Every day, remarkably unusual events happen. Lottery winners take home huge amounts. There are dozens of gamblers who earn winnings that make them the envy of others. How can these unusual events be explained? Is the gambler simply skilled or does luck play a role? This is indeed a complex question that applies to many aspects of human life. Humans have demonstrated a desire to understand how remarkable and unusual events occur. There are those who feel that skill is all that is required to experience events that others attribute to luck. On the other hand are people who believe that luck is the primary force behind events that astound and are difficult to explain. Nassim Nicholas Taleb set out to provide clarity on this debate. In his book, Fooled by Randomness, he attempts to determine the link between luck and skill, and the events mentioned above. As one reads the book, they are able to recognize that biases tend to define how individuals regard issues. Taleb’s text offers a compelling and convincing account of how unusual events occur.
Primary Thesis
The thesis captures the main message that an individual wishes to convey. For Taleb, the primary thesis is that chance plays a significant role in shaping the direction and outcomes of such endeavors as financial markets. He contends that in order to understand how individuals suffer losses while others make gains in these markets, an acknowledgement of the role of chance must be made (Taleb, 2005). In presenting this thesis, Taleb aimed to challenge the commonly held belief that insight and skill offer the most convincing explanations for human performance in such pursuits as gambling and the financial markets. As one reads the book, they are persuaded that while some skill and wisdom is needed to excel, luck plays a role that cannot be overlooked. It is worth noting that the thesis that Taleb presents does not wish to diminish the importance of skill, knowledge and competence. Instead, he simply sought to underscore the critical function that chance serves in human life.
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The role of chance is not the only subject of the thesis that Taleb presents and defends in his article. His thesis also offers an explanation for why people tend to attribute success or failure to skill and competence. Taleb posits that various biases are to blame for how people explain events (Taleb, 2005). He provides the example of hindsight bias to account for human behavior. Survivorship bias is another phenomenon that Taleb uses to explain how humans explain certain extraordinary events. Overall, Taleb’s text seeks to establish why humans are obsessed with the need to explain events even when no reasonable explanation exists or is warranted.
Supporting Details
In support of the theses provided above, Taleb offers supporting details that enable him to make a compelling case. The tendency that humans have to over-estimate causality is one of the details that Taleb relies on to defend his thesis (Taleb, 2005). He observes that people seek explanations; they attempt to make connections between what they observe and the knowledge that they possess. Taleb agrees that while the need to establish connections is only natural and can be useful, it is also responsible for the misguided belief that one thing must be the cause of another (Taleb, 2005). With regard to such issues as gambling and success on the financial markets, Taleb notes that individuals attribute these issues to skill. He confirms that competence does indeed play some role but insists that this role is limited and that chance offers the best explanation. This detail allows readers to understand why Taleb is convinced that not all events that occur together have a causative relationship.
Another supporting detail that Taleb offers concerns human perception of the universe. He states that individuals believe that there are reasonable and valid explanations for all events that occur in the universe (Taleb, 2005). For example, when one wins the lottery, it must be because they worked hard and possess tremendous skill. While this explanation is sensible, it does not necessarily offer an accurate account of why the individual won the lottery. Taleb makes it clear that not all events demand an explanation. Essentially, he challenges readers to recognize that many events happen because chance wills them to. To lend further support to his theses, Taleb introduces the concepts of survivorship bias and skewed distribution (Taleb, 2005). Basically, survivorship bias reflects the tendency to focus and inflate victory while dismissing or ignoring the high probability of loss. For instance, gamblers draw inspiration from the few people who win huge amounts while forgetting that there are thousands who are in debt and depressed because of the massive losses that they have incurred as a result of gambling. As regards skewed distribution, Taleb educates his readers that there are certain bets that people tend to over-simplify (Taleb, 2005). For example, gamblers believe that there they have a 50:50 chance of winning. While this could be true, these individuals forget that when they win, the amount that they take home will be modest. However, if they lose, they will suffer serious devastation. Through this detail, Taleb manages to persuade readers to understand that there are complex mechanisms that produce certain outcomes.
