Success and Luck: Good Fortune and the Myth of Meritocracy

In ancient times, philosophers started to ponder to what extent success depends on individual ability and effort, rather than fate or divine intervention. Nowadays we mostly categorize these external factors as chance or luck. Over the last 150 years in the U.S., the "Land of Opportunity" individualistic philosophy has emphasized the ability side. Academics take a more nuanced view, expressed well in an earlier book  Dance with Chance: Making Luck Work for You  (slightly edited).“Hard work, determination, education and experience count for a great deal as regards success. But the data available suggests that luck is almost entirely responsible for which hard working, determined, educated and experienced people make it in life.”Most accounts of this issue, such as  Outliers: The Story of Success  rely on stories. This book also has plenty of stories in which chance events led to success that seems unlikely without those events. But it is the first nontechnical book I've read that actually accompanies its stories with some account of “the data available". Part of this involves the “winner take all" parts of the current economy, where rewards accrue to only a few individuals. Part involves laboratory psychological experiments involving game-like settings where individuals are asked to make choices. And there are a few "toy model" mathematical simulations. I can confidently recommend this book as the best single treatment of its topic. Having said that, I do have a few quibbles.(a) The lab experiments involve short-term decision with negligible real-world consequences to the participants, so it’s mot clear how they apply outside the lab,(b) He notes that, after a point, acquisition of more wealth does not lead to more happiness. So it’s odd to use the word “success” to mean acquisition of wealth.(c) He proposes a progressive consumption tax, to reduce spending by the wealthy on positional goods (illustrated by expensive weddings and McMansions). But he makes no attempt to quantify the amount this would raise as taxes or reduce extravagance.(d) His mathematical models, combining “ability and effort” on one side with “pure luck” on the other side, miss a key point, which is the choice to undertake risky activity. When we look at the most successful people in a field, what we see is not just “ability plus luck”, but it’s “ability plus choice to take risks plus luck”.

