8 ms·

Talent, luck and success: simulating meritocracy and inequality

156 points by wwalker3 9y ago

newyankee 9y ago
One of the biggest lie sold in the West is that if you work hard, give everything you should succeed. This has grave implications on policy and really blinds people born with a silver spoon to the real problems in society as they have a 'i deserve it and they don't syndrome'. Contrast this with a poor society that is growing rapidly where you see islands of wealths with certain individuals, at least people over there do not harbor illusions of meritocracy. In general the more educated and developed a society is, it is much more meritocratic than others, however i still feel it is not enough especially for those who have everything stacked against them. May be sometime in the future we would have a universal human rights charter that expands and decides what are the basic needs of a human that a society should provide in exchange for basic responsibilities. This way life will not always be a rat race and the poorest and unlucky can at least have some dignity.
- rb808 9y ago
  Chris Dillow is my favorite economics blogger. http://stumblingandmumbling.typepad.com http://stumblingandmumbling.typepad.com One of his quotes from memory is "Meritocracy is the myth that justifies inequality", which explains a lot of the current world.
  - deleted 9y ago
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  - rb808 9y ago
    To add to this - yes he's not the only one who talks about it, the idea is even on the wikipedia page for meritocracy. Its worth following Chris, much of what he talks about is outside the world of regular media ideas, and usually has lots of interesting references. On this topic - he often says that social mobility is not a great goal to aim for, helping working & middle classes achieve interesting & rewarding work with security is better goal. http://stumblingandmumbling.typepad.com/stumbling_and_mumbling/2016/06/beyond-meritocracy.html http://stumblingandmumbling.typepad.com/stumbling_and_mumbli... http://stumblingandmumbling.typepad.com/stumbling_and_mumbling/2012/05/social-mobility-cui-bono.html http://stumblingandmumbling.typepad.com/stumbling_and_mumbli...
  - ZeroGravitas 9y ago
    See also, the "Just-World Hypothesis", which investigates why people feel this need to blame victims: https://en.wikipedia.org/wiki/Just-world_hypothesis https://en.wikipedia.org/wiki/Just-world_hypothesis
  - k__ 9y ago
    Some parties here in Germany actively pushing this. They talk about equality of opportunity and not equality of outcomes. But what can you do? You're phenotype is mostly determined by stuff you can't control. If you have low conscientiousness and a low IQ, you're basically f*cked and you can't control this either. Even if you're high on openness and have a average to high IQ, you're still playing a high risk game.
    - Cthulhu_ 9y ago
      I do agree to equality of opportunity and not equality of outcome; those people with low IQ won't end up in the high tiers of e.g. the scientific world, simply because they can't. Equality of opportunity does not rule out a proper socialist system. You give everyone the same opportunities at life and work by e.g. affordable health care and insurances for everyone, but also scholarships for everyone so they can follow what they want to do instead of be restricted by e.g. what their parents earn. And if you can't work because of whatever reason, you don't have to end up on the streets. Equality of opportunity gives everyone the chance to graduate university; equality of outcome gives everyone a university degree regardless. I'm probably misinterpreting it. But give everyone the opportunity, and there will be enough social mobility so that people now born in poverty can grow up to become e.g. software developers, and pay that little equal opportunity was paid for them during their education back tenfold within just a couple years of working in that industry. That's my experience anyway, my dad was a not-greatly-paid metalworker with a high interest mortgage (as was the times back then) and three kids, I'm a college graduate and my first job paid almost as much as his.
      - k__ 9y ago
        I don't really think this is the problem here. Sure, you shouldn't give any idiot a degree without doing something for it and yes, you shouldn't make it harder for intelligent people to get degrees, just because their parents are poor or something. But if you have low conscientiousness and low IQ, that was also given to you without asking. It's playing on the same level as poor parents. With your proposed change (which is already done in countries like Germany, we have almost free healthcare and education) you still have 50% of the population that has a IQ below 100.
- mapcars 9y ago
  >what are the basic needs of a human that a society should provide Earning a living should not be a problem in the modern world with basically any kind of job. One of the big problems is people want the latest iphone, the best car, the most luxurious home, holidays, etc. The expectation of life had been set too high to make it happen even for a small part of the population. What is actually needed is way, way different from what is being promoted by media and society.
  - rainbowmverse 9y ago
    What do you base this on? I know plenty of people working multiple jobs and saving every dollar they can who still barely get by.
    - troupe 9y ago
      You see many people in the United States who are working hard and avoiding foolish decisions that cannot seem to provide for their needs and set money aside for the future?
      - deleted 9y ago
        [deleted]
      - rm_-rf_slash 9y ago
        Plenty. Some have kids. Others are in grad school. Some are even dealing with both.
        troupe 9y ago
        > Plenty. Some have kids. Others are in grad school. Some are even dealing with both. Yes people who go out and have kids without thinking through how they will provide for them usually have to work pretty hard at first. Still most of the people I've seen in this situation aren't really as bad off as they think. If you didn't plan for having kids, you likely aren't in very good control of your budget either and a small investment of time in learning how to manage and budget your finances can take off most of the financial strain. (That isn't to say there aren't some people who are in really bad situations due to random events, but I still find it rare to see people who are struggling from things that are/were completely outside of their control.)
- kaolti 9y ago
  Why is it a lie? Do you disagree that hard work leads to success, within limits?
  - rectang 9y ago
    It depends on who you are. If there are structural factors arrayed against you, less success and more failure will come your way for the same amount of work.
    - kaolti 9y ago
      Yeah, but that doesn't mean that "work hard and you'll succeed"is a lie.
      - yulaow 9y ago
        If you keep it as it is, it is an absolute statement as in "I can guarantee that every single time any random person works hard, he will be successful after time X" which is clearly empirically false because ignores all the (extremely numerous) boundary conditions. The problem is exactly that, there are people who think that it is an absolute statement so poor people, unhealthy people, people in bad life conditions, etc are so just because they didn't work hard so they do not deserve any help.
      - rectang 9y ago
        If you take the fairness out, that phrase is worse than meaningless. It applies to slaves: those who work harder are rewarded to some extent. Does that mean a slave society fulfills the ideals of meritocracy?
      - jonathanstrange 9y ago
        With hard work you can be successful in the sense of being able to afford a basic living or being moderately middle class - which is enough for many people. The deception which looks like a lie to some is in implicating that one percenters got their wealth from hard work - most of them didn't. AFAIK, statistics show that in industrialized Western countries the wealthy people who are seemingly successful (because of their wealth) have inherited most of their wealth or at least benefited extremely from improved conditions provided by already rich parents. In contrast to this, vertical social mobility remains fairly low and the overall gap between poor & middle class and the richest has been increasing in almost all capitalist Western countries since WW2. So it's not literally a lie, it's just sometimes kind of dishonest and misleading. In most professions it's practically impossible to get rich from hard work.
