The difference betwen skill and luck.

http://blogs.hbr.org/cs/2011/02/untangling_skill_and_luck.html

by svag • 15 years ago

43 40 15 years ago

blogs.hbr.org

_b8r0• 15 years ago

This reminds me of a discussion on a mailing list where someone pointed out the most amazing scam.

You find 256 people and email them the details of a 50/50 prediction. 128 people should get the right prediction. You then email them another 50/50 prediction. Of course, 64 of them receive the right prediction twice in a row. You then make a third 50/50 prediction to the 64, another to the 32 positive responses and so on until you find a manageable number of people who now believe you have some amazing insight into the future.

As much as we may want to think things are not random, sometimes they really are, sometimes they're just probabilities.

frossie• 15 years ago

Exploitations of people's failure to understand statistics are a lot older than email.

Even in my grandmother's time there would be somebody who would offer to predict the gender of your unborn child - "if I am wrong, I'll give you your money back!".

lotusleaf1987• 15 years ago

That scam is an old one going back at the least to newspapers in the early 1900s. Specifically, sports prediction services did it in classified ads (and continue to do so in some places). I think most con-artist scams haven't really changed, just adopted new mediums and new technologies.

Xk• 15 years ago

Reminds me of http://xkcd.com/628/

ngsayjoe• 15 years ago

Warren buffet says what if all that predict successfully come from the same village, wouldnt that tells you something?

khafra• 15 years ago

The same rules of probability apply, so it depends on the number of villages making predictions divided by the improbability of successfully matching that village's predictions. If there were only 10 or 20 people buying lottery tickets, and one of them actually won, I'd pay very close attention to that one person's methods.

sobbybutter• 15 years ago

"In the mid-1970s, a man sought a ticket that ended in 48. He found a ticket, bought it, and won the lottery. When asked why he was so intent on finding that number, he replied, 'I dreamed of the number seven for seven nights. And seven times seven is 48.'"

Something tells me this guy did well by not taking math in grade school too seriously.

jacques_chester5• 15 years ago

If he'd paid attention to maths, he wouldn't be playing the lottery.

cema• 15 years ago

Well, he was close enough.

generalk• 15 years ago

  > Always compare results with a null model that reflects luck.

If nothing else, playing poker has taught me this.

It's possible to win lots of money based on making exceedingly poor bets and getting very lucky. There's one card left to come, there's a 5% chance an Ace will come, but if it does you'll have an unbeatable hand, if not, you have a hand that beats 66% of the possible hands. Do you bet? What happens if the Ace doesn't fall?

A poor player who gets lucky will attribute his success to his obvious skill.

A skillful player who gets lucky will chide himself for making a poor decision.

ikono• 15 years ago

If nothing else, playing poker has taught me this: The correct answer is always "it depends".

jacques_chester5• 15 years ago

You are now 2/3rds of the way to being a successful lawyer, accountant or economist!

Ruudjah• 15 years ago

> He found a ticket, bought it, and won the lottery. When asked why he was so intent on finding that number, he replied, "I dreamed of the number seven for seven nights. And seven times seven is 48."

Need say no more.

vannevar2• 15 years ago

The difficulty in separating skill and luck is unconsciously illustrated by the author himself in his basketball example. We're asked to consider how much of a 'hot hand' is attributable to chance, and how much to skill. But what is chance in this context? Clearly he doesn't mean the likelihood of a ball launched in an arbitrary trajectory finding its way to the basket. More likely, he means the shooting average of an average basketball player in the type of game being observed (pickup game, college, etc). Clearly skill contributes to such a baseline average.

With basketball we have a skill that can easily be measured for nearly anyone: we just have them toss a basketball a few dozen times and we have a good gauge of how skillful they are compared to others. But what about, say, a venture capitalist? The game that they are supposed to be skilled at has so much overhead that very few are ever played, and not all those that want to play can (you've got to have a lot of money to even sit at the table). It's quite possible that success as a VC is entirely attributable to luck, with no contribution from skill at all. For these kinds of activities we have no way to generate a meaningful statistical baseline. We can only engage in a thought experiment: if hypothetically the success in question was actually due solely to chance, would the world we see look any different?

ohashi• 15 years ago

It was interesting but I was hoping for some more concrete suggestions than just a 'you should consider randomness vs luck.' What is a better way than ESOs? Give me a concrete example of how to untangle this rather than just saying untangle it. It doesn't have to be universally applicable but an example would be nice.

jonpaul2• 15 years ago

The best single comment I've read about luck was written right here on HN. I've detailed it here: http://techneur.com/post/1321568428/luck-ii

In summary, I made a comment about Zuckerberg and the value of Facebook. Someone responded that he was lucky. To which someone else responded with this: (Can't find original HN comment)

"This attitude bugs me a lot. There is probably a path for every single person in this country to make a million dollars in the next year if they were just “savvy enough” to take advantage of it. It seems everyone wants to diminish Zuck’s success by ascribing luck to it, but let me tell you something. Zuck executed the shit out of Facebook. Did the community and mindshare just come out of thin air?