Another detail that Taleb offers concerns the link between preparedness and luck. For the better part of the book, he goes great lengths to make it clear that luck is behind many extraordinary events. However, as noted above, he admits that skill and competence play some role. He goes further to suggest that luck and skill can work in concert. To maximize one’s chance of winning in pursuits like gambling, preparedness is important. Taleb identifies being skilled and working hard as among the issues that constitute preparedness. Whereas it is true that he agrees that preparedness is important, it should be remembered that Taleb’s primary thesis remains that things are more random than people think. As part of his effort to strengthen his argument, Taleb agrees that some success can be attributed to how well one is prepared (Taleb, 2005). However, he makes it clear that only mild success can be linked to hard work and competence. Chance offers a far better explanation for wilder forms of success such as winning hundreds of millions in the lottery.
In writing his book, Taleb must have been motivated by the need to dispense advice regarding wise investment. Among the supporting details that he offers is that the wisest decision is to make safer choices instead of taking big risks. Relying on his experience as a trader on the financial markets, Taleb strongly advises that individuals should adopt the conservative approach when investing (Taleb, 2005). He cautions that a string of successes should not lull an individual into some sense of security. Instead, one needs to understand that failure will eventually follow these successes. Taleb states further that as they make decisions, individuals should not rely on history because it does not offer a full account of the impact of chance. For example, the mere fact that one has not suffered loss does not mean that a loss will not occur in the future. Chance is a function of probability and it explains nearly all developments in human life.
Scholarly Literature
Given how interesting and controversial the subject of Taleb’s book is, one can expect that there are other scholars who have added their voice to the discussion on the role of chance versus skill. This is indeed true as various scholars have presented varying positions as concerns the relative importance of chance. Megan Cowie (2017) and a team of researchers with whom she conducted a study are some of these scholars. While the primary focus of the article that these scholars authored is the association between beliefs and the problems that gambling presents, the authors offer insights on the role that randomness and luck play in defining human experiences. They observe that most gamblers believe that they are lucky and that they possess certain skills that allow them to excel in gambling (Cowie et al., 2017). Cowie and her colleagues call this belief into question. They suggest that the belief that gamblers hold is misguided and inaccurate. It is true that they do not explicitly identify random chance as the primary force behind the outcomes of gambling. However, they make it clear that the outcomes have little to do with skill (Cowie et al., 2017). Essentially, these scholars agree with Taleb that human experiences are shaped by powerful and complex forces that extend beyond skill or competence. In their article, Cowie and her team caution that gambling has serious and adverse effects. In addition to causing individuals to lose money, gambling can also lead to serious mental health problems. In essence, they support Taleb’s recommendation that individuals should be cautious and strive to minimize risk.
Cowie and her team are not the only scholars who have explored the role of luck and skill. Ajay Bhootra (2015) joined forces with three other researchers to broaden the discussion on the impact of the two factors. These researchers make the case that luck explains the performance of a portfolio of mutual funds. After a thorough study, they were able to observe that “results display a statistically significant proportion of mutual funds, though small in number, outperform their peers on a risk-adjusted basis and do so as a result of skill, not luck” (p. 52). To make this observation, Bhootra and his team analyzed the performance of two classes of mutual funds. Essentially, their observation indicates that to derive the greatest value from items on the financial markets, the involvement of some human with skill is needed. The conclusions that these scholars reach place them on a collision path with Taleb who insists that luck is behind such events as the positive performance of the financial markets. The lack of consensus shows that the question of the impact of luck is contentious and that debate is needed for direction and clarity to be gained.
Eric Jackson (2014) is yet another individual who has offered his thoughts on the relative significance of luck and skill. According to Jackson, the role of skill has been inflated. As part of his discussion, Jackson criticizes various scholars who have argued that skills help to drive success. For example, there are scholars who contended that skilled management is the main factor behind the success of top companies. Jackson offers the example of Google whose success he attributes to luck. Jackson shares Taleb’s view that it is luck and not skill that determines the level of success that one achieves.