- fullshark 9y ago
  Depends what you define as success. Hard work generally does lead to gainful employment and the ability to afford a home/car which used to be the canonical symbol of success in America. If you think success is "be as rich and respected as I desire to be" then that absolutely will not hold.
  - frgtpsswrdlame 9y ago
    Not really... I've known hard workers, they work hard, no success, they work hard, an unlucky event intervenes, they work hard, still no success, so on and so on and so they ask: what's the point in hard work? Can you blame them? Even to be a hard-worker implies that you've been lucky enough in life to see a correlation between hard-work and success.
    - deleted 9y ago
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    - dsacco 9y ago
      What does "no success" mean in this context?
      - Retric 9y ago
        Let's go with homeless. Plenty of hard workers end up homeless.
      - frgtpsswrdlame 9y ago
        I believe this comment is going to trigger my rate-limit so apologies for not being able to give further context. But to one: how about being poor, working hard and then staying poor? More importantly why should it matter how someone defines success? I think the false and self-perpetuating notion of meritocracy is massively benefitted by the lowered expectations of the lower class. If I'm born poor, making it to lower middle class could be a huge success for me, if I'm born rich that same outcome would be a massive failure. Even to acknowledge that that is true is admission of how massively tilted opportunity is. If the poor and the rich had the same visions of success, they dreamed the same dream, do you think we could still say with a straight face that, really, hard-work is the most important factor in success? I don't think so.
- hliyan 9y ago
  What if the problem is that the results of merit accumulate geometrically, so that beyond a certain threshold, some people just start rapidly pulling ahead of the pack?
  - rectang 9y ago
    That's a choice that society has made, through laws and institutions which benefit the wealthy -- such as treating corporations as people. It doesn't have to be that way.
    - dasil003 9y ago
      The problem is the people who really understand how it works are largely the ones that benefitted from the current system and thus have no incentive to change it.
    - cookiecaper 9y ago
      There's a natural power law distribution to many things. Economics is a natural force. We can't change it just by dictating that we'd like some things to change, just like we can't change other natural elements by fiat. There's a process, a technology, a science that has to be applied to shape and command natural forces. Human psychology is no exception. Things must be done within workable, realistic parameters. We can't just say "everyone will share and be happy and nice now" and expect it to work like that. "Corporations as people" is a massive politically-charged misnomer that doesn't mean anything by itself. The entire point of incorporation is to create a separate, independent legal entity divorced from its principals. This is what is meant when "legal personhood" is discussed. You have to be specific about what you'd like changed.
      - rectang 9y ago
        > Economics is a natural force. The extent to which "natural" inequality is amplified by institutions varies. Dictatorship is a very "natural" way to distribute rewards. We don't have to accept dictatorship as our destiny just because it is "natural", nor do we have to accept current levels of economic inequality as immutable.
- aantix 9y ago
  Isn't it the striving, the need to move from one circumstance to the next, is what propels us forward? People don't make progress in spite of their struggle, progress is made because of the struggle.
  - troupe 9y ago
    This is a very good point. Regardless of talent or luck, the person who is willing to keep trying dramatically increases their chances of success. Someone who only applies for one job and stops if they don't get it, is much less likely to get a job than someone who is willing to apply for 100 jobs until they get hired.
- pygy_ 9y ago
  > One of the biggest lie sold in the West is that if you work hard, give everything you should succeed. Even if it were strictly true, this ignores the fact that the ability to work hard is mostly determined by one's genes: https://www.ncbi.nlm.nih.gov/pmc/articles/PMC2762790/ https://www.ncbi.nlm.nih.gov/pmc/articles/PMC2762790/ The main merit there is to have the right genes.
- simonebrunozzi 9y ago
  Please, it's not the West: it's the anglo-saxon West (US, UK), or in general countries with a strong calvinist influence. Mediterranean countries (Italy, Spain, to some extent France) don't share that same mindset.
- Tade0 9y ago
  > Contrast this with a poor society that is growing rapidly where you see islands of wealths with certain individuals, at least people over there do not harbor illusions of meritocracy. Actually(speaking from experience) these islands of wealth only reinforce such illusions in poor countries. The logic is as following: apparently that person is exceptional and the fact that they've managed to get wealthy within one generation is proof.
- aantix 9y ago
  Whatever rules in life get laid out, whether it's scoring soccer goals or everyone gets X amount of food per month, someone always becomes good at "optimizing" those rules. We are humans born with different abilities with different tastes and strive for different things. Equalizing the outcomes of all by artificially holding some back suppresses the very creative life force in each one of us, ends in misery and progress is hampered.
  - pintxo 9y ago
    Talking about the extremes, I agree. Talking about defining sensible rules to allow a wider range of people to be successful than only those being a member of the local Golf Club, I disagree. There should be no question that we need rules, and at the same time there should be intense discussions - if not intellectual fights - about which rules we need and how to implement and enforce them.
    - aantix 9y ago
      >allow a wider range of people to be successful But what does "successful" mean in practice? E.g. If there are 100 software security companies, 50% of those are below average in performance (and will probably get chosen less). Do we no longer choose let the consumers choose? All of these software companies should now receive a percentage of business, regardless of performance/trust/expertise? Or should the top performing companies be disallowed the following year to market or do sales in order to give the underperforming companies a chance to catch up? What is "sensible" and who decides?
      - pintxo 9y ago
        For me, this is about ensuring that all 100 companies play along the same rules. If, while following the same rule book, 10 are significantly more successful than the others, fine. If another 20 are significantly less successful, also fine. What is no fine, is having some companies be exceptionally successful by breaking some rules. Think insider trading, it's a highly profitable business for those risking it, but has a long term negative impact on the market. Therefore we, as a society, via our proxy, the government, decided to enforce rules forbidding insider trading. The above answers who. This leaves the question of sensibility, I am afraid there will hardly every be consensus on what is sensible or not within a diverse enough group of people. If you'd ask a bunch of investment bankers about sensible rules for banking regulation, I'd assume you'd get quite a different answer than by asking a bunch of consumer rights activists. Our current solution to this problem of finally arriving at a single "sensible" rule is the democratic process / parliament. I guess most would agree this process seems to be sub-optimal, but it seems there are not too many other options on the table.
- toasterlovin 9y ago
  >May be sometime in the future we would have a universal human rights charter that expands and decides what are the basic needs of a human that a society should provide in exchange for basic responsibilities. This way life will not always be a rat race and the poorest and unlucky can at least have some dignity. Life has always been a rat race. The only reason that it isn't for some people right now is that we are at a very unique time in human history where we have greatly increased our ability to produce food and, at the same time, have extremely low birth rates as a result of being poorly adapted for modern life. This, too, shall pass.
- chmln 9y ago
