
The difference betwen skill and luck. - svag
http://blogs.hbr.org/cs/2011/02/untangling_skill_and_luck.html
======
iuguy
This reminds me of a discussion on a mailing list where someone pointed out
the most amazing scam.

You find 256 people and email them the details of a 50/50 prediction. 128
people should get the right prediction. You then email them another 50/50
prediction. Of course, 64 of them receive the right prediction twice in a row.
You then make a third 50/50 prediction to the 64, another to the 32 positive
responses and so on until you find a manageable number of people who now
believe you have some amazing insight into the future.

As much as we may want to think things are not random, sometimes they really
are, sometimes they're just probabilities.

~~~
ngsayjoe
Warren buffet says what if all that predict successfully come from the same
village, wouldnt that tells you something?

~~~
khafra
The same rules of probability apply, so it depends on the number of villages
making predictions divided by the improbability of successfully matching that
village's predictions. If there were only 10 or 20 people buying lottery
tickets, and one of them actually won, I'd pay very close attention to that
one person's methods.

------
generalk

      > Always compare results with a null model that reflects luck.
    

If nothing else, playing poker has taught me _this._

It's possible to win lots of money based on making exceedingly poor bets and
getting very lucky. There's one card left to come, there's a 5% chance an Ace
will come, but if it does you'll have an unbeatable hand, if not, you have a
hand that beats 66% of the possible hands. Do you bet? What happens if the Ace
doesn't fall?

A poor player who gets lucky will attribute his success to his obvious skill.

A skillful player who gets lucky will chide himself for making a poor
decision.

~~~
ikono
If nothing else, playing poker has taught _me_ this: The correct answer is
_always_ "it depends".

~~~
jacques_chester
You are now 2/3rds of the way to being a successful lawyer, accountant or
economist!

------
jonpaul
The best single comment I've read about luck was written right here on HN.
I've detailed it here: <http://techneur.com/post/1321568428/luck-ii>

In summary, I made a comment about Zuckerberg and the value of Facebook.
Someone responded that he was lucky. To which someone else responded with
this: (Can't find original HN comment)

 _"This attitude bugs me a lot. There is probably a path for every single
person in this country to make a million dollars in the next year if they were
just “savvy enough” to take advantage of it. It seems everyone wants to
diminish Zuck’s success by ascribing luck to it, but let me tell you
something. Zuck executed the shit out of Facebook. Did the community and
mindshare just come out of thin air?

There’s no good reason to believe that Zuckerberg is lucky at all. Saying he
was in the right place at the right time has this tacit assumption that if he
were somewhere else at the wrong time he would have tried the same thing and
fell flat on his face.

It seems because Facebook is an outlier, people feel safe talking about the
luck factor, but that’s meaningless because we all exist with individual
circumstances, and by that measure everything every one of us does is based on
luck. Instead, I prefer to ascribe luck to things that the individual actually
had no control over, such as winning the lottery."_

~~~
vannevar
_Zuck executed the shit out of Facebook._

In comparison to what? For all we know, there were dozens, maybe hundreds of
other similar sites being built at the same time. Without being able to
compare them, we really can't say how well he executed Facebook. Having used
both Friendster and MySpace, I'd say he did better than either of them. But by
the time Facebook was big enough to be mentioned in the same breath as those
two, success to some large degree was already assured.

 _Instead, I prefer to ascribe luck to things that the individual actually had
no control over, such as winning the lottery._

This is precisely the point: there may very well have been key moments in
Facebook's history, over which Zuckerberg had not control whatsoever, yet
which ultimately determined the company's fate. We know the economy is a
nonlinear dynamical system, and in such systems small perturbations in the
input can lead to large changes in the output. There's no reason to suppose
that similar effects don't play a role in the life cycle of individuals or
businesses.

~~~
rick888
"In comparison to what? For all we know, there were dozens, maybe hundreds of
other similar sites being built at the same time. Without being able to
compare them, we really can't say how well he executed Facebook."

