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Sunday, December 04, 2005

Luck vs Talent

Luck vs Talent

A good proportion of the people we know would either claim
not to believe in luck or that they were not lucky. A few
might confess to a unique moment in their life to being
lucky, and if you're lucky, you might meet someone who
claims to be lucky.

Now, talent is different. Although not always outwardly
manifested, most of us would like to think they had some
talent. The modest among us would, of course, down play such
a gift and put any successes down to good fortune. Anyway,
we don't want to attract undue attention from busy bodies or
envious folk.

However, the elusive nature of luck means that we are more
likely to be preoccupied with luck than by lack of talent.
After all, we do not need to invest anything for luck,
unlike talent. A gift of talent takes hard work, expensive
maintenance and a lot of time. But everyone around us tells
us that we should really be concerned about talent, and
leave luck to its own fate. No one would advice their
children not to study and to rely on luck in life.

How, then, should we react to this mysterious thing called
luck? What is this luck thing we keep talking about? Let us
start by looking at four situations where we are likely to
ascribe the element of luck. One caveat, though, I'm
thinking of luck in the positive sense and not bad luck.
Winning the lottery and not slipping on a Euro coin and
braking an arm! Furthermore, because luck features so widely
in life I'll restrict myself to these four examples where
both luck and talent can be operating at the same time. Or
at least believed to be the case.

The first case is the lottery. Usually, people play the
lottery or they don't. Those who play the lottery argue that
if they did win big it would make all the money they spent
on lottery tickets pale into insignificance. Those who do
not play argue that the odds are so stacked against winning
that it's worse than throwing the money away. Both are right
of course, but only because they argue from the point of
view that people play the lottery to win.

Lottery organisers know very well that a lottery is a good
way to make money. And that is why they make sure that they
employ a win/win strategy for lotteries: the organiser wins
and the punter wins. Before you think I've lost my head,
just hear me out.

If the organisers didn't make money they wouldn't organise
the lottery, we can assume this as given. The reason why you
though I was crazy is because you thought I said that anyone
who plays the lottery wins. What I said was the punter wins.
You see, it does not matter for the organizers whether half
the punters win two Euros or one punter wins seven million
Euros. However, winning two Euros is not exactly going to
set the adrenaline racing through our body, now, is it? But
seven million is no mean sum of money, now is it? And if you
are not sure, try this test, would get out of bed at six
o'clock in the morning to collect two Euros? Now, how about
seven big ones?

The objective logic of a lottery is not that one plays the
lottery to win, but that the chances of winning the lottery
are zero if one does not play. The rest then becomes a
matter of value judgment and not of luck or rationality.
It's a question of whether one thinks it is worth spending
any money on something that has a probability of
0.00000007151 to win. No luck is involved, it's all
probability no different from the chances of being born the
king of France or finding the sixpence in the Christmas
pudding.

Of course, some might object by pointing out that this does
not explain why some people win and some don't, which is the
real issue about luck. However, those who object will
discover, after an exhaustive research exercise, that those
who won a fair lottery tended to have the winning ticket and
those who did not win the lottery either tended not to have
the winning ticket or did not have a ticket at all.
Furthermore, no talent was involved in all cases, just value
judgment measured in terms of money spent. The probabilities
were the same for everyone. And those who bought more
tickets did not increase their chances, but simply bought
more probabilities. We might say that a lottery ticket
represents, in money terms, the value of a very small
probability. If a series of on/off switches can have a
monetary value, why not a probability?

I had a friend who was very good at getting money playing
slot machines; I mean getting, not winning. She was very
popular with bar staff because she seemed to win big on a
regular basis and this encouraged the other punters to have
a go. Without going into details, she once explained her
strategy. It all boils down to the simple fact that slot
machines also exploits the win/win/win strategy to maximum
effect. In other words, the slot machine operator wins, the
bar owner wins and the punter also wins. A slot machine
system works because, like the lottery, it exploits the WOW!
factor to the full.

Slot machines, therefore, adopt the same strategy as the
lottery, instead of paying small sums of money they
accumulate all the intake and at a certain threshold pay a
big sum to the punter who happens to be playing the machine
at the time. So, instead of giving value for money to
everyone, which is fair but boring, they give a few punters
a very big win of say thirty or forty Euros. Now that gets
everyone's adrenaline flowing, hence the win/win strategy.
My friend, of course, had the talent of knowing, more or
less, when the machine was going to pay up. In her case more
talent than luck was involved. And just in case you are
wondering, I don't play the machines!

We'd all like to have the dream job of our lives; and I
don't mean the quality controller for a bed manufacturer. I
mean working with job satisfaction no end, get paid serious
money, and management are reverently grateful. We all agree
that this scenario has more to do with talent than with
luck, although we would also think of the person with such a
job as being lucky.

