Rationally speaking, is a presentation of New York City skeptics dedicated to promoting critical thinking, skeptical inquiry and science education. For more information, please visit us at NYC Skeptic's Doug. Welcome to, rationally speaking, the podcast, where we explore the borderlands between reason and nonsense. I'm your host, Julia Gillard. And with me is today's guest, Professor Robert Frank. Robert is a professor of management and economics at Cornell University. He's the author of many books and for more than a decade was a columnist for The New York Times.
His most recent book is called Success and Luck Good Fortune and the Myth of Meritocracy. And that's primarily what we're going to be talking about today. Robert, welcome to rationally speaking.
My pleasure, Julia. So your thesis, as I understand it, is that, first of all, luck is more important than people give it credit for in terms of explaining who becomes successful and also that it's luck is more important than it used to be in explaining who becomes successful. Is that about right?
Both of those things are accurate. Yes. I think the problem is when we see an outcome, any kind of outcome, we try to explain it using the best narrative we can put together on the fly. And when we see somebody who's been very successful, we look for all the factors that generally explain successful outcomes. And so the first thing that would spring to mind in that attempt would be talent, hard work, diligence, personal qualities like that.
If somebody were constructing her own history, she's succeeded big time. After 30 years of toil, what's her memory bank going to serve up as ingredients for her narrative? Well, she got up early every day and worked hard and solved lots of difficult problems. She vanquished many formidable opponents along the way. Of course, those are the things that are going to constitute the building blocks of her story. You know, maybe she had a teacher in the eleventh grade that steered her out of trouble.
Maybe there was a promotion she got early on in her career. There had been a more qualified co-worker who couldn't accept the promotion. His ailing mother needed care. He couldn't he couldn't take the job. Those kinds of things, those sporadic, seemingly transitory minor events just don't enter into the narrative as readily. And so I think, yes, the tendency is for people when they look back, if they've been successful, to think, yeah, I made it primarily through my own efforts and talents.
You had a nice metaphor in the book comparing how it looks to illustrate someone walking into a wind that's blowing against them versus how it looks to show someone walking with the wind. And it's very obvious when someone's leaning into the wind that the wind is pushing against them. It's easier to show that an illustration. But if the wind is blowing at your back, helping you along, how do you even illustrate that? It looks just like the person's walking normally.
Yes, that's a good metaphor. That's a metaphor that I'll credit my friend Tom Gilovich for.
Oh, how we know what isn't. So, yes, exactly. He he's been writing about this of late. And it's a it's a major asymmetry in human memory.
The example he uses is if you're running into the wind or bicycling into the wind, you're extremely conscious of the handicap that you're laboring against. Then the course turns around and you've got the wind at your back. Wow, what a great feeling that is. But that feeling, he says, lasts for about five seconds. Then you become completely unconscious of the fact that the wind is at your back. So it's a total asymmetry.
Yeah, like this is this is just how far I move when I pedal one rotation on my bike.
Exactly. And if you're on a bike, then you can have an eight mile an hour wind at your back. And if you're going twelve miles an hour forward on your bike, then you've still got a four mile an hour wind in your face. So it feels like you're you're confronting a headwind even though you're not right.
His suggestion is along the lines of your earlier remark, do a Google search search on headwinds. You'll see all these vivid images illustrating the concept. It's a very easy psychological concept to grasp. It's it's easy to depict diagrammatically or with pictures.
Then do a search on tailwind and you get gobbledygook. You know, there's no there's no clear image that comes up that you'd say, oh, yeah, that's the right one to illustrate the concept.
Yeah, but this first part of the thesis, the core of the thesis is it's a little interesting because on some level it almost seems obvious. Of course, luck plays some role in events and yet. On an intuitive level or an instinctual level, I think people often don't realize it or don't want to acknowledge it, there's just a weird tension there.
Yes. If you would ask oh, let's let's take a CEO who's been successful. If you would ask that person, how do you think your life would have turned out if you'd been born in South Sudan? You know, there won't be any hesitation. They'll know immediately that, of course, things wouldn't have turned out nearly as well if they had been born there. So, yeah, I think everybody at least implicitly recognizes that we owe a huge debt to external circumstance when we've done well.