Yes we can. If there were tons of social networking sites out there at the
time, and Facebook came out on top, there must be a reason.

~~~
YooLi
Luck? :)

------
vannevar
The difficulty in separating skill and luck is unconsciously illustrated by
the author himself in his basketball example. We're asked to consider how much
of a 'hot hand' is attributable to chance, and how much to skill. But what is
chance in this context? Clearly he doesn't mean the likelihood of a ball
launched in an arbitrary trajectory finding its way to the basket. More
likely, he means the shooting average of an average basketball player in the
type of game being observed (pickup game, college, etc). Clearly skill
contributes to such a baseline average.

With basketball we have a skill that can easily be measured for nearly anyone:
we just have them toss a basketball a few dozen times and we have a good gauge
of how skillful they are compared to others. But what about, say, a venture
capitalist? The game that they are supposed to be skilled at has so much
overhead that very few are ever played, and not all those that want to play
can (you've got to have a lot of money to even sit at the table). It's quite
possible that success as a VC is entirely attributable to luck, with no
contribution from skill at all. For these kinds of activities we have no way
to generate a meaningful statistical baseline. We can only engage in a thought
experiment: if hypothetically the success in question was actually due solely
to chance, would the world we see look any different?

------
sobbybutter
"In the mid-1970s, a man sought a ticket that ended in 48. He found a ticket,
bought it, and won the lottery. When asked why he was so intent on finding
that number, he replied, 'I dreamed of the number seven for seven nights. And
seven times seven is 48.'"

Something tells me this guy did well by not taking math in grade school too
seriously.

~~~
jacques_chester
If he'd paid attention to maths, he wouldn't be playing the lottery.

------
Ruudjah
> He found a ticket, bought it, and won the lottery. When asked why he was so
> intent on finding that number, he replied, "I dreamed of the number seven
> for seven nights. And seven times seven is 48."

Need say no more.

------
StavrosK
> Reversion to the mean. Any system that combines skill and luck will revert
> to the mean over time. This means that an extreme outcome, good or bad, will
> be followed by an outcome that has an expected value closer to the mean.

So if I toss a coin 10 times and it comes up heads, the next toss is more
likely to come up tails? I smell a rat.

~~~
beder
No, it means that in the next 10 tosses, you still expect to get a 5/5 split,
so over these 20 tosses, you'll probably have 15 heads, which is closer to the
mean.

I've seen this analysis in sports. In baseball, for example, you generally
expect teams to win one-run games as often as they win games in general (that
is, there's no "great closer" effect). So if you see a team winning 80% of
their one-run games in the first half of the season, you can expect their
record to be worse in the second half.

~~~
StavrosK
Ah, I see, thanks.

~~~
ssebro
No dude- you were right and he was wrong.

~~~
StavrosK
No, he's saying that if you have a few outliers to begin with you expect to
get more normal-looking data later on, drowning your outliers in them. If you
get 5 heads initially and then another 5 heads and 5 tails, it's still closer
to the mean than when you began.

~~~
ssebro
That can't be right, since the each point in the data is independent. In a
50/50 coin-flip game where you get 9 coins come up heads, the probability that
the next coin flip results in tails is still 50%. What you need to understand
is that probability deals with uncertain events. So instead of thinking about
the final count needing to be around 50% heads and 50% tails, you should
expect the count of the yet undecided part to converge around 50% heads, 50%
tails.

~~~
beder
I just noticed this thread continued, but I'm not sure what you're worried
about. The two things you said:

* the final count will be about 50/50

* the remaining part will be about 50/50

are actually the same thing (since we're talking about a limit). That is, we
could flip a fair coin a billion times, get all heads, and still, in the long
run, expect the _total_ ratio to converge to 1/2 (imagine flipping the coin
forever - that initial billion flips won't even be a blip on the graph).

------
AbyBeats
"I dreamed of the number seven for seven nights. And seven times seven is 48."

I think his lack of multiplication skills won him the lottery. It was luck
indeed.

------
ohashi
It was interesting but I was hoping for some more concrete suggestions than
just a 'you should consider randomness vs luck.' What is a better way than
ESOs? Give me a concrete example of how to untangle this rather than just
saying untangle it. It doesn't have to be universally applicable but an
example would be nice.

------
ajaymehta
"I'm a great believer in luck, and I find the harder I work the more I have of
it." - Thomas Jefferson

------
chr15
The author has an entire paper dedicated to this [PDF]
<http://www.cscs.umich.edu/documents/Luck.pdf>

------
joshuaheard
Luck = Skill + Opportunity