  > One of the biggest lie sold in the West is that if you work hard, give everything you should succeed I think this used to be true decades ago when you could without much effort get a well-paying manufacturing job with just a high school diploma. It would be foolish these days to rely on just "working hard". Not everyone "works hard" equally - it is important to work hard in the right direction. To work as say a Starbucks barista even full-time and expect a house, a car, and a luxurious lifestyle, then after failing to achieve that exclaim "meritocracy doesn't work" is narrow-minded at best.
- stcredzero 9y ago
  One of the biggest lie sold in the West is that if you work hard, give everything you should succeed. How is this a lie? There is no guarantee, just good odds. at least people over there do not harbor illusions of meritocracy. [Citation Needed] May be sometime in the future we would have a universal human rights charter that expands and decides what are the basic needs of a human that a society should provide in exchange for basic responsibilities. There was already a Declaration of Universal Human Rights from a commission headed by Eleanor Roosevelt.
namenotrequired 9y ago
> Since the talent follows a normal distribution, technically it can be negative or larger than 1, but for convenience we assume T~[0, 1] Part of the answer to the original question is in this line. Normal distribution implies outliers - i.e. some are radically competent. In meritocratic conditions, you expect some to be radically successful, therefore creating a huge wealth asymmetry. I’m not saying we do live in a pure meritocracy, far from it. Only that normal distribution of talent doesn’t imply wealth should naturally become normally distributed.
chongli 9y ago
Is talent not just a form of luck? It doesn't matter how hard you work at your low post game, you'll never learn to be seven feet tall. Those who are of that height are extremely lucky, giving them a huge advantage over other contenders for that NBA center position. Other forms of athletic talent are less visible than height but I see no reason not to attribute them to luck (genetics, access to nutrition, coaching etc.) We can apply this reasoning to anything where success can be measured. A great deal of business success comes down to connections which provide access to capital and access to markets. All of these things accrue to the well-connected.
- SheepSlapper 9y ago
  All the things you mention are forms of luck, yes. And there's no way to control for them outside of some nightmarish eugenics scenario. It's a fact of life that people are different, and will excel in different facets of their lives to different degrees. In a free market system there will always be winners, losers, and a lot of us in the middle. That's a result of the system BEING an equal playing field, talent and money are correlated. It'll never be the case that we all go into the workforce on equal footing, because we all start out in different places, with different genetics, and different upbringings. That doesn't mean someone from a poor upbringing can't work hard and raise their market value (thus making more), but it means that not everyone is going to be a millionaire.
  - amelius 9y ago
    > In a free market system there will always be winners, losers, and a lot of us in the middle. Yeah, well I'm seeing a lot of "winner takes all" lately.
  - s73v3r_ 9y ago
    I think you're going to have to make an argument that there actually is a level playing field. I think most of us here would hotly dispute that.
    - SheepSlapper 9y ago
zappo2938 9y ago
“Things worthwhile generally don’t just happen. Luck is a fact, but should not be a factor. Good luck is what is left over after intelligence and effort have combined at their best. Negligence or indifference are usually reviewed from an unlucky seat. The law of cause and effect and causality both work the same with inexorable exactitude. Luck is the residue of design.” -- Branch Rickey
Thiez 9y ago
> The new term, wT is the amount of one’s paycheck. w represents the importance of the paycheck. The higher it is, the more pay you get. w is multiplied by the talent parameter T to implement a meritocratic idea: the more talented you are, the fatter the paycheck you get. Perhaps I misunderstand the situation, but it seems like the author is baking meritocracy directly into the model: if you have high talent then you automatically get a higher paycheck. By increasing the paycheck importance or simply reducing the event probability towards 0, this model will always produce a perfect meritocracy. So on the one hand we have random events that have a chance to double or halve capital, but somehow a persons paycheck is a constant over their life, nobody is ever between jobs, and paycheck is entirely deterministic. I think the author really missed the opportunity to link paychecks to the random events (but paychecks would otherwise persist between events).
- dalore 9y ago
  Perhaps talent in this case refers to ones talent at salary negotiation?
interlocutor2 9y ago
I'd like to see a model which separates talent into many constants: * job/income talent * exploiting luck talent * avoiding unlucky event talent * mitigating unlucky event talent
RcouF1uZ4gsC 9y ago
One of the biggest issues that discussions of inequality ignore is generational issues. People view wealth as an individual thing. However, if you look at American society, probably the majority has been generational. Each generation worked and saved to better their children's lives. An example of this is probably in immigrants. Many people came with practically nothing but he clothes on their back. They took whatever job they could find and worked like crazy and saved like crazy and pushed their children like crazy. Their children in turn started out better than their parents and worked and saved and pushed their children and their children did even better. After a few generations, the descendants of immigrants have entered the highest ranks of society. What drives the "myth" of the American dream is not necessarily that I who started out with nothing will be well off. It's that through my hard work and their hard work my children will be better than me and my grandchildren and their children will be well off even though I started with nothing. That version of the American dream has worked far more reliably than the individualistic model. Even once persecuted and discriminated against immigrant communities in the US have succeeded in this version of the American dream.
- sametmax 9y ago
  I'm not sure the Y-generation would agree it worked for them. The student loads have never been such a burden. The cost of housing skyrocketed. If they want to eat for the same price as their grand parents they need to eat junk food. I mean: my grand parent could buy their own house while only one was working, and a job that didn't require any diploma. But the flat screen prices are very cheap so they got that going for them.
  - new_hackers 9y ago
    There is truth to this, however there has also been major changes to how we live and the expectations. "my grand parent could buy their own house while only one was working, and a job that didn't require any diploma" Yes, but they probably couldn't buy a house anywhere in the world they wanted. The house size was probably much smaller than the sizes of today's suburban houses. I would argue that one could by a small, economical home in the midwest. "If they want to eat for the same price as their grand parents they need to eat junk food." Again, look at the diet lifestyle choices of Gen Y versus their grandparents. My grandparent (I'm a Gen Xer) told me stories of eating onions for a month because his parents were migrant workers and they worked picking onions when they were in season. Even today, it is possible to eat simply (rice, beans, in-season vegetables and fruits) for a low-price. You won't be eating much meat, and you won't be eating "luxury" items. But that is very similar to how people ate in the 30's, 40's and early 50's.
question_that 9y ago
The base model, where one day you double your wealth and the next you lose half - is that based on anything or just easy to implement?
kolbe 9y ago
If you don't even have the ability to quantitatively differentiate luck and talent, what is the point in developing an economic model completely dependent on those two things?
- refurb 9y ago
  This is a good point. You can't actually measure any of these things, thus you can't prove them. What's the point in debating them then?
  - kolbe 9y ago