I know someone who, for our purposes, has a dream job and
yes management do sometimes express their gratitude. We
would say that he was lucky, lucky to get the job and lucky
how he got the job. He answered an ad in a newspaper for a
job that was definitely two or three levels below his
general work history, but at the time he was between jobs,
as modern jargon would say. He went for an interview and
heard nothing from the company, a few weeks later he got a
call from the company for another interview. He left the
second interview with an offer for a job two levels above
his work history and with perks he didn't knew existed in
the labour market. There was no question about talent, he's
more than qualified for his job.

Luck, if you like, came into the picture because the company
started looking for a national manager at the same time as
the original job ad. But is that luck or just the way things
turned out? I would say it's the way huge companies tend to
operate, they change policies and requirements at short
notice. There was nothing lucky about this person seeing the
original job ad either. He knew about all the jobs going in
his industry over a period of six months; he was meticulous,
he was professional and he had talent.

Like the lottery, and in a way my friend playing slot
machines, it was a question of judgement. This person
thought it was worth applying for a job that was two or
three levels below his work history; even if he was prepared
to turn it down if the company offered him the job. His
talent played its part, and not the luck factor, when he
recognised that the job being advertised was on the direct
career path of his profession. From the job being advertised
to the job he got, he can go on to an Europe wide management
level position. Further more, the company was the kind of
company which appreciates talent.

Don't forget that I'm considering here situations that can
be attributed for their positive outcome to what might be
luck or talent. From the three cases I gave so far two of
them would probably be attributed to luck by outsiders, but
to talent by those who know the real details. The other case
is just a matter of value judgment and how much we think our
judgements are worth. Let's move on to the fourth case.

Economists, and facts tend to bare them out, say that long
term investments in the stock market can be very profitable.
Of course, this is not an advice to invest on the stock
market, but that money invested in the stock market tends to
make a profit in the long term, other things being equal.
This is not rejected by pointing out that some people have
lost a fortune on the stock market when the companies or
industry they invested in went bust. This is the same
argument as buying a lottery ticket that does not win, a
slot machine that is not due to pay up or a job application
that is rejected. It's all part of the game.

However, we can safely say that under a capitalist system,
the stock market is one of the best games of chance where
luck and talent are set against each other. The stock market
also works on a win/win strategy and the WOW! factor. We
already know the arguments for the win/win strategy, so
where does the WOW! factor come in? I would argue that
unlike the lottery or the slot machine models, the WOW!
factor in the stock market is not built into the system. Or
at least it is not its unique selling point, but rather a
consequence of employing talent to the system. For every
broker who makes a seven figure salary on the stock market
there are hundreds of other people just making a normal
living. This is a place where having talent can really pay
dividends. So how is it that companies go bust and brokers
lose fortunes if not literally break the bank?

Of course, there are always economic down turns and
competition, but usually these mega big disasters are not
due to natural causes. In some cases it might be that the
talent of a broker has reached its limit and in others greed
took over. In other words, what we usually have here is a
case of bad judgement instead of some form of bad luck.

So far, what I hope to have shown is that in situations
where we would expect luck to be the deciding factor we find
judgement playing an equally important part. And in cases
where we expect talent to be the deciding factor we discover
that judgement also plays an important part.

So what is luck? The word luck is very susceptible to some
kind of naturalistic fallacy. Originally, the fallacy was to
describe or reduce an ethical concept, like good, into
something that's not ethics, but, for example, natural.
Likewise, with luck we are tempted to think that it is
something metaphysical that gets mixed up in a state of
affairs, which turns an event in our favour. Metaphysical
ingredients cannot be mixed up with physical one's to make a
wonderful pudding that out of this world.

We also usually describe people as being lucky. As if these
people had some quality which they enjoyed and not us. For
example, we say that a person is lucky in the same manner of
speech and frame of mind as, that person is six feet tall.
We can confirm that a person is six feet tall by measuring
them, and we can, supposedly, tell if someone is lucky by
seeing how much money they win on the lottery. But the
lottery is designed to enable someone make a lot of money,
whereas one's height is a causal factor of evolution and
family genetics. Tall parents tend to have tall children,
blue eyed parents tend to have blue eyed children; but,
buyers of lottery tickets tend to win prizes does not make
sense.

On the other hand, we can say that someone is talented and
look at the kind of things they do or the kind of enterprise
they bring about. There is no mystery with talent, but
compared with luck talent has two very important features.
Firstly, we know that most people are capable of showing
some talent in something, even if they have to try harder or
practice more. Secondly, there is nothing to stop us or bar
our way from being talented. All we need is to have the
desire or the motivation to try. However, there is
fundamental and basic distinction between luck and talent.
In the case of the lottery, only one person can win the top
prize; there can only be one person employed in a dream
position. These things are designed to favour one against
the rest, but not talent; it is not exclusive. Everyone can
be talented and no one need be worse off for it. Of course,
there are always those who are more talented than others,
but that's a different matter.

