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.
If you read this and think "luck is all that matters, how can I be successful?" the solution is proactively creating optionality.<p>Basically giving yourself the chance the get lucky.<p>Things like: putting your work online, meeting new people, living in a big city, not buying a house, etc.
A bit of a tangent but here's something I stumbled on recently:<p>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<p><a href="https://www.youtube.com/watch?v=HNlgISa9Giw" rel="nofollow">https://www.youtube.com/watch?v=HNlgISa9Giw</a><p>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.<p><a href="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" rel="nofollow">http://www.cbc.ca/radio/the180/the-psychology-of-terror-a-fo...</a>
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.<p>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.
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.<p>www.amazon.com/How-Fail-Almost-Everything-Still/dp/1591846
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.<p>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.<p>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.
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.
>It is very well known that intelligence or talent exhibit a Gaussian distribution among the population<p>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.
There was a write-up about this paper in MIT Technology Review: <a href="https://www.technologyreview.com/s/610395/if-youre-so-smart-why-arent-you-rich-turns-out-its-just-chance/" rel="nofollow">https://www.technologyreview.com/s/610395/if-youre-so-smart-...</a>
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.<p>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.<p>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.
Not to mention the distribution of talent is also a matter of simple luck.<p>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.
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.<p>If the factors are roughly independent and normally distributed, the output could be approximated fairly well with <i>Log-Normal Distribution</i> which often appears very similar to Power Law Distribution given certain assumptions.
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).
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."<p>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."