But if you if you try to point that out to people, often the the message is met with hostility, defensiveness.
I don't know if you were following the presidential campaign in 2012, but there were two speeches, one by President Obama, another by Elizabeth Warren.
Both of them eventually came to be known as the you didn't build that speeches, but what they were both saying there were remarkably similar speeches was totally uncontroversial. If you if you start a business and it succeeded, great.
You're entitled to keep a big chunk of the money you made. But just remember, you ship your goods to market on roads. The rest of us help pay for you. You hired workers that the community helped pay to educate. You were protected by police and firefighters that the rest of us hired to protect you. So part of the underlying social contract is that you you pay forward for the next group that comes along.
You didn't succeed entirely on your own. Well, that's not what they heard.
There was an explosion of outrage in response to those those speeches, you know, millions of angry comments. What they seem to be hearing was you don't deserve the success that you've achieved. You didn't earn it somehow.
That was the message they heard. That was not the message.
But so I think it matters a great deal rhetorically how we have this conversation, the way both Elizabeth Warren and the president framed that message, it just wasn't able to fall on receptive ears.
I think we need to think harder about how to talk about that.
Well, so I basically share your reaction to the public's reaction to those speeches, but to try to steelman that reaction, by which I mean to try to see it in its most charitable light possible, I suppose they could say, well, look, yes, I benefited from these public goods, these institutions. But in order to determine whether I deserve all of my success or not, you have to look at the fact that everyone had the option of benefiting from these public goods and services.
I'm the I am one of the few elites who did, in fact, benefit from them because of my talent and hard work and grit, et cetera, et cetera.
Oh, absolutely right. And but I would endorse every syllable of that. It's just that there are lots and lots of people who were just as talented and just as hardworking who didn't succeed.
Right. Well, so I think that actually, like your your argument about the role of luck and success is sort of more crucial even than the the argument about the role of public goods and services, because without arts, more foundational, maybe because if you without the role of luck, you can still get out of the the conclusion that your success is partly due to public goods and services.
Because then we can go to your second point, which is that luck has gotten more important over time, which I think does speak to exactly that that issue. So so it's my claim that luck has gotten more important over time, in part because of the spread, the intensification of what Phil Cook and I in our 1995 book called Winner Take All Markets.
The these are markets. We've seen them forever in sports and entertainment. They're becoming more common in other fields. Technology is giving the most productive players in every domain the ability to extend their reach geographically. So so. Oh, a century ago, piano manufacturer was a completely local undertaking. Why was was that? It was because pianos were so costly to ship that if your customer was more than a few miles from the factory, it was just prohibitively costly to get the goods to him.
Now with each open. Of the the the system, the canals got built, the railroads got built, then the the container ships that could transport stuff all over the world for not much expense. And every one of those developments we saw the market for pianos get more and more geographically concentrated.
There was a shootout between the many local producers that used to compete in that market. One of them would prevail and then serve the entire regional market or now the global market.
And, you know, when you've got lots and lots of competitors for the top slot in a market like that, then they'll be some of them who are right up against the very upper limits of the talent and effort scales. Let's find the one who's the most talented and the most hardworking.
Well, he should win, right? Not necessarily. There will be hundreds of others almost as talented, almost as hard working as that guy.
But the the most talented, most hardworking guy will, by definition have had only average luck. We selected him because he was the most talented and hard working. We didn't select him because he was more or less lucky than average. So on average, he'll he'll have average look. Right.
So just to to go on a brief tangent, it seems to me like there's a couple of cognitive biases at work here. Whether or logical fallacies were one of them is the selection bias that you were just referring to in the sense that we only look at the people who turned out to be successful and then ask, well, what what factors are present that could have contributed to their success? And we see things like hard work and and talent and so on.
But we're not looking at the people who didn't become successful. And and we would we would notice that many of them also had hard work and talent, etc., which sort of screws up the the causal inference there. Exactly.