    I disagree. Unprovable things can and often should be a part of a dialogue. I don't know what that has to do with unquantifiable things being left out of quantitative economic models, though.
falcolas 9y ago
One model I don't see here is "success requiring a certain amount of capitol to obtain". If you don't have the, say, 6 capital to invest in an opportunity, you can't get the rewards for that opportunity. This applies even if you provide debt, since going into debt typically requires having existing assets in excess of the debt amount. My hypothesis is that the starting capital will impact the distribution of capital more than talent. Another potential model: Vary the chance to participate in opportunities. Not everyone has equal chance to take advantage of opportunities; someone living in NY will have more opportunities they can leverage than someone living in Iowa (and being able to move to NY is an opportunity in itself). My hypothesis here is that the chance for being able to take advantage of opportunities will play as big of a role in the final capital distribution as talent.
lbriner 9y ago
There are plenty of "soft factors" at work in being successful or not. Confidence adds a lot of perceived value to an individual; their ability to work smart instead of just hard; their ability to prove they can do well in the specific context of their job rather than just be generally intelligent but not practical; their ability to make others look good or feel confident in their ability will make them get promotions sooner. There are obviously lots of practical conditions outside of our control such as local conditions, state of the job market, being willing to relocate etc. There is also the understanding that you need to look better than the other applicants rather than just look good in isolation. Another major issue that is rarely covered is personality types and the fact that insecurity, paranoia or other physical conditions that are obvious to the interviewer will cause you to look bad, regardless of whether they actually measure your ability to do a job. And then there's luck!
sol_remmy 9y ago
Everyone in this thread directly supports inequality through their buying decisions and I'm callin' them out. Anytime you use Netflix, Google, HackerNews is supporting inequality. Every time you bought a Harry Potter book as a kid you supported inequality. You're giving more money to the winners. If you want to reduce inequality, then buy books from unpopular authors. Use unpopular OSes like TempleOS instead of giving even more market share to Google/Apple/Microsoft. Drive cars made by less popular manufacturers. Don't read the New York Times, Fox News, or Washington Post - only blogs or magazines with a small subscribership. And don't watch anything Disney.
- dsacco 9y ago
  I'm not going to respond to most of your comment, but this suggestion is pretty weird: > Use unpopular OSes like TempleOS instead of giving even more market share to Google/Apple/Microsoft ...Why? You could also just use Linux or BSD. TempleOS seems like a very odd suggestion for people looking to cut out non-free operating systems cold turkey. Edit: In case this isn't clear, I'm responding to the commenter's commercialism thesis. I mean free as in beer, not as in speech.
  - sol_remmy 9y ago
    You're still giving market share to the "open source winners". Linus and RedHat have both made piles of money.
  - dasil003 9y ago
    The GP is about popularity not freedom.
    - dsacco 9y ago
      No it isn't, it's clearly about commercialism. The commenter makes specific examples and includes the phrase "buying decisions".
- lmcarreiro 9y ago
  "And don't watch anything Disney." It's difficult since Star Wars now is Disney. But you made a really good point.
joshuaheard 9y ago
Luck = Skill + Opportunity. That is, you must have the skill set to become successful, but also be in the right place at the right time to apply these skills.
- troupe 9y ago
  Fortunately, you can increase your skill through training, reading, etc. You can increase your opportunity just by trying when you fail. Someone who only applies to a single job is less likely to be employed than someone who keeps on applying until they are hired. But then that would mean that luck is greatly a matter of how hard you are willing to work and that doesn't seem to be a popular opinion these days.
  - s73v3r_ 9y ago
    Because it's not. Donald Trump has not worked hard a day in his life; nor have his offspring. Yet they have quite a privileged position.
    - troupe 9y ago
      Typically if someone has a lot of money, they or someone worked hard for it at some point. But yes, people do win the lottery so there are people who haven't worked for it. But the fact that there are some people who didn't have to work hard doesn't change anything I said. America is a great place for people who want opportunities to succeed. It is a horrible place for people who are mainly focused on whether or not anyone else has more than them because the land is full of people taking advantage of those opportunities.
solidsnack9000 9y ago
In a meritocratic society, there is positive correlation between talent and success. But how steep should this relationship be? If the talent-success slope is very steep (i.e., a small talent difference causes a large capital gap), you might end up having a wide distribution of wealth (severe economic inequality). On the other hand, if the slope is quite flat (i.e., a big talent difference makes little difference in capital), the society has weak meritocracy, which may disincentivize people from achievements. The right degree of steepness depends on how one defines fairness and how much inequality a society can handle. This discussion misses one important element of returns to talent: more capital in the hands of more capable people should result in better allocation of resources, and consequently better outcomes for society as a whole. Too little inequality would, according to this view, result in destruction of capital over time, and in consequence impoverish the society.
- Retric 9y ago
  You assume the ability to gain capital has anything to do with the ability to invest well. A quick check of sports stars shows this is very far from the case. Talent is not universal, being a great Doctor has little to do with being a great painter or investor.
  - quotemstr 9y ago
    > Talent is not universal, being a great Doctor has little to do with being a great painter or investor. You might like to think so, but g says otherwise.
    - Retric 9y ago
      Correlation != a 1:1 relationship. Top Hollywood actors might do better than the average person on average, but plenty of high income people live in vast amounts of debt.
      - solidsnack9000 9y ago
        It just has to be better on average, though, for the broader social implication to hold: allocating capital to able people isn’t just about rewarding them, it’s about what they go on to do with that capital.
all_seeing_eye 9y ago
Appealing to luck is absolutely unscientific.
- garyfirestorm 9y ago
  luck is a loose term used in place of 'probability' eg. probability that the company having an open java developer position at this years career fair seems high because of x,y and z reasons. eg. i got lucky, they gave me an offer letter right after the interview for a developer position!
DoreenMichele 9y ago
I don't even know where to begin to critique this. It entirely leaves out factors like race and gender that are known to have an impact. I've spent a lot of years trying to understand the details of exactly how my gender is a factor and trying to find solutions to those details. I don't believe it has to be a problem, but we know it currently is a problem, and these cleaned up models seem to never include the idea that if you are female or a person of color or gay etc, you will tend to have "demerits" or be handicapped (in the horse racing sense of carrying an extra burden). If talent, work and luck were everything, then we shouldn't have such consistent outcomes that certain groups overall do better than others.
arnold8020 9y ago
About a year ago, I asked similar questions about the 80-20 rule and income distributions. It seems that the simple explanation works surprisingly well. Simulate the following system and it matches real world distributions surprisingly well. r1) Actors have normally distributed abilities r2) Actors are chosen randomly based on current winnings, the more you have won, the more you compete. r3) Winner of competition wins one point from the loser You can find what I wrote about this at http://www.cs.toronto.edu/~arnold/research/80-20/ http://www.cs.toronto.edu/~arnold/research/80-20/ including the code. It's interesting!