There’s no good reason to believe that Zuckerberg is lucky at all. Saying he was in the right place at the right time has this tacit assumption that if he were somewhere else at the wrong time he would have tried the same thing and fell flat on his face.

It seems because Facebook is an outlier, people feel safe talking about the luck factor, but that’s meaningless because we all exist with individual circumstances, and by that measure everything every one of us does is based on luck. Instead, I prefer to ascribe luck to things that the individual actually had no control over, such as winning the lottery."

zck• 15 years ago

The comment is here: http://news.ycombinator.com/item?id=1791800

Searchyc.com is your friend: http://searchyc.com/This+attitude+bugs+me+a+lot.+There+

Charuru• 15 years ago

You can also just google it with quotation marks.

jacques_chester5• 15 years ago

Zuckerberg is not particularly unique in terms of his intelligence, ambition or connections. Men and women like Zuckerberg have come into and passed out (or dropped out) of the USA's elite universities for centuries.

Yes. Luck played a big role.

rick8882• 15 years ago

"Zuckerberg is not particularly unique in terms of his intelligence, ambition or connections. Men and women like Zuckerberg have come into and passed out (or dropped out) of the USA's elite universities for centuries. Yes. Luck played a big role."

The reason I say luck didn't play a big role, is because not anyone could do what he did.

Can anybody from a 5 year old to a grandmother build Facebook? If not, there must be skill required to accomplish the task.

To build the application behind Facebook alone takes skill (taking out a large percentage of the population). To build the company up to what it is (and make the right decisions) takes another set of skills. I think the luck factor is around 10%.

Of course there is a certain amount of luck with anything that we do. I have always felt that there are lucky situations all around us. Without the proper skills to recognize it, most people will just let it pass by.

vannevar2• 15 years ago

Zuck executed the shit out of Facebook.

In comparison to what? For all we know, there were dozens, maybe hundreds of other similar sites being built at the same time. Without being able to compare them, we really can't say how well he executed Facebook. Having used both Friendster and MySpace, I'd say he did better than either of them. But by the time Facebook was big enough to be mentioned in the same breath as those two, success to some large degree was already assured.

Instead, I prefer to ascribe luck to things that the individual actually had no control over, such as winning the lottery.

This is precisely the point: there may very well have been key moments in Facebook's history, over which Zuckerberg had not control whatsoever, yet which ultimately determined the company's fate. We know the economy is a nonlinear dynamical system, and in such systems small perturbations in the input can lead to large changes in the output. There's no reason to suppose that similar effects don't play a role in the life cycle of individuals or businesses.

rick8882• 15 years ago

"In comparison to what? For all we know, there were dozens, maybe hundreds of other similar sites being built at the same time. Without being able to compare them, we really can't say how well he executed Facebook."

Yes we can. If there were tons of social networking sites out there at the time, and Facebook came out on top, there must be a reason.

ssebro4• 15 years ago

I don't want to be a dick, but you do have some amount of control over the probability of you winning the lottery. If you don't play, it becomes significantly more difficult to win.

StavrosK3• 15 years ago

> Reversion to the mean. Any system that combines skill and luck will revert to the mean over time. This means that an extreme outcome, good or bad, will be followed by an outcome that has an expected value closer to the mean.

So if I toss a coin 10 times and it comes up heads, the next toss is more likely to come up tails? I smell a rat.

beder2• 15 years ago

No, it means that in the next 10 tosses, you still expect to get a 5/5 split, so over these 20 tosses, you'll probably have 15 heads, which is closer to the mean.

I've seen this analysis in sports. In baseball, for example, you generally expect teams to win one-run games as often as they win games in general (that is, there's no "great closer" effect). So if you see a team winning 80% of their one-run games in the first half of the season, you can expect their record to be worse in the second half.

StavrosK3• 15 years ago

Ah, I see, thanks.

ssebro4• 15 years ago

This is still wrong, since coin flips are independent events, and events that are totally independent can't affect each other's probability. I understand your reasoning, but it is flawed.

joshuaheard• 15 years ago

Luck = Skill + Opportunity

ajaymehta• 15 years ago

"I'm a great believer in luck, and I find the harder I work the more I have of it." - Thomas Jefferson

AbyBeats• 15 years ago

"I dreamed of the number seven for seven nights. And seven times seven is 48."

I think his lack of multiplication skills won him the lottery. It was luck indeed.

chr15• 15 years ago

The author has an entire paper dedicated to this [PDF] http://www.cscs.umich.edu/documents/Luck.pdf

The difference betwen skill and luck.

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