Talent vs. Luck: the role of randomness in success and failure

Previously: <a href="https:&#x2F;&#x2F;news.ycombinator.com&#x2F;item?id=16530423" rel="nofollow">https:&#x2F;&#x2F;news.ycombinator.com&#x2F;item?id=16530423</a>.

N agents are placed in a square grid, each with T_k &quot;talent&quot;, chosen from a Normal distribution with mean, m, and variance, v, (chosen to be in the neighborhood of [0,1], e.g. m = 0.6, v = 0.1) and C_k initial capital, with all C_k chosen to be the same initially. N&#x2F;2 &quot;events&quot; are also placed on the grid, with p of them being &quot;lucky&quot; and (1-p) of them being &quot;unlucky&quot;.<p>The simulation is run with the &quot;events&quot; wandering around randomly. If an event &quot;hits&quot; an agent, the agent doubles their capital (C_k) with probability T_k, trying to encapsulate the idea of &quot;when preparation meets opportunity&quot;. In other words an agent&#x27;s capital doubles proportional to their &quot;skill&quot; if a &quot;lucky&quot; event hits them.<p>An agent&#x27;s capital is halved if an unlucky event hits them.<p>After running the simulation for a certain amount of time, a Pareto distribution is observed for the distribution of capital (C_k). That is, with an initial distribution of &quot;skill&quot; as Gaussian&#x2F;Normal, the wealth distribution that results is power law.

&quot;The Drunkard&#x27;s Walk: How Randomness Rules Our Lives&quot; by Leonard Mlodinow seems topical based on the abstract. I would recommend it as a fairly quick read that presents a perspective you might not have thought much about.<p>I avoided it when I first came across it because I was worried (based off of the subtitle) that it&#x27;d just be fodder for learned helplessness. It turned out quite good though, and anything but (unless you&#x27;re a movie studio executive).

You may also attribute the possession of various types of intelligence to luck and you are done!<p>Richard Wiseman argued quite convincingly that luck is mostly self-made.<p><a href="http:&#x2F;&#x2F;richardwiseman.com&#x2F;resources&#x2F;The_Luck_Factor.pdf" rel="nofollow">http:&#x2F;&#x2F;richardwiseman.com&#x2F;resources&#x2F;The_Luck_Factor.pdf</a><p>In the famous picture-counting experiment, people were grouped into two categories (those who were considered successful&#x2F;lucky and those unsuccessful&#x2F;unlucky) and given the the task of counting the number of pictures in a newspaper. People in the &quot;lucky&#x2F;successful&quot; group found the correct number in less than half the time it took people in the &quot;unlucky&#x2F;unsuccessful&quot; group.<p>There was a small footnote in the front page of the newspaper: &quot;This paper has 47 pictures.&quot; Guess which group was more likely to notice that.

Cue the people saying &quot;yeah but we all make our own luck&quot; or &quot;luck favors the prepared&quot;<p>Which misses the point. Of course you have to be good AND lucky to succeed. But not everyone can be lucky. So think of that the next time you&#x27;re looking a few rungs down the ladder.

FTA &quot;almost never the most talented people reach the highest peaks of success, being overtaken by mediocre but sensibly luckier individuals.&quot;<p>It&#x27;s also interesting that regardless of anything, in the end your genes and where&#x2F;when you were born determine pretty much your whole life, and that&#x27;s just luck. In the end success attribution to anything but luck is just ego.

It&#x27;s interesting that 10 years ago, people avoided this subject completely - The authors of such papers would have been accused of being jealous and lazy.<p>Now, the idea that we are not a meritocracy is basically common knowledge, it seems that more or less everyone (even among the rich) accepts that this is the reality. I don&#x27;t think that society has ever been in such a state of economic self-awareness before. Unfortunately, all this doesn&#x27;t seem to change people&#x27;s attitude towards wealth; if anything, the rich are getting even richer and the poor are literally being wiped out in the opiate epidemic.<p>It seems that luck plays a bigger role than ever and yet the consequences of winning or losing are becoming more extreme at the same time.

TL;DR: Talent (inputs) are normally distributed but wealth (outcomes) have a power law distribution. So talent doesn&#x27;t determine wealth. What does? Luck. (They do some simulations.)<p>I wonder if they&#x27;re measuring the right kind of input though. IQ is distributed in a bell curve but that is one input. There is hard work, common sense, ambition, and energy. I wonder if you have a multi dimensional bell curve as inputs, you may end up with a power distributed output (all the elements have to line up for success).<p>Although, as someone pointed out, talent too is often a matter of luck.

The (flawed) assumption that hard work inevitably leads to success is perhaps the biggest reason why capitalism is so successful.