So so the the the reason luks more important now is that more of the income that's being doled out in society is being doled out in the context of these kinds of markets. These winner take all markets where there are literally thousands, maybe tens of thousands of people competing for a few slots at the top. And in almost every case, even if luck counts for only two percent of the total performance that determines the outcome, the most talented, most hardworking contestant will rarely be the winner of that contest.
It'll be somebody almost as talented and hardworking who happen to be quite a bit luckier. So I think, for example, Bryan Cranston is a is a great illustration of the problem.
He's a very talented actor. I don't know if you're a Breaking Bad fan.
I tried it was a little too upsetting for me so I couldn't get into it. But I'm a I'm a big Bryan Cranston fan from what I've seen.
So I don't know if you knew about him before he starred in Breaking Bad. But Vince Gilligan, the creator of Breaking Bad, wanted to cast him in the leading role. The studio guys, the money man didn't want that. They didn't want that because hardly anybody had ever heard of Bryan Cranston. They were going to spend a lot of money on this project. They wanted somebody known. At their insistence, Gilligan offered the role first to Kuzak, John Cusack, Cusack turned it down, then Michael Broderick.
Brodrick didn't want it.
Only then was Gilligan able to persuade the money guys to say, all right, we'll give him a try. They offer the role to Cranston. Cranston won four Emmys in the show's five season. He's now the very most sought after actor and his slice of the demographic. He's an unbelievably talented actor.
I just heard him on a talk show do a Trump imitation just off the top of his head. It was unbelievable. Spot on.
So. So does he deserve his success? Absolutely. You know, he's he's incredibly talented. I'm sure he worked harder than the dog all through his career. But if he hadn't also been lucky, if he hadn't had those two guys turned down the pivotal role that launched him into the big time, we never would have heard him released. I wouldn't if he was the dad in Malcolm in the Middle. I never I never saw that most possible. I know.
Didn't watch it. So who's Bryan Cranston? We wouldn't know. Yeah.
It's such a striking contrast to the character he plays on Breaking Bad. It's pretty funny to be able to compare the two now.
Exactly. You also told a pretty striking story in your book about how the Mona Lisa came to be one of the most celebrated paintings in all of art history that really that really drives home just how pivotal it can be. How did that go?
Yeah, this is an account that I wrote to Duncan Watts. He's one of the. Sociologists whose work I admire most most out there. He he offered the Mona Lisa as an example of hindsight bias that we mentioned earlier. You see an outcome, you try to explain it. Well, the Mona Lisa, as we all know, is the most famous painting in the world. It's a symbol of Western art and culture.
Art historians try to explain why it's a sign that role and they look for all the properties that it must have in order to deserve the successful prominence that it's attained. Duncan was at the Louvre. I've been there, too. I've seen it. I remember being surprised when I first saw it. It's it's smaller than I expected. There were hundreds of people elbowing one another aside, jostling for a closer look at it and you get a closer look. Well, OK, what's what's so special?
And and Duncan actually walked into the next gallery. There are hanging there two other Leonardos. They're from the same era. They have the same new style of brushstroke that we saw on the Mona Lisa. Nobody's crowding in to see them. Why didn't people care about them? He read a little bit more about the painting and apparently no one had much remarked about it for its entire early history, hundreds of years until 1911. What happened then? It had been stolen from the Louvre by an Italian maintenance worker.
He walked out with it one night.
This was the first time that a picture of a painting had appeared on the front pages of newspapers around the world is the theft was reported in great detail.
It was much discussed. It was an ongoing issue for about two years. Then Vincenzo Peruggia, the thief, was apprehended when he tried to sell the painting to the fitty in Florence. Of course, the director had to turn him in.
And then another media explosion, pictures of the painting all over the world's newspapers. If the painting had not been stolen, nobody would have ever heard of it. That's that's the claim.
So. So the Mona Lisa, she's she's famous. Yes. But she's not famous because of objective qualities, X, Y and Z, that the painting like her smile.