Robert Frank should be commended for opening an interesting and relevant debate about the role of luck in life. As others have pointed out, regardless of the correctness of his logic or conclusions, his book clearly struck a chord with readers judging by the volume of thoughtful and intelligent Amazon reviews written here and so for that reason alone I would consider it to be a valuable contribution.However, despite the excellent insights into the role of luck in the first section of the book, it is then somewhat spoiled by overreach and spurious reasoning while wading into the inequality and fiscal policy debate. While this is certainly an important area of discussion these days, it has been covered more comprehensively by other writers such as Thomas Piketty, and without appealing solely to Frank’s philosophical framework concerning luck. In fact, the two ideas are not automatically linked at all, and probably shouldn’t be.Frank’s case isn’t helped by some readers' apparent confusion surrounding the arguments in the book which I would guess stems from not clearly stating his working assumptions as explicitly and early as he could have, but the salient logical framework seems to be as follows:1. Luck increasingly dominates competitive outcomes as a function of competitors’ absolute ability levels in many fields (along the lines of Michael Mauboussin's ‘Paradox of Skill’ argument)2. Luck as a factor in life events is positively correlated and path-dependent, i.e. being lucky tends to create the conditions for further favorable outcomes, and vice versa, compounding over time to produce greater extremes in the distribution than would happen if ability and effort alone were the only factors at play3. Per his previous book, the Winner-Take-All phenomenon has become increasingly prevalent as globalization enlarges the pool of competitors in many industries and has disproportionately increased rewards accruing to the winners4. The implication of putting 1 + 2 + 3 together is that small differences in initial endowments combined with the compounding effects of luck can, and increasingly do, produce large differences in life outcomes that don’t merely arise from differences in natural ability and effort5. Most people tend to underestimate this potentially outsized influence of luck on the distribution of outcomes6. If the average person had a better understanding of the influence of luck, they would likely think differently about redistributive fiscal policy, and so policy should be preemptively changed accordinglyWhile I can be convinced that 1, 2, 3, 4 and possibly 5 are true, I am less readily able to jump to accepting 6. Frank presses quite hard to make this case, and then goes further to argue that a progressive consumption tax is the natural way to address 6, which in my opinion neither necessarily follows nor is supported by sound reasoning.As an aside, I’ve avoided the use of the word ‘success’ in my review until now because of interpretation issues relating to that term. Defining 'success' in life in purely financial terms as Frank is mostly seen to be doing in his book is both common and questionable when framing debates about fairness and inequality. People obviously don't always make career and life choices based exclusively on maximizing their personal wealth, and often instead make trade-offs against other non-monetary benefits they hold valuable depending on their personal preferences, for example finding a sense of meaning in their work, making a contribution to society at large, or achieving a favorable work-life balance. It’s very likely that some of these preferences happen also to be correlated with their own initial life circumstances, e.g. level of ability and willingness to exert effort, further muddying the assumption of independence between these variables and the luck factor.However, temporarily putting aside any specific objections concerning the definition of success and accepting a definition of success measured in purely monetary terms as a yardstick in Frank’s model of life outcomes based on three input components - ability, effort and luck – subjective questions still arise about what we are trying to optimize as a society that are unrelated to views on the way purely random luck operates:How closely do we want to align individual incomes to ‘merit’, and what exactly is merit? Is a meritocracy one in which we maximize rewards to effort only or do we want ability to be rewarded as well? If so, in what proportion? What if we view ability as simply another variety of luck, i.e. the luck of genetics and birth circumstances such as quality of upbringing or education; what should be done about that? Should we try to counteract these early circumstantial differences in ability through public policy? Are we aiming to ensure equality of outcomes or equality of opportunity in society?These are all subjective political questions that can be answered differently by different people without any logical inconsistency and unrelated to a view of how much luck plays a part in life.Furthermore, with regard to the argument about a progressive consumption tax - if we accept that our societal objective should be to reduce wealth inequality, why should we necessarily expect a progressive consumption tax to be the best way to achieve this, given that for most people the marginal propensity to consume (MPC) and hence their likely relative tax burden, tends to diminish in relation to wealth? I can concede this would probably work if the objective is to reduce inequality of consumption, but it’s not clear to me that it would be more effective than a similar progressive income (or capital gains) tax in terms of reducing inequality of income or wealth. What kinds of inequality are we seeking to reduce and why?Too many questions of this type are at best only partially addressed and even then mostly anecdotally, and this together with Frank’s generally unconvincing linkage between luck and policy are fundamental flaws of the book, as astutely highlighted by Aaron Brown and other reviewers (arguments concerning free will and determinism are irrelevant here in my view). In trying to tie his commendably insightful initial ideas about luck into current debates surrounding inequality and fiscal policy, the writer overstretches. His sleight-of-hand attempt to prescribe a specific policy stance based on a proposition that the average person underestimates the role of luck in life attempts to build shaky policy recommendations on top of the foundation of a potentially solid observational hypothesis (however difficult that observation might be to test in practice). Overall, this book is a missed opportunity that would have been better served as an empirical study trying to pick apart the contribution of luck in life outcomes, while leaving readers to form their own political views about what if anything should be our response.

Un excelente libro para refelexionar, lo recomiendo mucho si estas interesado en temas de negocios, emprendimiento y economía

Great book! Food for thought.

The book has a good and an intriguing start but gets boring towards the middle and end. It has nice insights which is why I rated it 3 stars.

Great book conveying a compelling message with public policy considerations:Luck always plays a part in whatever we do, in successes and failures. This is the reality he is portraying and supporting through a very successful selection of examples, personal stories and quotes from other authors. Yet, when focusing on our efforts to succeed, we would rather put aside the implications of the existence of luck, as this can make us more passive.

The author covers the role of luck for success. Any student who gets thrilled at guest lectures by successful entrepreneurs shluld read it. I enjoyed reading the book and found it insightful for research too.