156 points by wwalker3 9y ago

One of the biggest lie sold in the West is that if you work hard, give everything you should succeed. This has grave implications on policy and really blinds people born with a silver spoon to the real problems in society as they have a 'i deserve it and they don't syndrome'. Contrast this with a poor society that is growing rapidly where you see islands of wealths with certain individuals, at least people over there do not harbor illusions of meritocracy. In general the more educated and developed a society is, it is much more meritocratic than others, however i still feel it is not enough especially for those who have everything stacked against them. May be sometime in the future we would have a universal human rights charter that expands and decides what are the basic needs of a human that a society should provide in exchange for basic responsibilities. This way life will not always be a rat race and the poorest and unlucky can at least have some dignity.

rb808 9y ago
Chris Dillow is my favorite economics blogger. http://stumblingandmumbling.typepad.com http://stumblingandmumbling.typepad.com One of his quotes from memory is "Meritocracy is the myth that justifies inequality", which explains a lot of the current world.
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- rb808 9y ago
  To add to this - yes he's not the only one who talks about it, the idea is even on the wikipedia page for meritocracy. Its worth following Chris, much of what he talks about is outside the world of regular media ideas, and usually has lots of interesting references. On this topic - he often says that social mobility is not a great goal to aim for, helping working & middle classes achieve interesting & rewarding work with security is better goal. http://stumblingandmumbling.typepad.com/stumbling_and_mumbling/2016/06/beyond-meritocracy.html http://stumblingandmumbling.typepad.com/stumbling_and_mumbli... http://stumblingandmumbling.typepad.com/stumbling_and_mumbling/2012/05/social-mobility-cui-bono.html http://stumblingandmumbling.typepad.com/stumbling_and_mumbli...
- ZeroGravitas 9y ago
  See also, the "Just-World Hypothesis", which investigates why people feel this need to blame victims: https://en.wikipedia.org/wiki/Just-world_hypothesis https://en.wikipedia.org/wiki/Just-world_hypothesis
- k__ 9y ago
  Some parties here in Germany actively pushing this. They talk about equality of opportunity and not equality of outcomes. But what can you do? You're phenotype is mostly determined by stuff you can't control. If you have low conscientiousness and a low IQ, you're basically f*cked and you can't control this either. Even if you're high on openness and have a average to high IQ, you're still playing a high risk game.
  - Cthulhu_ 9y ago
    I do agree to equality of opportunity and not equality of outcome; those people with low IQ won't end up in the high tiers of e.g. the scientific world, simply because they can't. Equality of opportunity does not rule out a proper socialist system. You give everyone the same opportunities at life and work by e.g. affordable health care and insurances for everyone, but also scholarships for everyone so they can follow what they want to do instead of be restricted by e.g. what their parents earn. And if you can't work because of whatever reason, you don't have to end up on the streets. Equality of opportunity gives everyone the chance to graduate university; equality of outcome gives everyone a university degree regardless. I'm probably misinterpreting it. But give everyone the opportunity, and there will be enough social mobility so that people now born in poverty can grow up to become e.g. software developers, and pay that little equal opportunity was paid for them during their education back tenfold within just a couple years of working in that industry. That's my experience anyway, my dad was a not-greatly-paid metalworker with a high interest mortgage (as was the times back then) and three kids, I'm a college graduate and my first job paid almost as much as his.
    - k__ 9y ago
      I don't really think this is the problem here. Sure, you shouldn't give any idiot a degree without doing something for it and yes, you shouldn't make it harder for intelligent people to get degrees, just because their parents are poor or something. But if you have low conscientiousness and low IQ, that was also given to you without asking. It's playing on the same level as poor parents. With your proposed change (which is already done in countries like Germany, we have almost free healthcare and education) you still have 50% of the population that has a IQ below 100.
mapcars 9y ago
>what are the basic needs of a human that a society should provide Earning a living should not be a problem in the modern world with basically any kind of job. One of the big problems is people want the latest iphone, the best car, the most luxurious home, holidays, etc. The expectation of life had been set too high to make it happen even for a small part of the population. What is actually needed is way, way different from what is being promoted by media and society.
- rainbowmverse 9y ago
  What do you base this on? I know plenty of people working multiple jobs and saving every dollar they can who still barely get by.
  - troupe 9y ago
    You see many people in the United States who are working hard and avoiding foolish decisions that cannot seem to provide for their needs and set money aside for the future?
    - deleted 9y ago
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    - rm_-rf_slash 9y ago
      Plenty. Some have kids. Others are in grad school. Some are even dealing with both.
      - troupe 9y ago
        > Plenty. Some have kids. Others are in grad school. Some are even dealing with both. Yes people who go out and have kids without thinking through how they will provide for them usually have to work pretty hard at first. Still most of the people I've seen in this situation aren't really as bad off as they think. If you didn't plan for having kids, you likely aren't in very good control of your budget either and a small investment of time in learning how to manage and budget your finances can take off most of the financial strain. (That isn't to say there aren't some people who are in really bad situations due to random events, but I still find it rare to see people who are struggling from things that are/were completely outside of their control.)
kaolti 9y ago
Why is it a lie? Do you disagree that hard work leads to success, within limits?
- rectang 9y ago
  It depends on who you are. If there are structural factors arrayed against you, less success and more failure will come your way for the same amount of work.
  - kaolti 9y ago
    Yeah, but that doesn't mean that "work hard and you'll succeed"is a lie.
    - yulaow 9y ago
      If you keep it as it is, it is an absolute statement as in "I can guarantee that every single time any random person works hard, he will be successful after time X" which is clearly empirically false because ignores all the (extremely numerous) boundary conditions. The problem is exactly that, there are people who think that it is an absolute statement so poor people, unhealthy people, people in bad life conditions, etc are so just because they didn't work hard so they do not deserve any help.
    - rectang 9y ago
      If you take the fairness out, that phrase is worse than meaningless. It applies to slaves: those who work harder are rewarded to some extent. Does that mean a slave society fulfills the ideals of meritocracy?
    - jonathanstrange 9y ago
      With hard work you can be successful in the sense of being able to afford a basic living or being moderately middle class - which is enough for many people. The deception which looks like a lie to some is in implicating that one percenters got their wealth from hard work - most of them didn't. AFAIK, statistics show that in industrialized Western countries the wealthy people who are seemingly successful (because of their wealth) have inherited most of their wealth or at least benefited extremely from improved conditions provided by already rich parents. In contrast to this, vertical social mobility remains fairly low and the overall gap between poor & middle class and the richest has been increasing in almost all capitalist Western countries since WW2. So it's not literally a lie, it's just sometimes kind of dishonest and misleading. In most professions it's practically impossible to get rich from hard work.
fullshark 9y ago
Depends what you define as success. Hard work generally does lead to gainful employment and the ability to afford a home/car which used to be the canonical symbol of success in America. If you think success is "be as rich and respected as I desire to be" then that absolutely will not hold.
- frgtpsswrdlame 9y ago
  Not really... I've known hard workers, they work hard, no success, they work hard, an unlucky event intervenes, they work hard, still no success, so on and so on and so they ask: what's the point in hard work? Can you blame them? Even to be a hard-worker implies that you've been lucky enough in life to see a correlation between hard-work and success.