Yeah. So it's not this enigmatic smile that beams out. It's just if she hadn't been stolen, we never would would care, Whit, about.
Someone I think it was maybe it was like I don't remember on Twitter just today said, you know, we really need to to pay attention to the probabilities, like to the to the uncertainty currently looking for it in whether Donald Trump will, in fact, win the presidency because it's currently it, I don't know. Thirty six percent or so. But, you know, if he does win, there will be a ton of think pieces about how how this was inevitable and why we, of course, would have known from the start we should have gone right.
And if he doesn't win, there will be all these think pieces about, well, of course he was going to lose. Yes. So we really need to just call it right now. But it is uncertain to have the hindsight bias of the past. Exactly. There was this great article, this unusual art exhibit that I saw. I think it was at the Guggenheim years ago now. And what made it unusual was that they they didn't pick the best art pieces from a particular genre or era or of a particular painter.
The theme, the organizing theme of the exhibit was art. In some particular year, it might have been 1911 or something like that. And they just exhibited a bunch of art that had been shown in galleries in 1911 and they did not flag explicitly. These are the ones that turned out great, like turned out to be famous and celebrated, made history. And these are the ones that didn't you just had to go through the exhibit, sort of not unless you were already a, you know, well educated student of art history, not knowing which paintings turned out to be great and sort of experiencing it all without the benefit of hindsight and and having to sort of figure out for yourself which ones seemed great to you, the way that you would have in nineteen.
Sure. Great exercise. Yeah.
I don't know if that if that was sort of the motivation behind the exhibit, but that was how I experienced it.
One of the famous hindsight bias experiments was a survey that asks students in a small college to predict whether Clarence Thomas would be confirmed by the Senate in a vote coming up in a week or so. And the fifty eight percent of students said that he would be the researchers went back and reinterview the same students, asking them to recall how they'd voted in the earlier survey.
And seventy eight percent said that they had predicted confirmation.
And how long? Sorry, what was the time elapsed? Two weeks, wow, that is really depressing. I'm going to I'm going to hope that they were knowingly lying because that is less depressing than our memory actually being that revisionist. So going back to the you know, why has the role of luck increased over the past few decades? Question. I was thinking. So you talk about network effects in your book as something that contribute to this winner take all phenomenon where.
Yes, a a a book that's that's only slightly better than other books are a piece of music that's only slightly better or slightly luckier than other pieces of music can quickly rocket up to the very top of the charts, in part thanks to network effects, where, yes, people want to read and listen to the things that other people are reading and listening to is if you get even a slight edge in popularity, that can snowball into a huge edge.
Yes. And I was wondering, so I don't remember if you made this case explicitly in the book, but I was wondering if that phenomenon itself might be increasing over time because of globalization and social media.
Well, of course, yeah. I think where we get our cues about what to do, it used to be that we would get them from people we knew personally in our own very narrow geographic location. Now, you know, we're in contact with people from all around the globe. Literally, it's. And so if something catches on, I mean, it wouldn't have been possible for something like this Pokémon go phenomenon to have happened 40 years ago. There could be fads.
Yes, we would eventually read about them. But the idea that everyone's on the same page at the same time, that that just is a new thing and it's vastly increase the stakes in these markets.
I also wanted to ask you about the way that you modeled the contributions of skill and luck, so you have these simulations that you ran, which you detail in the appendix to the book where you're making some basic assumptions like like luck is is random and independent, therefore independent of skill and skill is you can sort of model it as being uniformly distributed. And and you can show that that luck, therefore plays a large role in who ends up, you know, reaping the rewards, being the most successful.
Sorry, did I say success? No, I meant to say skill was uniformly distributed.
