
Talent vs. Luck: the role of randomness in success and failure - mmrezaie
https://arxiv.org/abs/1802.07068
======
sctb
Previous discussion:
[https://news.ycombinator.com/item?id=16503235](https://news.ycombinator.com/item?id=16503235)

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bethly
This has interesting implications for organizational dynamics: the more you
can allow people across the organization to innovate, rather than relying on
promotion and formal recognition to pre-pick winners, the more likely the
company will benefit from future luck. And it may be more valuable for a
company to hire a bunch of people who are just "good enough" than one person
who is a super-genius, because it makes it more likely the company will get
lucky.

~~~
alexpetralia
I always find it interesting how employers pay you for your labor, yet they
implicitly also have an option on any significant innovation you produce. In a
truly competitive labor market, employers would have to compensate for this
option value (ie. employees who are more likely to have breakthroughs, as
separate from any incremental project work).

~~~
jtraffic
This is a fascinating point. Perhaps the cleanest way to fairly treat your
option value is to not compensate you in expectation, but to allow you to
"sell" your idea internally when you have them. Employees could get a royalty,
say, for a successful idea. Pricing the royalty is difficult, but it's still
an interesting idea.

As I write, I realize this must have been tried somewhere. I know at one point
Sandia Labs allowed employees to start spin-offs using tech developed there,
but that's not quite the same.

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howitworks
If you read this and think "luck is all that matters, how can I be
successful?" the solution is proactively creating optionality.

Basically giving yourself the chance the get lucky.

Things like: putting your work online, meeting new people, living in a big
city, not buying a house, etc.

~~~
joncrane
>not buying a house

How does this help with luck, exactly?

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gnicholas
Not buying a house may decrease mobility for some, especially single people.
But folks who have spouses and/or kids tend to be more anchored to the
community regardless of whether they rent. They have jobs and schools and
friends that are hard to move away from.

Also, buying a house can be an opportunity itself. Although the new tax law
makes it somewhat less tax-favored as an investment, it still offers the
ability to escape capital gains taxation on up to $500k (married) of gains.
There are other federal and state benefits that can make the overall purchase
decision attractive.

So for some folks, yes a house can be an anchor. For other folks, they're
already pretty much anchored, and the tax benefits can outweigh the downsides
of incremental anchoring. Also, you can't get evicted...

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joncrane
> buying a house can be an opportunity itself. Although the new tax law makes
> it somewhat less tax-favored as an investment, it still offers the ability
> to escape capital gains taxation

This is what I was thinking. There's nothing stopping a person from moving and
keeping the house and renting it out, often at a profit over
mortgate+fees+repairs+etc.

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hugh4life
A bit of a tangent but here's something I stumbled on recently:

Vox: A statistical analysis of luck vs skill in sports. They interview the
author of The Success Equation: Untangling Skill and Luck in Business, Sports,
and Investing

[https://www.youtube.com/watch?v=HNlgISa9Giw](https://www.youtube.com/watch?v=HNlgISa9Giw)

I've been trying to get into hockey lately and I doubt It'll last because
there seems to be too much randomness to it. I feel like I would enjoy it more
were it 4-on-4. I think I would also enjoy it more if each side were given 1-2
free powerplays per period. Hockey fans in the youtube comments say that
there's more parity in the NHL than other sports leagues and that's skewing
the calculation for luck vs randomness.

[http://www.cbc.ca/radio/the180/the-psychology-of-terror-a-
fo...](http://www.cbc.ca/radio/the180/the-psychology-of-terror-a-former-
enviro-minister-defends-coal-and-making-hockey-fun-again-1.3325278/free-the-
game-the-case-for-4-on-4-hockey-1.3328057)

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jeffreyrogers
I remember Nassim Taleb wrote a paper with a similar hypothesis a few years
ago. If I recall correctly it was about why smart people shouldn't go into
trading: the role of luck is so great that even if you're one of the most
skilled traders in the world you'll probably be outdone by someone less
skilled but much luckier.

It makes you wonder though: where does luck matter least? Probably in
something like a trade that you turn into a business. There you get enough
customers that the effects of luck probably cancel out over time.

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daphneokeefe
In his inspiring book "How to Fail at Almost Everything and Still Win Big",
Scott Adams places much emphasis on the seeming randomness of luck. In
describing his approach to success, he says "I pursued a conscious strategy of
managing my opportunities in a way that would make it easier for luck to find
me." His strategy includes focusing on systems rather than goals, and
developing moderate skills in multiple areas. It's a very good read.

www.amazon.com/How-Fail-Almost-Everything-Still/dp/1591846

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ozim
I think being smart or being hardworking can have normal distribution. But
being smart and hardworking not. Introduction of paper states that qualities
are distributed normally but they do not say anything about combinations.

Though I do not underestimate role of luck because luck can change outcomes of
people in a huge way. Still you get lottery winners ending up badly. You still
get top athletes ending up badly because they did well on one type of talent,
but other types of talents like staying away from drugs not.

So as armchair philosopher/sociologist I believe that combinations of talents
are more important than luck. If you have strong combination it saves you from
bad luck, and helps get a lot more from good luck.

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maximexx
I never had financial success without being lucky. Without luck my talent is
not worth a dime.

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vishvananda
Interesting. If I read this correctly, they chose to let talent affect lucky
events but not unlucky events. I wonder what the rationale is for that and if
it changes the results significantly to allow for probabilistically avoiding
unlucky events.