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  - dsacco 9y ago
    What does "no success" mean in this context?
    - Retric 9y ago
      Let's go with homeless. Plenty of hard workers end up homeless.
    - frgtpsswrdlame 9y ago
      I believe this comment is going to trigger my rate-limit so apologies for not being able to give further context. But to one: how about being poor, working hard and then staying poor? More importantly why should it matter how someone defines success? I think the false and self-perpetuating notion of meritocracy is massively benefitted by the lowered expectations of the lower class. If I'm born poor, making it to lower middle class could be a huge success for me, if I'm born rich that same outcome would be a massive failure. Even to acknowledge that that is true is admission of how massively tilted opportunity is. If the poor and the rich had the same visions of success, they dreamed the same dream, do you think we could still say with a straight face that, really, hard-work is the most important factor in success? I don't think so.
hliyan 9y ago
What if the problem is that the results of merit accumulate geometrically, so that beyond a certain threshold, some people just start rapidly pulling ahead of the pack?
- rectang 9y ago
  That's a choice that society has made, through laws and institutions which benefit the wealthy -- such as treating corporations as people. It doesn't have to be that way.
  - dasil003 9y ago
    The problem is the people who really understand how it works are largely the ones that benefitted from the current system and thus have no incentive to change it.
  - cookiecaper 9y ago
    There's a natural power law distribution to many things. Economics is a natural force. We can't change it just by dictating that we'd like some things to change, just like we can't change other natural elements by fiat. There's a process, a technology, a science that has to be applied to shape and command natural forces. Human psychology is no exception. Things must be done within workable, realistic parameters. We can't just say "everyone will share and be happy and nice now" and expect it to work like that. "Corporations as people" is a massive politically-charged misnomer that doesn't mean anything by itself. The entire point of incorporation is to create a separate, independent legal entity divorced from its principals. This is what is meant when "legal personhood" is discussed. You have to be specific about what you'd like changed.
    - rectang 9y ago
      > Economics is a natural force. The extent to which "natural" inequality is amplified by institutions varies. Dictatorship is a very "natural" way to distribute rewards. We don't have to accept dictatorship as our destiny just because it is "natural", nor do we have to accept current levels of economic inequality as immutable.
aantix 9y ago
Isn't it the striving, the need to move from one circumstance to the next, is what propels us forward? People don't make progress in spite of their struggle, progress is made because of the struggle.
- troupe 9y ago
  This is a very good point. Regardless of talent or luck, the person who is willing to keep trying dramatically increases their chances of success. Someone who only applies for one job and stops if they don't get it, is much less likely to get a job than someone who is willing to apply for 100 jobs until they get hired.
pygy_ 9y ago
> One of the biggest lie sold in the West is that if you work hard, give everything you should succeed. Even if it were strictly true, this ignores the fact that the ability to work hard is mostly determined by one's genes: https://www.ncbi.nlm.nih.gov/pmc/articles/PMC2762790/ https://www.ncbi.nlm.nih.gov/pmc/articles/PMC2762790/ The main merit there is to have the right genes.
simonebrunozzi 9y ago
Please, it's not the West: it's the anglo-saxon West (US, UK), or in general countries with a strong calvinist influence. Mediterranean countries (Italy, Spain, to some extent France) don't share that same mindset.
Tade0 9y ago
> Contrast this with a poor society that is growing rapidly where you see islands of wealths with certain individuals, at least people over there do not harbor illusions of meritocracy. Actually(speaking from experience) these islands of wealth only reinforce such illusions in poor countries. The logic is as following: apparently that person is exceptional and the fact that they've managed to get wealthy within one generation is proof.
aantix 9y ago
Whatever rules in life get laid out, whether it's scoring soccer goals or everyone gets X amount of food per month, someone always becomes good at "optimizing" those rules. We are humans born with different abilities with different tastes and strive for different things. Equalizing the outcomes of all by artificially holding some back suppresses the very creative life force in each one of us, ends in misery and progress is hampered.
- pintxo 9y ago
  Talking about the extremes, I agree. Talking about defining sensible rules to allow a wider range of people to be successful than only those being a member of the local Golf Club, I disagree. There should be no question that we need rules, and at the same time there should be intense discussions - if not intellectual fights - about which rules we need and how to implement and enforce them.
  - aantix 9y ago
    >allow a wider range of people to be successful But what does "successful" mean in practice? E.g. If there are 100 software security companies, 50% of those are below average in performance (and will probably get chosen less). Do we no longer choose let the consumers choose? All of these software companies should now receive a percentage of business, regardless of performance/trust/expertise? Or should the top performing companies be disallowed the following year to market or do sales in order to give the underperforming companies a chance to catch up? What is "sensible" and who decides?
    - pintxo 9y ago
      For me, this is about ensuring that all 100 companies play along the same rules. If, while following the same rule book, 10 are significantly more successful than the others, fine. If another 20 are significantly less successful, also fine. What is no fine, is having some companies be exceptionally successful by breaking some rules. Think insider trading, it's a highly profitable business for those risking it, but has a long term negative impact on the market. Therefore we, as a society, via our proxy, the government, decided to enforce rules forbidding insider trading. The above answers who. This leaves the question of sensibility, I am afraid there will hardly every be consensus on what is sensible or not within a diverse enough group of people. If you'd ask a bunch of investment bankers about sensible rules for banking regulation, I'd assume you'd get quite a different answer than by asking a bunch of consumer rights activists. Our current solution to this problem of finally arriving at a single "sensible" rule is the democratic process / parliament. I guess most would agree this process seems to be sub-optimal, but it seems there are not too many other options on the table.
toasterlovin 9y ago
>May be sometime in the future we would have a universal human rights charter that expands and decides what are the basic needs of a human that a society should provide in exchange for basic responsibilities. This way life will not always be a rat race and the poorest and unlucky can at least have some dignity. Life has always been a rat race. The only reason that it isn't for some people right now is that we are at a very unique time in human history where we have greatly increased our ability to produce food and, at the same time, have extremely low birth rates as a result of being poorly adapted for modern life. This, too, shall pass.
chmln 9y ago
> One of the biggest lie sold in the West is that if you work hard, give everything you should succeed I think this used to be true decades ago when you could without much effort get a well-paying manufacturing job with just a high school diploma. It would be foolish these days to rely on just "working hard". Not everyone "works hard" equally - it is important to work hard in the right direction. To work as say a Starbucks barista even full-time and expect a house, a car, and a luxurious lifestyle, then after failing to achieve that exclaim "meritocracy doesn't work" is narrow-minded at best.
stcredzero 9y ago
One of the biggest lie sold in the West is that if you work hard, give everything you should succeed. How is this a lie? There is no guarantee, just good odds. at least people over there do not harbor illusions of meritocracy. [Citation Needed] May be sometime in the future we would have a universal human rights charter that expands and decides what are the basic needs of a human that a society should provide in exchange for basic responsibilities. There was already a Declaration of Universal Human Rights from a commission headed by Eleanor Roosevelt.

