Readnotes: Talent vs Luck: the role of randomness in success and failure

Click here for the original paper.

Known facts:

  • wealth distribution follows a power-law, whose typical long tailed shape reflects the deep existing gap between the rich and the poor in our society.
  • eight men own the same wealth as the 3.6 billion people constituting the poorest half of humanity
  • scientists have the same chance along their career of publishing their biggest hit
  • those with earlier surname initials are significantly more likely to receive tenure at top departments
  • one’s position in an alphabetically sorted list may be important in determining access to over-subscribed public services
  • middle name initials enhance evaluations of intellectual performance
  • people with easy-to-pronounce names are judged more positively than those with di cult-to-pronounce names *the probability of becoming a CEO is strongly influenced by your name or by your month of birth

In the literature, research found that:

  • chance events play a much larger role in life than many people once imagined
  • talent and e↵orts are not enough: luck also matters, even if its role is almost always underestimated by successful people

Book “Everything Is Obvious: Once You Know the Answer”

In this paper

  • randomness plays a fundamental role in selecting the most successful individuals
  • ordinary people with a medium level of talent are statistically destined to be successful (i.e. to be placed along the tail of some power law distribution of success) much more than the most talented ones, provided that they are more blessed by fortune along their life.

Model

  • “Talent vs Luck” (TvL) model, which builds on a small set of very simple assumptions, aiming to describe the evolution of careers of a group of people influenced by lucky or unlucky random events.

Conclusion

  • although talent has a Gaussian distribution among agents, the resulting distribution of success/capital after a working life of 40 years, follows a power law which respects the ”80-20” Pareto law for the distribution of wealth found in the real world.
  • the most successful agents are almost never the most talented ones, but those around the average of the Gaussian talent distribution – another stylized fact often reported in the literature.
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