Thursday, August 9, 2012

Does Luck Contribute to Personal Success?


Romney pouncing on Obama’s statement “you didn’t build that” got me thinking about success and luck and community.  Romney took Obama’s words out of context and contends that the President is hostile to successful small businesses and always looks to government for the answers. 

When the entire quotation is examined, it is clear that Obama is saying that successful people are helped “by personal mentors and government policies that support infrastructure and technology.”  Here is what the President said in Roanoke, Virginia on July 13, 2012:

“If you were successful, somebody along the line gave you some help. There was a great teacher somewhere in your life.  Somebody helped to create this unbelievable system that we have that allowed you to thrive.  Somebody invested in roads and bridges.  If you’ve got a business, you didn’t build that. Somebody else made that happen.” (http://www.washingtonpost.com/politics/as-romney-obama-spar-over-you-didnt-build-that-small-businesses-add-context/2012/07/25/gJQA6IN79W_story.html)

What interests me here is not the election speeches and ads; what interests me is the expression of two different views of American culture. 

“One narrative puts the big gamble at the center of American life:  from the earliest English settlements at Jamestown and Massachusetts Bay, risky ventures in real estate (and other less palpable commodities) power the progress of a fluid, mobile democracy…. The other narrative exalts a different sort of hero – a disciplined self-made man, whose success comes through careful cultivation of (implicitly Protestant) virtues in cooperation with a Providential plan.” (Jackson Lears, Something for Nothing. New York: Penguin Group, 2003)

In the first narrative, luck contributes to success or failure and net worth may not correlate with moral worth.  In the second, luck does not play a role in success and net worth in this world does reflect moral worth. 

Conservatives regard success in the marketplace as due to the individual’s hard work and skill.  Liberals believe that hardworking folks can fail because of bad luck and events beyond their control.  No wonder Romney and Obama are arguing over what causes success or failure. (http://www.nytimes.com/2012/08/05/business/of-luck-and-success-economic-view.html)

When I read Daniel Kahneman’s superb summary of behavioral economics, Thinking, Fast and Slow, (New York: Farrar, Straus & Giroux, 2011) I was surprised to find two formulas dealing with success.  Kahneman describes these two formulas as his favorites:  “Success = luck + talent; Great success = a little more talent + a lot of luck.”  He also states, “Luck plays a large role in every story of success; it is almost always easy to identify a small change in the story that would have turned a remarkable achievement into a mediocre outcome.”

Recent research on online markets concludes that the link between quality and success is uncertain.  The best products sometimes fail, and the worst products sometimes succeed.  Success in the marketplace for products that are not the best or the worst is mostly due to luck. 

In the research, a control group listened to music by obscure bands and rated them without knowing what others thought of the songs.  The researchers then compared the results of the control group with results from eight other versions of the study where participants could see how many times each song had been downloaded and its average rating.  The researchers concluded that if a few early listeners disliked the song it would fail.  If a few early listeners liked the same song it could go on to be a winner in the contest.  “The song ‘Lockdown,’ by the band 52 Metro, is a case in point. Ranked 26th out of 48 in the objective ratings, it finished at No. 1 in one of the eight groups, but at No. 40 in another.” (http://www.nytimes.com/2012/08/05/business/of-luck-and-success-economic-view.html)

Michael Lewis, the enormously successful writer of books like Liar’s Poker and Moneyball, gave the 2012 commencement speech at his alma mater, Princeton.  He described how an art history major ended up at 28 years old the author of a best selling business book with a little fame, a small fortune, and new life narrative.

“Even I could see there was another, truer narrative, with luck as its theme.  What were the odds of being seated at that dinner next to that Salomon Brothers lady? Of landing inside the best Wall Street firm from which to write the story of an age? Of landing in the seat with the best view of the business? Of having parents who didn’t disinherit me but instead sighed and said, ‘do it if you must?’ Of having had that sense of must kindled inside me by a professor of art history at Princeton?  Of having been let into Princeton in the first place?”

Later in the speech, he observes that the true narrative of his successful career makes many in America uncomfortable.

“People really don’t like to hear success explained away as luck – especially successful people. As they age, and succeed, people feel their success was somehow inevitable.  They don’t want to acknowledge the role played by accident in their lives.  There is a reason for this:  the world does not want to acknowledge it either.” (http://blogs.ajc.com/get-schooled-blog/2012/06/09/author-michael-lewis-commencement-speech-lucky-you/)

It is hard to imagine Mitt Romney giving a similar commencement speech. It is easy to identify Romney with the narrative that has no place for luck in the story of his personal success. Romney clearly believes in the dominant culture of control where everything from universities to medicine is valued by the marketplace.

“The new rhetoricians of progress believed that their success was the product of a meritocratic process, that they were the type who took chances successfully, that their superior skill and drive allowed them to make their own luck – and that history was on their side.  This is a fair summary of the dominant mood within managerial professional elites, amid the triumphalist atmosphere of the American fin de siècle.  (Jackson Lears, Something for Nothing. New York:  Penguin Group, 2003)

Contrast that point of view with Tim Berners-Lee who invented the world wide web without cashing in to become a millionaire.

“People have sometimes asked me whether I am upset that I have not made a lot of money from the Web.  In fact, I made some quite conscious decisions about which way to take my life. These I would not change…. What does distress me, though, is how important a question it seems to be maddening is the terrible notion that a person’s value depends on how important and financially successful they are, and that that is measured in terms of money.  That suggests disrespect for the researchers across the globe developing ideas for the next leaps in science and technology.  Core in my upbringing was a value system that put monetary gain well in its place, behind things like doing what I really want to do.  To use net worth as a criterion by which to judge people is to set our children’s sights on cash rather than on things that will actually make them happy.”
(Tim Berners-Lee, Weaving the Web:  The Original Design and Ultimate Destiny of the World Wide Web by Its Inventor. San Francisco:  Harper, 1999)

In the afterword to the 25th Anniversary Edition of The Gift:  Creativity and the Artist in the Modern World (New York: Vintage, 2007), Lewis Hyde describes why he wrote his book about the parts of the world that do not work well under the marketplace theory:

“The first is simply that there are categories of human enterprise that are not well organized or supported by market forces.  Family life, religious life, public service, pure science, and of course much artistic practice:  none of these operates very well when framed simply in terms of exchange value.  The second assumption follows:  any community that values these things will find nonmarket ways to organize them.  It will develop gift-exchange institutions dedicated to their support.”

The Gift is a great place to start thinking about the tension between the two narratives described in the beginning of this blog post.  The current tension in the medical scientific community between knowledge being a gift or a commodity is nicely summarized in this quotation by MIT Geneticist Jonathan Kind:

            “’In the past one of the strengths of American bio-medical science was the
free exchange of materials, strains of organisms and information…But now, if you sanction and institutionalize private gain and parenting of microorganisms, then you don’t send out your strains because you don’t want them in the public sector.  That’s already happening now. People are no longer sharing their strains of bacteria and their results as freely as they did in the past.’”

Those of us who have won Warren Buffett’s “ovarian lottery” and have experienced a modicum of worldly success might living in the United States of America should constantly remind ourselves that we are indeed lucky.  We should heed the conclusion of Lewis’ commencement speech:

“You are the lucky few.  Lucky in your parents, lucky in your country, lucky that a place like Princeton exists that can take in lucky people, introduce them to other lucky people, and increase their chances of becoming even luckier. Lucky that you live in the richest society the world has ever seen, in a time when no one actually expects you to sacrifice your interests to anything.” (http://blogs.ajc.com/get-schooled-blog/2012/06/09/author-michael-lewis-commencement-speech-lucky-you/)


           






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