namenotrequired 9y ago

> Since the talent follows a normal distribution, technically it can be negative or larger than 1, but for convenience we assume T~[0, 1] Part of the answer to the original question is in this line. Normal distribution implies outliers - i.e. some are radically competent. In meritocratic conditions, you expect some to be radically successful, therefore creating a huge wealth asymmetry. I’m not saying we do live in a pure meritocracy, far from it. Only that normal distribution of talent doesn’t imply wealth should naturally become normally distributed.

chongli 9y ago

Is talent not just a form of luck? It doesn't matter how hard you work at your low post game, you'll never learn to be seven feet tall. Those who are of that height are extremely lucky, giving them a huge advantage over other contenders for that NBA center position. Other forms of athletic talent are less visible than height but I see no reason not to attribute them to luck (genetics, access to nutrition, coaching etc.) We can apply this reasoning to anything where success can be measured. A great deal of business success comes down to connections which provide access to capital and access to markets. All of these things accrue to the well-connected.

SheepSlapper 9y ago
All the things you mention are forms of luck, yes. And there's no way to control for them outside of some nightmarish eugenics scenario. It's a fact of life that people are different, and will excel in different facets of their lives to different degrees. In a free market system there will always be winners, losers, and a lot of us in the middle. That's a result of the system BEING an equal playing field, talent and money are correlated. It'll never be the case that we all go into the workforce on equal footing, because we all start out in different places, with different genetics, and different upbringings. That doesn't mean someone from a poor upbringing can't work hard and raise their market value (thus making more), but it means that not everyone is going to be a millionaire.
- amelius 9y ago
  > In a free market system there will always be winners, losers, and a lot of us in the middle. Yeah, well I'm seeing a lot of "winner takes all" lately.
- s73v3r_ 9y ago
  I think you're going to have to make an argument that there actually is a level playing field. I think most of us here would hotly dispute that.
  - SheepSlapper 9y ago

zappo2938 9y ago

“Things worthwhile generally don’t just happen. Luck is a fact, but should not be a factor. Good luck is what is left over after intelligence and effort have combined at their best. Negligence or indifference are usually reviewed from an unlucky seat. The law of cause and effect and causality both work the same with inexorable exactitude. Luck is the residue of design.” -- Branch Rickey

Thiez 9y ago

> The new term, wT is the amount of one’s paycheck. w represents the importance of the paycheck. The higher it is, the more pay you get. w is multiplied by the talent parameter T to implement a meritocratic idea: the more talented you are, the fatter the paycheck you get. Perhaps I misunderstand the situation, but it seems like the author is baking meritocracy directly into the model: if you have high talent then you automatically get a higher paycheck. By increasing the paycheck importance or simply reducing the event probability towards 0, this model will always produce a perfect meritocracy. So on the one hand we have random events that have a chance to double or halve capital, but somehow a persons paycheck is a constant over their life, nobody is ever between jobs, and paycheck is entirely deterministic. I think the author really missed the opportunity to link paychecks to the random events (but paychecks would otherwise persist between events).

dalore 9y ago
Perhaps talent in this case refers to ones talent at salary negotiation?

interlocutor2 9y ago

I'd like to see a model which separates talent into many constants: * job/income talent * exploiting luck talent * avoiding unlucky event talent * mitigating unlucky event talent

RcouF1uZ4gsC 9y ago

One of the biggest issues that discussions of inequality ignore is generational issues. People view wealth as an individual thing. However, if you look at American society, probably the majority has been generational. Each generation worked and saved to better their children's lives. An example of this is probably in immigrants. Many people came with practically nothing but he clothes on their back. They took whatever job they could find and worked like crazy and saved like crazy and pushed their children like crazy. Their children in turn started out better than their parents and worked and saved and pushed their children and their children did even better. After a few generations, the descendants of immigrants have entered the highest ranks of society. What drives the "myth" of the American dream is not necessarily that I who started out with nothing will be well off. It's that through my hard work and their hard work my children will be better than me and my grandchildren and their children will be well off even though I started with nothing. That version of the American dream has worked far more reliably than the individualistic model. Even once persecuted and discriminated against immigrant communities in the US have succeeded in this version of the American dream.

sametmax 9y ago
I'm not sure the Y-generation would agree it worked for them. The student loads have never been such a burden. The cost of housing skyrocketed. If they want to eat for the same price as their grand parents they need to eat junk food. I mean: my grand parent could buy their own house while only one was working, and a job that didn't require any diploma. But the flat screen prices are very cheap so they got that going for them.
- new_hackers 9y ago
  There is truth to this, however there has also been major changes to how we live and the expectations. "my grand parent could buy their own house while only one was working, and a job that didn't require any diploma" Yes, but they probably couldn't buy a house anywhere in the world they wanted. The house size was probably much smaller than the sizes of today's suburban houses. I would argue that one could by a small, economical home in the midwest. "If they want to eat for the same price as their grand parents they need to eat junk food." Again, look at the diet lifestyle choices of Gen Y versus their grandparents. My grandparent (I'm a Gen Xer) told me stories of eating onions for a month because his parents were migrant workers and they worked picking onions when they were in season. Even today, it is possible to eat simply (rice, beans, in-season vegetables and fruits) for a low-price. You won't be eating much meat, and you won't be eating "luxury" items. But that is very similar to how people ate in the 30's, 40's and early 50's.

question_that 9y ago

The base model, where one day you double your wealth and the next you lose half - is that based on anything or just easy to implement?

kolbe 9y ago

If you don't even have the ability to quantitatively differentiate luck and talent, what is the point in developing an economic model completely dependent on those two things?

refurb 9y ago
This is a good point. You can't actually measure any of these things, thus you can't prove them. What's the point in debating them then?
- kolbe 9y ago
  I disagree. Unprovable things can and often should be a part of a dialogue. I don't know what that has to do with unquantifiable things being left out of quantitative economic models, though.

