use indirect means. If you care about
efficient use of capital then add a capital tax of say 1%. Now, people who get
a higher ROI accumulate wealth faster rather than those who simply conserve
wealth.

When accumulation of wealth is more tightly coupled with the ability to invest
rather than the ability to let compound safe investments create wealth you
increase efficiency.

Beyond that I don't think capital accumulation needs any incentives. People
don't invest more because of changes to the tax code they simply get more
money from the same investments.

------
lbriner
There are plenty of "soft factors" at work in being successful or not.
Confidence adds a lot of perceived value to an individual; their ability to
work smart instead of just hard; their ability to prove they can do well in
the specific context of their job rather than just be generally intelligent
but not practical; their ability to make others look good or feel confident in
their ability will make them get promotions sooner.

There are obviously lots of practical conditions outside of our control such
as local conditions, state of the job market, being willing to relocate etc.
There is also the understanding that you need to look better than the other
applicants rather than just look good in isolation.

Another major issue that is rarely covered is personality types and the fact
that insecurity, paranoia or other physical conditions that are obvious to the
interviewer will cause you to look bad, regardless of whether they actually
measure your ability to do a job.

And then there's luck!

------
Thiez
> The new term, wT is the amount of one’s paycheck. w represents the
> importance of the paycheck. The higher it is, the more pay you get. w is
> multiplied by the talent parameter T to implement a meritocratic idea: the
> more talented you are, the fatter the paycheck you get.

Perhaps I misunderstand the situation, but it seems like the author is baking
meritocracy directly into the model: _if_ you have high talent _then_ you
automatically get a higher paycheck. By increasing the paycheck importance or
simply reducing the event probability towards 0, this model will always
produce a perfect meritocracy.

So on the one hand we have random events that have a chance to double or halve
capital, but somehow a persons paycheck is a constant over their life, nobody
is ever between jobs, and paycheck is entirely deterministic. I think the
author really missed the opportunity to link paychecks to the random events
(but paychecks would otherwise persist between events).

~~~
dalore
Perhaps talent in this case refers to ones talent at salary negotiation?

------
falcolas
One model I don't see here is "success requiring a certain amount of capitol
to obtain". If you don't have the, say, 6 capital to invest in an opportunity,
you can't get the rewards for that opportunity. This applies even if you
provide debt, since going into debt typically requires having existing assets
in excess of the debt amount.

My hypothesis is that the starting capital will impact the distribution of
capital more than talent.

Another potential model: Vary the chance to participate in opportunities. Not
everyone has equal chance to take advantage of opportunities; someone living
in NY will have more opportunities they can leverage than someone living in
Iowa (and being able to move to NY is an opportunity in itself).

My hypothesis here is that the chance for being able to take advantage of
opportunities will play as big of a role in the final capital distribution as
talent.

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DoreenMichele
I don't even know where to begin to critique this. It entirely leaves out
factors like race and gender that are known to have an impact.

I've spent a lot of years trying to understand the details of exactly how my
gender is a factor and trying to find solutions to those details. I don't
believe it has to be a problem, but we know it currently is a problem, and
these cleaned up models seem to never include the idea that if you are female
or a person of color or gay etc, you will tend to have "demerits" or be
handicapped (in the horse racing sense of carrying an extra burden).

If talent, work and luck were everything, then we shouldn't have such
consistent outcomes that certain groups overall do better than others.

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arnold8020
About a year ago, I asked similar questions about the 80-20 rule and income
distributions. It seems that the simple explanation works surprisingly well.
Simulate the following system and it matches real world distributions
surprisingly well.

r1) Actors have normally distributed abilities r2) Actors are chosen randomly
based on current winnings, the more you have won, the more you compete. r3)
Winner of competition wins one point from the loser

You can find what I wrote about this at

[http://www.cs.toronto.edu/~arnold/research/80-20/](http://www.cs.toronto.edu/~arnold/research/80-20/)

including the code. It's interesting!

------
zappo2938
“Things worthwhile generally don’t just happen. Luck is a fact, but should not
be a factor. Good luck is what is left over after intelligence and effort have
combined at their best. Negligence or indifference are usually reviewed from
an unlucky seat. The law of cause and effect and causality both work the same
with inexorable exactitude. Luck is the residue of design.” -- Branch Rickey

------
interlocutor2
I'd like to see a model which separates talent into many constants:

* job/income talent

* exploiting luck talent

* avoiding unlucky event talent

* mitigating unlucky event talent

------
kolbe
If you don't even have the ability to quantitatively differentiate luck and
talent, what is the point in developing an economic model completely dependent
on those two things?

~~~
refurb
This is a good point. You can't actually measure any of these things, thus you
can't prove them. What's the point in debating them then?

~~~
kolbe
I disagree. Unprovable things can and often should be a part of a dialogue. I
don't know what that has to do with unquantifiable things being left out of
quantitative economic models, though.

------
all_seeing_eye
Appealing to luck is absolutely unscientific.

~~~
garyfirestorm
luck is a loose term used in place of 'probability' eg. probability that the
company having an open java developer position at this years career fair seems
high because of x,y and z reasons.

eg. i got lucky, they gave me an offer letter right after the interview for a
developer position!

