What's luck got to do with it?
Success and Luck: Good Fortune and the Myth of Meritocracy
By Robert H. Frank
On a chilly November morning in 2007, Professor Robert Frank was
playing tennis with a colleague when he started to feel nauseated. A
few moments later, Frank collapsed on the tennis court. A victim of
"sudden cardiac death," he wasn't breathing, and his friend couldn't
detect a pulse. Four days later, Frank was discharged from the
hospital "with a clear head," one of just 2 percent to survive such an
event, and among an even smaller minority who do so without severe
cognitive and other impairment.
Two weeks later, Frank was back on the tennis court. But it wasn't due to greater strength, or more resilience, than the less fortunate 98 percent. Not according to him, anyway. Instead, it was the result of a series of incredibly lucky breaks — chief among them a chance event that left an unoccupied ambulance several hundred yards from the tennis court where Frank collapsed — that contributed to his full recovery.
In Success and Luck: Good Fortune and the Myth of Meritocracy, due out in March and published by Princeton University Press, Frank uses personal experience to frame the issue of luck's role in individual success — not only as a lifesaver, but also a life maker.
In the book, Frank expertly weaves personal anecdotes and social science research into a larger policy argument in favor of a progressive consumption tax as a solution to growing inequality and trillions of dollars in wasteful spending.
The jump from the role of luck in personal success to large-scale tax policy recommendations is a big one, Frank admits. But he cites research suggesting that people who acknowledge luck's role in their lives are more likely to feel grateful for success they've enjoyed. They also demonstrate a greater likelihood of sharing their wealth to support the common good.
Indeed, luck isn't a purely passive endeavor; it's something that requires the right conditions to flourish on a wider scale. "The biggest element of luck is to be born into a place where if you worked hard and you were good, you could make something of yourself," said Frank in an interview. "The way things are developing in this country, we're less and less a place like that year by year."
As the economist Alan Krueger has noted, the correlation between parents' income and their children's income in the United States is roughly the same as the correlation between parents' height and their children's height. The same goes for intelligence and energy level. "But if you have such qualities, on what theory would it make sense for you to claim moral credit for them? You didn't choose your parents, nor did you have much control over the environment in which you were raised. You were just lucky," Frank writes.
Success and Luck could rely heavily on anecdotes to demonstrate luck's outsized influence on individual lives, but much of the power of Frank's argument comes from taking the emotion out of it. In one of the simulations he led in his lab, Frank examines a baseline case with 100,000 contestants, in which luck counts for 2 percent of total performance. Ability and effort comprise the remaining 98 percent. Where each contestant's ability, effort, and luck values were independently drawn random numbers between zero and 100, the average luck score of contest winners was 90.23, and 78.1 percent of winners did not have the highest combined total of talent and effort values. The most talented and hardest working, in other words, rarely won the contest.
As competition increases and technology improves, financial rewards for society's winners balloon. Take CEO pay as the microcosm for the broader society. CEOs of the largest American corporations, who were paid 42 times as much as the average worker as recently as 1980, are now paid more than 400 times as much. In 1976, only 8.9 percent of the nation's total pretax incomes went to the top 1 percent of earners, but by 2012 that group was receiving 22.5 percent of the total.
Frank concedes that there is good reason why more people don't acknowledge the role of luck in their lives. When the going gets tough, and in fields where genuine expertise is often an essential precondition for success, sitting back and hoping for luck is probably the worst approach, argues Frank. "Parents who teach their children that luck doesn't matter may for that very reason be more likely to raise successful children than parents who tell their children the truth," he writes.
We can't expect competition to decrease, but we can mitigate the waste and excess that comes from a moneyed top 1 percent competing with each other for material status symbols. "Beyond some point, additional spending on mansions, coming-of-age parties, and many other goods becomes purely positional, meaning that it merely raises the bar that defines adequate," writes Frank.
This argument will be familiar to anyone who has read Frank's New York Times column. After basic needs are met, status is largely determined by relativity to others in a society, not by objective standards. "Because much of the total spending in today's economy is purely positional," the argument goes, "it is wasteful in the same way that military arms races are wasteful." And not only that, Frank says private waste is not only far more pervasive than government waste, but also far easier to curtail.
Enter the progressive consumption tax, which would essentially reward individuals and families for saving. The individual tax rate would start out low and would then rise steadily as taxable consumption increased. "My basic claim is that, without demanding painful sacrifices from anyone, this relatively simple policy change would enable us to put trillions of dollars a year to work rebuilding the institutions and infrastructure that reliably translate talent and effort into success — in other words, the kind of environment people would be lucky to be born into."
Part memoir, part policy prescription, it's clear that Success and Luck is deeply personal for Frank. "With the extra time I've been granted, I've continued trying to explain why a few relatively simple changes in policy could produce dramatic improvements for all of us," he writes.
Aside from being a joy to read, Success and Luck is indeed a timely, compelling contribution to the current debate around income inequality — a hard-working, talented volume just searching for a lucky break.