How much of success is due to hard work and smarts, and how much to luck? It is a question that the Cornell University economist Robert Frank explores in his latest book, Success and Luck. In this essay the writer, who will be taking part in the Abu Dhabi Ideas Forum 2017 on March 4 and 5, explains why a greater acceptance of the role of luck would be good for society.
The essay
A risky action is one that entails the possibility of a bad outcome. So if you’ve taken risky actions and succeeded, you were lucky by definition. What’s surprising, therefore, is the nearly universal tendency of successful entrepreneurs to attribute their success almost entirely to their own doing. For instance in a study of about 3,000 entrepreneurs in Switzerland – one of the world’s most innovative nations – respondents ranked luck dead last (after experience, talent, hard work, education and connections) when asked which factors had the greatest impact on performance.
To be fair, so did the control group. Logically, however, successful entrepreneurs can’t have it both ways. Either they must abandon their claim to have taken risks, or they must accept that they enjoyed at least a modicum of good fortune along their paths to the top. And though the latter is clearly the more defensible option, many continue to insist that they made it entirely on their own. As the essayist E B White once observed, “Luck is not a subject you can mention in the presence of self-made men.”
Now, to say that most successful entrepreneurs enjoyed a bit of luck, or benefited from investments made by the community, is not to deny the importance of their talent and hard work. The marketplace is a bitterly competitive arena. Without abundant measures of talent and hard work, few entrepreneurs would have had even a chance to succeed. But those qualities alone obviously don’t guarantee success, as evidenced by the legions of talented, hard-working entrepreneurs whose ventures fail every year.
Widely documented idiosyncrasies of human reasoning virtually guarantee that seemingly minor chance events will get short shrift when people construct their life stories.
One such quirk is the almost universal tendency to think that events are far more predictable than they are. A simple example of this phenomenon, known as hindsight bias, formed the basis of a 1991 experiment by the psychologists Martin Bolt and John Brink. They asked students at America’s Calvin College to predict the outcome of a pending vote on whether the Supreme Court nominee Clarence Thomas would be confirmed by the United States Senate – and 58 per cent said that Thomas would prevail. A week after Thomas was in fact confirmed, Bolt and Brink again surveyed the same students, asking them to recall how they’d voted in the earlier survey. And this time 78 per cent said they recalled predicting Thomas’ confirmation.
In similar fashion, when entrepreneurs reflect on their successful ventures, they tend to view those outcomes as having been inevitable. That’s actually true of people more generally, too. In their attempts to construct narratives to explain them, they search their memory banks for details that are consistent with successful outcomes. And because the overwhelming majority of successful people are in fact extremely talented and hardworking, they’ll find many ready examples of the long hours they logged, the many difficult problems they solved and the many formidable opponents they vanquished.
But as the psychologist Tom Gilovich has argued, they’re much less likely to remember external events that may have helped them. This asymmetry, he points out, resembles the way people react to headwinds and tailwinds. When you’re running or bicycling into a strong headwind, for example, you’re keenly aware of the handicap you face. And when your course shifts, putting the wind at your back, you feel a momentary sense of relief. But that feeling fades almost immediately, leaving you completely unmindful of the tailwind’s assistance.
The tendency to overlook luck’s importance does not produce uniformly undesirable consequences. Viewing yourself as the captain of your own fate is in many ways an energising stance. If everyone were instead preoccupied with the importance of forces beyond their control, who could muster the energy and confidence to launch a new business venture? With the possibility of failure prominent in their minds, who could put forth the thousands of hours of difficult practice required to become an expert?
In reality, of course, people are clearly not in complete control of their own destinies. Most bankruptcies in the United States, for example, result from medical crises that would be impossible to insure against in private markets. The associated illnesses sometimes result from bad personal choices, but most are simply bad luck.
Being born in a good environment is one of the luckiest things that can happen to anyone. But failure to appreciate luck’s importance has undermined our collective stock of good fortune. It has made successful people more reluctant to pay the taxes required to support the investments necessary to maintain a good environment.
Demands for lower marginal tax rates stem in part from the phenomenon known as loss aversion, which refers to the finding that people reliably fight much harder to avoid a loss than to achieve a gain of the same amount. Since most successful people work extremely hard for the money they earn, it feels like they own it, and that makes taxation feel like theft. On reflection, however, that’s a difficult assertion to defend. A country without taxes couldn’t field an army, after all, and would soon be overrun by a country that had one. Its residents would then have to pay taxes to that country.
Further evidence on how the failure to appreciate luck’s importance diminishes the willingness to pay taxes comes from laboratory experiments involving bargaining games that are played between strangers. In one study, for example, players were told that their scores in a game reflected their respective skill levels, when in fact those scores were randomly generated by the researchers. Players who were told they had outperformed their partners invariably demanded a disproportionate share of the total rewards. And they moderated their demands only slightly when told they had underperformed their partners. Falsely believing themselves to be more skilful than their partners apparently induced a powerful sense of entitlement. Falsely believing themselves to be less skilful diminished that sense of entitlement, but only slightly.
More realistic beliefs about luck would not only make it easier to create and maintain environments that would sustain the luck of future businesses; they would also enhance the health and happiness of today’s most successful entrepreneurs. But until we grasp more clearly the extent to which success depends on external circumstances, we’ll be unlikely to make progress toward those goals.
Can we find more effective ways of discussing the relationship between success and luck? One possibility: Instead of telling successful people that they’ve been lucky, simply ask them whether they can recall examples of any lucky breaks they might have enjoyed.
Try this, and you’ll discover that successful people don’t respond angrily or defensively to this question. On the contrary, their eyes light up with each example they recount of when good fortune smiled on them. And if you then ask how they feel about their responsibility to pay forward for the next generation, you’ll be surprised by how many are quick to volunteer examples of public investments they favour.
So we have reason to hope that more careful attention to rhetorical strategy could also reshape our conversations about the relationship between success and luck. Going forward, we should try a different tack: ask, don’t tell. Recalling ways in which they’ve been fortunate reliably causes them to experience the emotion of gratitude, which makes them not only happier, healthier and more socially comfortable, but also significantly more willing to pay forward for the common good. This, in any event, has been my consistent experience in recent conversations with successful business leaders.
Psychologists who have been studying gratitude have discovered that it creates a large array of beneficial side effects in those who experience it. Robert Emmons of the University of California at Davis and Michael McCullough of the University of Miami, prominent contributors to this effort, have demonstrated that subjects who feel gratitude are also more likely to experience improved immune-system function, for example, and to sleep better. Other psychologists have found additional advantages, such as increased empathy toward others and diminished aggression.
In a recent telephone conversation, I asked David DeSteno, the Northeastern University psychologist who has done extensive experimental work in this area, whether the claims were credible. He said that before embarking on his own research on gratitude, he too would have found them difficult to believe.But unlike much of the other work on gratitude, which focuses on subjects’ self-reports, his own experiments typically require subjects to make specific choices with objectively measurable consequences. And the choices he and his collaborators have observed are strongly consistent with the self-reported effects documented by other investigators. Subjects in whom feelings of gratitude have been induced, for example, are more willing to trust others when real money is at stake and also more willing to incur immediate costs in order to reap larger gains in the future.
“A warmer embrace of good fortune’s role in life,” he said, “will almost certainly kindle a greater sense of gratitude in most people.”
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