In this case, we assumed that Charlie's skill was fixed and not subject to variation. In fact, his declarative memory was very accurate. He knew eighty facts. If he was asked for them, he could regurgitate them reliably. We introduced the element of luck by varying the number of questions the teacher chose.
Skill was fairly well fixed in Charlie's example, but luck can also arise through the normal variation in other kinds of skill. Consider a basketball player who makes 70 percent of her free-throw shots over a long season. You wouldn't expect that player to make seven out of every ten shots she takes. Rather, some nights she might make 90 percent of her free throws and other nights only 50 percent. Even if she trains constantly at improving her free throws, she'll experience the variation that arises from the workings of the neuromuscular system, which relies on a completely different system of memory from the one that allows us to recall facts. An athlete can reduce that variation in performance through practice, but removing it altogether is virtually impossible.9
Randomness and luck are related, but there is a useful distinction between the two. You can think of randomness as operating at the level of a system and luck operating at the level of the individual. Say you ask a hundred people to call five consecutive tosses of a fair coin. The order of how heads and tails fall will be random, and we can estimate that a handful of people will call all five tosses correctly. But if you are one among the hundred and happen to get them all right, you are lucky.
My definition suggests that it is useful to develop an attitude of equanimity toward luck. The consequences of our efforts, both good and bad, reflect an element within our control—skill—and an element outside of our control—luck. In this sense, luck is a residual: it's what is left over after you've subtracted skill from an outcome. Realizing good or bad luck says nothing about you as a person. If you've benefited from good luck, be happy about it and prepare for the day when your luck runs out. And don't feel affronted when you suffer from bad luck. Provided that you have approached the activity in the correct fashion, you want to shrug off the poor results and go about your business in the same fashion in the future.
Most people have a general sense that luck evens out over time. That may be true in the grand scheme of things. But the observation doesn't hold for any individual, and the timing of luck can have a large cumulative effect. One well-documented example is the timing of graduation from college. Students who graduate at times of relative prosperity have an easier time getting jobs and enjoy higher pay than students who graduate during a recession or depression. Lisa Kahn, an economist at the Yale School of Management, studied this effect. For white male students at the time of graduation, the unemployment rate can be used to predict a loss of earnings. For each percentage point of unemployment, the graduate will earn 6 to 7 percent less. Fifteen years later, he'll still be below par.10 The difference in what people earn is strongly influenced by whether or not the economy is weak or strong when they graduate from college. In other words, it's a matter of luck.
Making Your Own Luck
Since luck is intimately intertwined in all of our lives, it comes as no surprise that there are plenty of aphorisms that address luck:
“You make your own luck.”
“Luck is what happens when preparation meets opportunity.”
“I'm a great believer in luck, and I find the harder I work, the more I have of it.”11
Preparation and hard work are essential elements of skill. They often lead to good outcomes. But the aphorisms don't really address what's happening. If you prepare and work hard, you are successful not because your luck improves. Luck doesn't change at all. Only your skill improves. And you can work hard and prepare and build the best American diner on Route 66 just when the interstate highway bypasses your town and puts you out of a job.
There's another popular argument that says you can't get lucky unless you get in luck's way. For example, you can't win the lottery unless you play. On one level, of course, this is true. But it glosses over two important points. Luck can be good or bad. While winning the lottery does seem like good luck, it's hard to say that losing the lottery is bad luck. Losing the lottery is expected. Lotteries are designed to take in more money than they dole out, so they are a loser's game in the aggregate. The main issue is that putting yourself in a position to enjoy good luck also puts you in a position to lose.
The other point is that the very effort that leads to luck is a skill. Say that you need to complete ten interviews with prospective employers to receive one job offer. Individuals who seek only five interviews may not get an offer, but those who go through all ten interviews will have an offer in hand by the end of the process. Getting an offer isn't luck, it's a matter of effort. Patience, persistence, and resilience are all elements of skill.
The best-known advocate for the idea that you can create your own luck is Richard Wiseman, a professor at the University of Hertfordshire who holds Britain's Chair in the Public Understanding of Psychology. Wiseman's investigations are offbeat and fun. For example, he conducted a “scientific search” for the world's funniest joke. (The winner: Two hunters are out in the woods when one of them collapses. He doesn't seem to be breathing and his eyes are glazed. The other guy whips out his phone and calls the emergency services. He gasps, “My friend is dead! What can I do?” The operator says, “Calm down. I can help. First, let's make sure he's dead.” There is a silence, then a shot is heard. Back on the phone, the guy says, “OK, now what?”) He also argues that he has found “a scientifically proven way to understand, control, and increase your luck.”12
Wiseman collected a sample of hundreds of individuals and had them rate themselves on their beliefs about luck. He then sought to explain “the different ways in which lucky and unlucky people thought and behaved” and identified the “four principles of luck.” The principles include maximizing your chance opportunities, listening to your lucky hunches, expecting good fortune, and turning bad luck into good. Wiseman's research is unfailingly lively and provocative and he comes across as an energetic and intellectually curious man. Unfortunately, good science this is not.
In one experiment, Wiseman asked people playing the U.K. National Lottery to submit a form that included information on how many tickets they intended to buy and whether they considered themselves lucky. Of the seven hundred–plus respondents, 34 percent considered themselves lucky, 26 percent unlucky, and 40 percent were neutral. Thirty-six of the respondents (about 5 percent) won money that night, split evenly between the lucky and unlucky people. Individuals lost £2.50 on average, just as you would expect according to the number of tickets purchased. Wiseman points out that this experiment shows that lucky people aren't psychic (just in case you thought they were); he also rules out any relationship between intelligence and luck.13 Suffice it to say that there is no way to improve your luck, because anything you do to improve a result can reasonably be considered skill.
Skill
Now let's turn to skill. The dictionary defines skill as the “ability to use one's knowledge effectively and readily in execution or performance.”14 It's hard to discuss skill in a particular activity without recognizing the role of luck. Some activities allow little luck, such as running races and playing the violin or chess. In these cases, you acquire skill through deliberate practice of physical or cognitive tasks. Other activities incorporate a large dose of luck. Examples include poker and investing. In these cases, skill is best defined as a process of making decisions. So here's the distinction between activities in which luck plays a small role and activities in which luck plays a large role: when luck has little influence, a good process will always have a good outcome. When a measure of luck is involved, a good process will have a good outcome but only over time. When skill exerts the greater influence, cause and effect are intimately connected. When luck exerts the greater influence, cause and effect are only loosely linked in the short run.
There's a quick and easy way to test whether an activity involves skill: ask whether you can lose on purpose. In games of skill, it's clear that you can lose intentionally, but when playing roulette or the lottery you can't