Another reason why we give such importance to luck is
because we really believe in the principle of causality. No
one believes that things just happen out of the blue.
However, when things turn out to be different from what we
expected, some tend to resort to such concepts as; luck, bad
luck, fate, miracle, good or bad fortune and maybe some
supernatural force. The causality principle prevents us from
accepting things can happen at random or that there is no
understandable explanation of how and why things happen. But
in nature there are things that happen at random, one of
which is the tunnelling effect in atomic particles. In
nature there are limits to what we can know.

Could it be that we use the word luck to explain part of a
causal chain that we just don't understand? What is sure, at
least in the four cases above, is that the epistemic state
of mind of each person involved was as decisive as any hint
of luck.

Take the lottery for example, we assume that just because
the probability is so low we can just as well dismiss the
concept of probability and replace it by this mysterious
thing called luck. Sure, having a probability of
0.00000007151 is not exactly sexy, but its much better than
zero. It is, however, irrelevant how big or how small the
probability is for something to happen, what matters is
whether there is or there isn't a calculable probability.
But just because we know what probability is involved in
some matter it doesn't mean: a) we can know precisely what
is going to happen, b) that we can somehow always manipulate
the causal process or the causal outcome and c) that someone
else won't get there before us.

Take anther example from the world of employment or
business. What are the chances that a company, which is
planning a reorganisation and an ambitious investment
programme, won't be recruiting new people? And what if they
operate in a stable growth market? Of course, we can
understand this scenario and need not rely on luck if a good
job comes someone's way. Fair enough, let's look at the real
world. Take Bill Gates, if ever there was someone who won
big on the jackpot of work and business it is him. Who
wouldn't describe Gates as being lucky? But of course, there
are some who would say that in reality, it was IBM'
stupidity by selling Gates the DOS operating system for PCs
that made Bill Gates what he is today. Lucky? Or Bad
judgement? It's not even clear whether it was a case of good
judgement on Gate's part to by the DOS OS or a dare and do
to spend some cash on a piece of interesting software. Don't
forget, Gates was a computer geek before he was a multi
billionaire.

So, just because we don't understand a process we cannot
just assume that some extra-natural or metaphysical force is
at play. Our lack of knowledge is not a reason to assume
that something mysterious is going on. Nor our inability to
know is a reason for such mystery. From our four examples it
is clear that our state of knowledge and the amount of
information we have play an important part on how we
understand events, how we manage events and how to apply our
talent and judgement.

The value of luck for some people is not only related to the
causative effects of luck, but that we use luck to explain
why things happen the way they happen. Luck can explain
things even if we don't know why or cannot know why. And in
support of this chain of thought I want to refer to a
precedent, from science no less, as an analogy. Take the
concept of the square root of minus one (i). As far as
ordinary mathematics is concerned this (i) does not exist,
but in the world of high level mathematics it an important
number. It is so important that without it our modern world
would not exist because it features everywhere that involves
quantum physics, nuclear physics and the atomic world. There
is, however, one important difference here. With (i) ,
scientist can still use it to bring about the desired
outcomes, irrespective of whether they know what it is or
not. They can build power stations, manufacture computers,
design medicines and so on. Luck, however, is not only
mysterious, but we cannot even use it to bring about
anything. How do we add luck to the equation of life?

I earlier said that luck is exclusive; for example, only one
person can win the lottery. But as I explained above the
exclusivity of luck is brought about, at least in our four
cases, by the design of the situation. The organisers of the
lottery want that only one person wins the lottery.
Companies want that only one person is the national manager.
However, as with (i), winning a prize is in the nature of
the event. Atomic particles have this relationship of (i),
lotteries have prizes, it's the nature of the thing. If we
contrast this with social benefits, getting unemployment
benefit is part of the system and if we are entitled, but
don't get any we can legitimately complain. It is the same
with lottery, if we have the winning ticket, but are not
given the prize wan can legitimately complain.

Our prejudices about luck lead to some serious ethical
issues. In Britain there was an infamous case of a convicted
rapist winning a seven figure jackpot on the lottery. When
he was out on temporary release he bought a lottery ticket
and won. One of the issues was whether the government should
continue spending tax payers' money in protecting his
identity, he can afford it now. Should he keep the money
since he bought the ticket when he was technically a
prisoner? And of course, some people even asked whether he
should pay any compensation to his victim.

However, the big question no one was asking, but everyone
wanted an answer for is this: is it just that a rapist
should win the lottery? Not, whether a rapist should receive
the prize money, but whether a rapist should be lucky enough
to win the lottery? This question goes to the heart of what
is justice or whether there is natural justice, if not legal
justice. It might even go further and question the whole
notion of morality; a rapist winning the lottery or a drop
out becoming the richest person on Earth. Where is the
morality in this, it's as absence as hardcore pornography
Why wasn't it the victim who won the jackpot. Why wasn't it
the PhD graduate who never missed a class or a lecture who
became the richest man on Earth by selling software?

After all is said and done, we know that in general our
lives would be better if we were talented, however, what
will our lives be like without luck?

Take care

Lawrence

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