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Luck: Mostly everything that you have is down to luck
Topic Started: 28 Nov 2013, 07:47 AM (4,383 Views)
peter fraser
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LUCK
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Rick's lovely account of how computers enabled him to write should remind us of a more general point - that luck determines pretty much all of our economic fate.

The standard Mincer equations express individual earnings as a function of schooling and exprience - and, in more sophisticated versions, of personality or cognitive skills as well. Even these leave a huge chunk of earnings' varation across individuals' unexplained - suggesting that luck plays a big role*.

However, these equations under-estimate the role of luck, because luck helps determine how much human capital we acquire in the first place. I'm thinking of several mechanisms here:

- When you were born. Rick was lucky enough to be born near enough to the computer age.Had he been born a few decades earlier, he'd never have unleashed his writing "talent.**" This point extends. In the 50s, only a few people could get to university. Now, many more can - which gives late developers especially more advantage. (It is of course, trivial that when you were born also affects the returns to your human capital; top footballers and CEOs earn more now than 40 years ago because their skills are in demand, not because they are necessarily more skilled than their predecessors.)

- The month you were born in. People born in September earn more than those born in the summer, perhaps because they are bigger and older for their school year, and so do better at school.

- Where you were born. I'm rich because I was born in England, not Ethiopia. Herbert Simon estimated that at least 90% (pdf) of the incomes of western individuals are due to this fortune of birth.

- Genes. Michael Young described meritocrats as members of the "lucky sperm club." He was surely right. If I'd inherited my dad's criminal tendencies rather than my mum's unimaginative sense of duty, I'd be very different***.

- Child poverty. Children from poor homes do worse in school (pdf) and later life - on average! - than those from wealthy homes. Although this doesn't seem to greatly affect life-satisfaction in adulthood, childhood emotional health does.

- The luck of getting a sympathetic teacher or good role models. Pretty much every successful person can point to these, surely.

- Chance meetings. Harry Markowitz has said that a "chance conversation" led him to study portfolio theory for which he won a Nobel prize. The story is surely typical; how many of us got valuable early experience simply because a job interviewer liked the cut of our gib, or were denied it because he didn't?

I suspect that pretty much all the differences between our incomes are due to luck; a capacity for hard work is also a matter for luck. We do not "deserve" our economic fate, and only the most witlessly narcissistic libertoon could claim otherwise.

Now, it doesn't follow automatically from this that the tax system should equalize incomes. As Nozick argued, people can be entitled to things they don't deserve. And justice is not the only virtue; efficiency might require some differences in post-tax income.

What it does mean is that the rich and successful should be more humble.
Any expressed market opinion is my own and is not to be taken as financial advice
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Steve99
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People who have had a massive dose of luck as described in this article usually assume 'I make my own luck' and are blind to 'luck' they had in life. Dito whole industries that make people feel clever and get them financially rich is usually just plain luck, ie the accident of history that China wants Aussie iron ore etc. One does have to get off ones arse of course but that is not guaranteed either to do its job.
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themoops
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You are one of the few bulls who are humble Peter. Good for you. Actually you're probably the only one.

I used to follow Ricky Gervais on Twitter, but I got sick of him banging on about how he worked hard.

I suspect if this movie hadn't been made in 1999:

Posted Image

http://www.imdb.com/title/tt0151804/?ref_=nv_sr_1

He wouldn't have made The Office.

But I could be wrong, and none the less his work is must see stuff imo.

If you look at all the majorly successful people in the world there is nearly always a very significant, catalyst like dosage of luck.




Edited by themoops, 28 Nov 2013, 09:57 AM.
stinkbug omosessuale


Frank Castle is a liar and a criminal. He will often deliberately take people out of context and use straw man arguments.
Frank finally and unintentionally gives it up and admits he got where he is, primarily via dumb luck!
See here
Property will be 50-70% off by 2016.
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themoops
28 Nov 2013, 09:55 AM
You are one of the few bulls who are humble Peter. Good for you. Actually you're probably the only one.

I used to follow Ricky Gervais on Twitter, but I got sick of him banging on about how he worked hard.

I suspect if this movie hadn't been made in 1999:

Posted Image

http://www.imdb.com/title/tt0151804/?ref_=nv_sr_1

He wouldn't have made The Office.

But I could be wrong, and none the less his work is must see stuff imo.

If you look at all the majorly successful people in the world there is nearly always a very significant, catalyst like dosage of luck.




The Green Eye Monster strikes Again.

You do realized some people have plenty of luck and still blow it.

And what about some very unlucky people who are born with serious disabilities, and still mange to be successful.

Luck is only 1 factor, you seem fixated with luck.



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Trojan
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Everyone on this forum has already struck it lucky - none of us are living in a third world country, we have access to an excellent education system and opportunities in career or other financial investments have never been greater. Yet amazingly some people here think they are hard done by!! This is pretty much why I have no sympathy for the whingers on this forum.
Edited by Trojan, 28 Nov 2013, 10:14 AM.
I put trolls and time wasters on my ignore list so if I don't respond to you, you are probably on it ....
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peter fraser
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themoops
28 Nov 2013, 09:55 AM
You are one of the few bulls who are humble Peter. Good for you. Actually you're probably the only one.

I didn't write this article moops, but I do agree with it.
Any expressed market opinion is my own and is not to be taken as financial advice
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stinkbug
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Trojan
28 Nov 2013, 10:14 AM
Everyone on this forum has already struck it lucky - none of us are living in a third world country, we have access to an excellent education system and opportunities in career or other financial investments have never been greater. Yet amazingly some people here think they are hard done by!! This is pretty much why I have no sympathy for the whingers on this forum.
Spot on.
---------------------------------------------------------------

While it's true that those who win never quit, and those who quit never win, those who never win and never quit are idiots.

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Dr Watson
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Trojan
28 Nov 2013, 10:14 AM
Everyone on this forum has already struck it lucky - none of us are living in a third world country, we have access to an excellent education system and opportunities in career or other financial investments have never been greater. Yet amazingly some people here think they are hard done by!! This is pretty much why I have no sympathy for the whingers on this forum.
Yes, but government policy can often be improved to make things even better for the people. When one makes the case for change, it necessarily involves some degree of 'whinging' or discussion of problems. We should appreciate what we have, but we can also consider what might be done better.
The trouble with the world is that the stupid are cocksure and the intelligent are full of doubt — Bertrand Russell
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Trojan
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Dr Watson
28 Nov 2013, 10:34 AM
Yes, but government policy can often be improved to make things even better for the people. When one makes the case for change, it necessarily involves some degree of 'whinging' or discussion of problems. We should appreciate what we have, but we can also consider what might be done better.
I personally think its better to help those who are in the bottom 10% (genuinely unlucky) i.e. kids starving to death to obtain food than to help those in the lucky top 10% get to the top 5% ....
Edited by Trojan, 28 Nov 2013, 10:51 AM.
I put trolls and time wasters on my ignore list so if I don't respond to you, you are probably on it ....
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zaph
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Trojan
28 Nov 2013, 10:43 AM
I personally think its better to help those who are in the bottom 10% (genuinely unlucky) i.e. kids starving to death to obtain food than to help those in the lucky top 10% get to the top 5% ....
Are you talking about Australia, or world wide?

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