~~~
mysterypie
> they chose to let talent affect lucky events but not unlucky events

Could you explain that a bit more please? The paper says, "We propose a
model... of people influenced by lucky or _unlucky_ random events." So unlucky
events are being considered too. But it's possible that I'm not understanding
what you mean.

~~~
vishvananda
From the paper:

2\. A lucky event intercepts the position of agent Ak: this means that a lucky
event has occurred during the last six month; as a consequence, agent Ak
doubles her capital/success with a probability proportional to her talent Tk.
It will be Ck(t) = 2Ck(t − 1) only if rand[0, 1] < Tk, i.e. if the agent is
smart enough to profit from his/her luck.

3\. An unlucky event intercepts the position of agent Ak: this means that an
unlucky event has occurred during the last six month; as a consequence, agent
Ak halves her capital/success, i.e. Ck(t) = Ck(t − 1)/2.

Note that the equation for lucky events includes talent, but unlucky events do
not.

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DINKDINK
>It is very well known that intelligence or talent exhibit a Gaussian
distribution among the population

Why should we assume that intelligence in the total population is Gaussian
distributed, even if you assume that you can measure 'intelligence'? A
Gaussian distribution of a metric emerges solely for the reason that there is
nothing else influencing the out come of the variables (no one way boundary
transition conditions) and as a result, there is just a random, scattered
cloud of noise around where the values are. Pareto distributions emerge when
there's an influencing factor which forces a change (businesses collocating
next to each other to reduce costs, people buying things from
people/businesses they know) Given that there are are events/phenomenon that
will clearly break independence of an intelligence result (child suffers head
trauma, exposure to chemicals while in the womb, Malnutrition) I remain
skeptical that 'intelligence' is Gaussian distributed.

~~~
Valmar
Intelligence cannot exhibit a Gaussian distribution, not unless you make
certain assumptions about what intelligence is.

Is the OP's definition of intelligence limited to academic or intellectual
intelligence? If so, that's the problem.

There just isn't a single kind of intelligence. Nor is intellectual
intelligence superior. It's just unique, like other forms of intelligence.

Also, different people excel naturally in certain fields, or even when it
comes to learning in certain fields, or learning through certain methods, such
as through watching something happening, doing it practically, listening to an
explanation, or even just reading about it, and so on.

Because of this, I'm skeptical that there's even an element of randomness.
There isn't, not when you take into account all of the life circumstances that
shape individuals and their ability to cultivate and make proper use of their
innate skills and abilities.

Many people are hampered by society from ever discovering their true calling
in life, so to speak, in various ways, whether it be bias towards intellectual
intelligence, bias towards what suits the needs of our corporation-dominated
society consumed by the need to work for money almost all the time just to
survive, etc.

In a work-orientated society that takes up the majority of people's time,
stress them out, etc, most people never get the chance to discover their
talents, to cultivate them, etc.