falcolas 9y ago

One model I don't see here is "success requiring a certain amount of capitol to obtain". If you don't have the, say, 6 capital to invest in an opportunity, you can't get the rewards for that opportunity. This applies even if you provide debt, since going into debt typically requires having existing assets in excess of the debt amount. My hypothesis is that the starting capital will impact the distribution of capital more than talent. Another potential model: Vary the chance to participate in opportunities. Not everyone has equal chance to take advantage of opportunities; someone living in NY will have more opportunities they can leverage than someone living in Iowa (and being able to move to NY is an opportunity in itself). My hypothesis here is that the chance for being able to take advantage of opportunities will play as big of a role in the final capital distribution as talent.

lbriner 9y ago

There are plenty of "soft factors" at work in being successful or not. Confidence adds a lot of perceived value to an individual; their ability to work smart instead of just hard; their ability to prove they can do well in the specific context of their job rather than just be generally intelligent but not practical; their ability to make others look good or feel confident in their ability will make them get promotions sooner. There are obviously lots of practical conditions outside of our control such as local conditions, state of the job market, being willing to relocate etc. There is also the understanding that you need to look better than the other applicants rather than just look good in isolation. Another major issue that is rarely covered is personality types and the fact that insecurity, paranoia or other physical conditions that are obvious to the interviewer will cause you to look bad, regardless of whether they actually measure your ability to do a job. And then there's luck!

sol_remmy 9y ago

Everyone in this thread directly supports inequality through their buying decisions and I'm callin' them out. Anytime you use Netflix, Google, HackerNews is supporting inequality. Every time you bought a Harry Potter book as a kid you supported inequality. You're giving more money to the winners. If you want to reduce inequality, then buy books from unpopular authors. Use unpopular OSes like TempleOS instead of giving even more market share to Google/Apple/Microsoft. Drive cars made by less popular manufacturers. Don't read the New York Times, Fox News, or Washington Post - only blogs or magazines with a small subscribership. And don't watch anything Disney.

dsacco 9y ago
I'm not going to respond to most of your comment, but this suggestion is pretty weird: > Use unpopular OSes like TempleOS instead of giving even more market share to Google/Apple/Microsoft ...Why? You could also just use Linux or BSD. TempleOS seems like a very odd suggestion for people looking to cut out non-free operating systems cold turkey. Edit: In case this isn't clear, I'm responding to the commenter's commercialism thesis. I mean free as in beer, not as in speech.
- sol_remmy 9y ago
  You're still giving market share to the "open source winners". Linus and RedHat have both made piles of money.
- dasil003 9y ago
  The GP is about popularity not freedom.
  - dsacco 9y ago
    No it isn't, it's clearly about commercialism. The commenter makes specific examples and includes the phrase "buying decisions".
lmcarreiro 9y ago
"And don't watch anything Disney." It's difficult since Star Wars now is Disney. But you made a really good point.

joshuaheard 9y ago

Luck = Skill + Opportunity. That is, you must have the skill set to become successful, but also be in the right place at the right time to apply these skills.

troupe 9y ago
Fortunately, you can increase your skill through training, reading, etc. You can increase your opportunity just by trying when you fail. Someone who only applies to a single job is less likely to be employed than someone who keeps on applying until they are hired. But then that would mean that luck is greatly a matter of how hard you are willing to work and that doesn't seem to be a popular opinion these days.
- s73v3r_ 9y ago
  Because it's not. Donald Trump has not worked hard a day in his life; nor have his offspring. Yet they have quite a privileged position.
  - troupe 9y ago
    Typically if someone has a lot of money, they or someone worked hard for it at some point. But yes, people do win the lottery so there are people who haven't worked for it. But the fact that there are some people who didn't have to work hard doesn't change anything I said. America is a great place for people who want opportunities to succeed. It is a horrible place for people who are mainly focused on whether or not anyone else has more than them because the land is full of people taking advantage of those opportunities.

solidsnack9000 9y ago

In a meritocratic society, there is positive correlation between talent and success. But how steep should this relationship be? If the talent-success slope is very steep (i.e., a small talent difference causes a large capital gap), you might end up having a wide distribution of wealth (severe economic inequality). On the other hand, if the slope is quite flat (i.e., a big talent difference makes little difference in capital), the society has weak meritocracy, which may disincentivize people from achievements. The right degree of steepness depends on how one defines fairness and how much inequality a society can handle. This discussion misses one important element of returns to talent: more capital in the hands of more capable people should result in better allocation of resources, and consequently better outcomes for society as a whole. Too little inequality would, according to this view, result in destruction of capital over time, and in consequence impoverish the society.

Retric 9y ago
You assume the ability to gain capital has anything to do with the ability to invest well. A quick check of sports stars shows this is very far from the case. Talent is not universal, being a great Doctor has little to do with being a great painter or investor.
- quotemstr 9y ago
  > Talent is not universal, being a great Doctor has little to do with being a great painter or investor. You might like to think so, but g says otherwise.
  - Retric 9y ago
    Correlation != a 1:1 relationship. Top Hollywood actors might do better than the average person on average, but plenty of high income people live in vast amounts of debt.
    - solidsnack9000 9y ago
      It just has to be better on average, though, for the broader social implication to hold: allocating capital to able people isn’t just about rewarding them, it’s about what they go on to do with that capital.

all_seeing_eye 9y ago

Appealing to luck is absolutely unscientific.

garyfirestorm 9y ago
luck is a loose term used in place of 'probability' eg. probability that the company having an open java developer position at this years career fair seems high because of x,y and z reasons. eg. i got lucky, they gave me an offer letter right after the interview for a developer position!

DoreenMichele 9y ago

I don't even know where to begin to critique this. It entirely leaves out factors like race and gender that are known to have an impact. I've spent a lot of years trying to understand the details of exactly how my gender is a factor and trying to find solutions to those details. I don't believe it has to be a problem, but we know it currently is a problem, and these cleaned up models seem to never include the idea that if you are female or a person of color or gay etc, you will tend to have "demerits" or be handicapped (in the horse racing sense of carrying an extra burden). If talent, work and luck were everything, then we shouldn't have such consistent outcomes that certain groups overall do better than others.

arnold8020 9y ago

About a year ago, I asked similar questions about the 80-20 rule and income distributions. It seems that the simple explanation works surprisingly well. Simulate the following system and it matches real world distributions surprisingly well. r1) Actors have normally distributed abilities r2) Actors are chosen randomly based on current winnings, the more you have won, the more you compete. r3) Winner of competition wins one point from the loser You can find what I wrote about this at http://www.cs.toronto.edu/~arnold/research/80-20/ http://www.cs.toronto.edu/~arnold/research/80-20/ including the code. It's interesting!