The three articles summarized above offer varying perspectives on the question of luck versus skill. What is evident is that a consensus is lacking. On the one hand, such scholars as Cowie join Taleb in confirming that luck offers the most convincing explanation for the remarkable and extraordinary events that occur in human life. On the other hand, there are scholars like Bhootra and his team who feel that skill is needed to achieve success. All the scholars raise valid arguments. It is rather difficult to establish a conclusive position on whether luck or skill has the most profound effect on success. To arrive at such a position, more debate and research is needed.
In order to understand the positions of the different scholars, it is helpful to consider their ethical implications. One of the ethical issues that the discussion raises concerns the health impacts of gambling. Taleb appears intent on cautioning individuals against this practice. He reminds his readers that gambling is a serious problem and that the few who win huge fortunes should not inspire others to engage in gambling. He is joined by Cowie and her team who highlight the adverse effects of gambling. Essentially, these scholars are acting ethically by noting that certain experiences are not the result of skill but are rather caused by luck. The insights that they offer extend beyond gambling. Any other endeavor that could have such negative effects as addiction and financial losses could benefit from the insight that the scholars offer. Personally, I support the position that Taleb presents. I think that while skill is an influential determinant of success, luck plays a more central role. I have observed that most of the successes that I have achieved have been driven by luck instead of deliberate effort.
Implications for Career
Currently, I am in the teaching profession. My primary mandate is to impart knowledge and skills into my students. I find that the issue discussed above presents significant and numerous implications for my current professional pursuits and future plans. As regards my current career, the question of luck and how it relates to skill will enable me to understand the level of effort that I should commit to my work. Taleb suggests that skills are not essential for success. While I generally agree with this position, I think that for teachers, the role of skills cannot be dismissed. For instance, teachers need to adopt effective strategies that match the needs of their students. To achieve this, they need to possess skill and competence. Whereas I recognize that skill is important, I also agree that luck will play a role in my professional career. There are some aspects of this career that are beyond my control. For instance, I have no control over the educational policies that the government of the day adopts. These policies define how I perform my duties. I can only hope that the policies are in line with my career aspirations and personal philosophy. I intend to venture into business management in the future. I think that luck will have a more significant effect in this endeavor. For example, I understand that the level of success that a business achieves is determined by forces that are beyond the control of the business. As a business manager, I will need to demonstrate wisdom by identifying the issues that I can control and the factors that are manipulated by the universe.
Conclusion
The debate on the importance of luck and skill rages on. This debate has split opinion. On the one hand, there are those like Taleb who are convinced that luck determines success. These individuals believe that while some effort and skill is needed, one’s fate is shaped by chance. On the other hand are those who are of the opinion that skill is far more important than luck. According to these individuals, skilled people possess the insights and knowledge needed to leverage opportunities for success. This debate is important because it has implications for such issues as gambling. The position that one assumes determines their view on whether engaging in excessive gambling in the hope of winning is healthy or appropriate. Personally, I think that luck shapes our lives. This belief will influence how I perform my work and the pursuit of my future plans. I will allow the universe to direct my life but I will also take deliberate action to ensure that my goals are met.
References
Bhootra, A., Drezner, Z., Schwarz, C., & Stohs, M. H. (2015). Mutual fund performance: luck or skill? International Journal of Business, 20 (1), 52-63.
Cowie, M. E., Stewart, S. H., Salmon, J., Collins, P., Al-Hamdani, M., Boffo, M., Salemink, E., De Jong, D., Smits, R., & Wiers, R. W. (2017). Distorted beliefs about luck and skill and their relations to gambling problems and gambling behavior in Dutch gamblers. Frontiers in Psychology. DOI: 10.3389/fpsyg.2017.02245
Jackson, E. (2014). Skill versus luck: what if all the key success factors you think matter actually don’t. Forbes. Retrieved October 15, 2018 from https://www.forbes.com/sites/ericjackson/2014/10/28/skill-versus-luck-what-if-all-the-key-success-factors-you-think-matter-actually-dont/#5904759a1a58
Taleb, N. N. (2005). Fooled by randomness: the hidden role of chance in life and in the markets (incerto). New York City: Random House.