Just a bit of unstructured rant, because it's early in the morning and I
haven't yet had my coffee, but had to type this while it was still fresh. :/

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sdpy
There was a write-up about this paper in MIT Technology Review:
[https://www.technologyreview.com/s/610395/if-youre-so-
smart-...](https://www.technologyreview.com/s/610395/if-youre-so-smart-why-
arent-you-rich-turns-out-its-just-chance/)

~~~
microcolonel
The writeup title is also a bit wrong though. Because "smartness" or even
"aptitude" are not the sole filter between relative success and relative
failure.

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rdtsc
I think it often boils down to this: people who have more resources are
allowed to test their luck multiple times, fail and try again until they
succeed. People who don't have resources (a large inheritance say, no college
debt) even if they are smart, might only get to try once. Invest their time,
energy, money into one venture, fail and they could be screwed.

So in other words, looking back a particular instance of success might look
like luck, or a coin toss. But some people just have more coins to flip than
others.

You can also factor persistence in there as well, and make not just about
money. Say those that fail have enough stubbornness to get up, get to toss the
coin again, and again. So perhaps sometimes the limitations are self-imposed
not just external resources that are limited.

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someone454
“Chance favors the prepared mind”

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jmull
Not to mention the distribution of talent is also a matter of simple luck.

People tend to ignore this when they are trying to justify how the talents
they have make them “better” than others or that it means they deserve more...
for that matter, “having more” is a false success metric anyway, but that’s
another story.

~~~
tomnipotent
> talent is also a matter of simple luck.

There's no proof to this [0]. For many of us, talent is a matter of hard work
and dedication.

[0] [https://www.scientificamerican.com/article/is-innate-
talent-...](https://www.scientificamerican.com/article/is-innate-talent-a-
myth/)

~~~
colomon
What if the ability and dedication to work hard also the luck of the genetic
shuffle? I started seriously thinking about this when reading up on autism a
few years back.

(I don't have any answers, just a nagging suspicion that pretty much everyone
is getting these sorts of moral questions wrong. I mean, if I don't get any
credit for working hard to create a modestly successful very small business,
why should I get the blame for anything I do?)

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dqpb
My answer: neither

Persistence has been far more important for me than either talent or luck.

~~~
benji-york
[http://marginalrevolution.com/marginalrevolution/2018/03/gro...](http://marginalrevolution.com/marginalrevolution/2018/03/growth-
mindset-replicates.html)

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nopinsight
It could be that the magnitude of successes tends to result from the
multiplication of several factors, talent being one of them. Luck and location
are two other candidates.

If the factors are roughly independent and normally distributed, the output
could be approximated fairly well with _Log-Normal Distribution_ which often
appears very similar to Power Law Distribution given certain assumptions.

~~~
nopinsight
Correction for above: Each factor needs not be normally distributed, just
independent.

Evidence that suggests Log-Normal is at least as plausible as Power Law as a
model for wealth distribution:

"Using recently developed empirical methodology for detecting power-law
behaviour introduced by Clauset et al. we have found that top wealth values
follow the power-law behaviour only in 35% of analysed cases. Moreover, even
if the data do not rule out the power-law model usually the evidence in its
favour is not conclusive – some rivals, most notably the log-normal and
stretched exponential distributions, are also plausible fits to wealth data."

[https://arxiv.org/pdf/1304.0212.pdf](https://arxiv.org/pdf/1304.0212.pdf)

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mmrezaie
I Wonder if gaming models (like strategic game simulations) can help to
visualize what we mean by luck. We can improve our luck or chance by
education, taking chances, and etcetera. This is so easy to show in games (you
stay passive you will be eaten by opponents, you go too aggressive the same
result).

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bordercases
Any way to create randomness?

~~~
QasimK
You can, at the very least, make sure that your prepared for the random, lucky
opportunities that come your way! Be in a position to seize the opportunity.

I also don’t see why you couldn’t increase the number of opportunities that
you do come across. For example comparing someone that explores their field
talking to different people versus someone that does the bare minimum.

~~~
koolba
> For example comparing someone that explores their field talking to different
> people versus someone that does the bare minimum.

In social situations, talent (via extroverted personality, lack of shyness,
being presentable) can appear to be a way to make your own luck.

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gnat
tl;dr: Intelligence ("talent") has a Gaussian distribution, but money
("success") follows a power law. The difference might be "luck", and they use
a simple agent-based model to simulate intelligence+luck to get power-law
success. "The most talented people [almost never] reach the highest peaks of
success, being overtaken by mediocre but sensibly luckier individuals."

Some interesting policy analyses, too. "[I]t is evident that, if the goal is
to reward the most talented persons (thus increasing their final level of
success), it is much more convenient to distribute periodically (even small)
equal amounts of capital to all individuals rather than to give a greater
capital only to a small percentage of them, selected through their level of
success - already reached - at the moment of the distribution."

