In his book Thinking Fast and Slow, Daniel Kahneman describes an "illusion of skill" where too much weight is attributed to skill rather than other factors like blind luck. He recalls a time he was invited to speak to 25 top investment advisers who had given him eight years worth of their spreadsheets to analyse. 

Did the same advisers consistently achieve better returns year after year?

Did some display more skill than their peers?

To find the answers he looked at the correlations over the eight years but found no evidence of skill. 

He concluded: "The stability that would indicate differences in skill was not to be found. The results resembled what you would expect from a dice-rolling contest, not a game of skill. The firm was rewarding luck as if it were skill."

One advisor went on the defensive when he heard this and said "I have done very well for this company and nobody can take that away from me." But if it's mostly down to chance, how much credit are you entitled to take for it? There is no doubt Kahneman's message was forgotten.

Kahneman talks about how we like nice stories that seem to fit the narrative over cold statistics. Emotion over logic. We are very poor at looking at the bigger picture.

How much chance do you think is involved in big business? Sports? How common is this illusion of skill? I'd be willing to bet it's very common. 

Tags: chance, luck, skill

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How much chance do you think is involved in big business? Sports? How common is this illusion of skill? I'd be willing to bet it's very common.

If we file this one under the cognitive bias of illusory superiority, it's common. When asked to rate a skill or quality in themselves, most people rate themselves above average, which is statistically impossible. Ironically, the below average tend to overrate themselves, while the above average tend to underestimate themselves.

This occasionally causes people to do mind-bogglingly stupid things while having the impression they're being clever. Case in point: McArthur Wheeler robbed two Pittsburgh banks in broad daylight in 1995 with no visible attempt at disguise. He was arrested after the 11 o'clock news showed video footage taken by surveillance cameras. When police showed him the video, Wheeler stared in shock and said, "But I wore the juice." Wheeler thought rubbing lemon juice on his face rendered it invisible to video cameras.

So it goes.

I think this effect is easy to hide in environments where valuations are subjective and relative, such as big business. For instance, I think an incompetent boss could give a competent employee a negative performance review and be totally convinced the review was just, and even show the whole company and get away with it. For another instance: just about every yokel that ever sings on American Idol.

I don't think this effect translates well into sports. For instance, when Lagerrette Blount rushes for 150 yards and 4 touchdowns in one game, nobody can credibly claim he didn't play very well. This is why it's probably no coincidence that some of the earliest efforts to end racial segregation happened as a result of high-profile professional sports rather than legislation like the Civil Rights Act.


"Some people are born on third base and go through life thinking they hit a triple." -Barry Switzer 

There was a study on basketball players that questioned whether a player was on a "hot streak" i.e. they score four long shots in a row or something. The study found the players deemed hot would inevitably regress to the mean, thus there is no such thing as a hot streak. I can see how this might make sense in basketball but I don't know about other sports.  It's all a bit confusing. 

This is touched on in Fooled by randomness, Dice World, the Black Swan and The Halo Effect. In each case the workers believe "my job is essential" and "I am the best person to do it". Often the answers are "no" and  "no". We don't even need to get into their obscene salaries.

"that CEO makes too much"

"yeah...but would you want a guy who would work for less to be at the helm"?


"you're crazy"

Carlos Santana, John Coltrane, Wynton Marsalis, Neil Peart. No skill, just luck.

I think talent has less to do with business success than ruthlessness. Of course, how much ruthlessness one gets is simply a matter of luck.

What is it specifically about Carlos' guitar playing abilities that make you believe he is just lucky? I have appreciated his musical abilities for decades and think the guy has laudable talent.

Okay, you are joking, right? The point was that NO luck was involved in any of those examples. Innate talent and lots of practice, not luck.

Carlos may not be the fastest guitar player on the planet, but no other guitar player creates such melodically beautiful extemporaneous lines.

Since we live in a hard determinist world ... neither luck nor skill apply.

Now I ask you if you are joking. If you're serious, explain.

Yeah...I'm joking. But that was inevitable ;)

As far as skills, if you play any sport you got skillz,

You obviously have never seen me wield a bowling ball.



We are all Patriots!

I lived in Portland, Oregon for about 35 years and wish I was back there. I love the Pacific Northwest, rain and all. Portland doesn't have and NFL team (they're more of a soccer town), so the Seahawks are my team.

I'm stuck in Cleveland. Came back to take care of my father. He died, but now I can't seem to get back there. I love the fact that Portand is such a walkable city  It's compact. At the same time it has plenty of good restaurants and probably the best public transportation system in the country. It's the microbrew capital of the country and (don't tell Seattle) it has more coffee microroaster awards than Seattle (or any other city for that matter). It's a very clean city, too. It's been likened to a Scandinavian city in that regard. 

Then, there's that Portland wackiness. Do you ever watch Portlandia? The city's unofficial motto is "Keep Portland Weird."


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