I don't remember what I said, but I was wondering whether the result would still hold if skill was not uniformly distributed, but instead normally distributed or something like that. So like skill was uniformly distributed. Then the differences between between one person and the next most skillful person remained basically constant throughout the whole spectrum of skill level. So, you know, at the at the center, you've got people at, you know, fifty and then fifty one and fifty two, fifty three, etc.
for measuring scale from zero to one hundred. And similarly up in the upper end you'd end up with like 97, 98, 99, etc. But if skill were normally distributed, most people would be clustered around 50 and you'd have people like fifty and fifty point two and fifty point three and fifty point five, etc. And then when you get way out into the upper and lower ends of the distribution, you'd it would be much faster. So there'd be, you know, a person that maybe skill level 96 and then a person at skill level ninety eight or nine, skill level one hundred or something like that.
And I'm wondering then if the gaps between skill levels are are greater at the tail end. If it were normally distributed then maybe that then maybe luck just wouldn't dominate so much in the final calculus.
Yeah, your intuition is right about that. We did do some simulations with long tailed distributions, not just normals.
And the people in the middle basically don't matter in these contests. They're not going to ever be finalists anyway.
All right. If we're talking about who wins. Yeah, so so typically the the kind of contests we're talking about have a huge number of contestants in them. And most of them, if they're at all realistic or are already from the long right tail of the distribution like you're talking about. So, yes, it does it does make a difference.
You you don't see quite as much bunching near the top of the distribution.
There isn't any cut natural cutoff for talent or or or effort at the top of the scale in the normal distribution extends to infinity. But but the the results qualitatively are really quite similar.
Well, then let's move on to another big theme of your book, which is the sort of implications of believing that luck or acknowledging that luck is a major contributor to success versus not acknowledging it.
It sounded like you had kind of mixed feelings about that. But there were upsides and downsides where where one of the downsides of acknowledging the role of luck is that it sort of reduces your your willpower, your motivation to work hard. Right. I mean, is that a correct interpretation? Yeah, that's a concern. You know you know, look, as as one of your former guests, George Ainslee, explained very clearly, a hard thing for people and animals, for that matter, non-human animal animals to is to postpone seizing an immediate but inferior reward in the hope of waiting long enough to get the larger reward that you could have later.
We're not good at self-control. We're not good at postponing the immediate gratification that's available on the fly. And so if you think about that, somebody who's sort of constantly bombarded with a message that says, look, you can work hard and be very skillful, you still probably won't win because like such a big part of the story, that person's more likely to sell. The hell with it. There's an easy, early reward. Why should I study hard to get into a good school?
I'll just take the easy road down. So, yeah, if you really encourage people to think that they're not the captain of their own fate, there could be bad consequences to that.
I think the the resistance to luck as part of our narrative must surely trace in part to that. But at the same time, if you look back on life, it's obvious that no one's really the captain of his own fate. You know, there's all this external stuff that happens. It's probably not adaptive to to try and build a society on the view that whatever happens to you, it's either your credit or blame 100 percent for that.
We pull all the risks we face. We try to insure against them. There's all sorts of things we want to do and should do if we recognize that people are not, in fact, the captains of their own fate.
I wonder, I know that you've you've found many examples of people being resistant to this thesis, including there was this one really uncomfortable to watch interview that you did years ago on on Fox Business News, where the host basically before you even let you speak, came right out and said your thesis is insulting. I came to this country with nothing and it was through my own my own talent and hard work that I built my career. And you're you're saying that that that was nothing and it was all luck.
How dare you essentially get better from there?
Do you do show notes on your your podcasts?
Like we have links to things we can link to that interview? Yeah.
If anyone's got six minutes to spare and it's a spectacle to behold, really emotional energy to spare as well because it's worth your time.
I can't watch it again. Yeah, I was curious. Yeah.
It's really I want a one off experience but but so what I was going with that is I know that people like that Fox Business host are very resistant to your thesis, but I wonder if so those are people who are already successful being told, hey, luck played a role. I wonder if people who have not yet become successful are also resistant to this thesis. Is that something that you've noticed as well?
You know, it depends how much time you have to talk about it. Cornell sends me out to talk to alumni groups. Most most of the groups I talked to are NPR listeners.
They're all fairly socially conscious and think we ought to have progressive policies to to protect people from hardship and so on. But occasionally they send me to a hard right group. I went to a group like that last spring. And, you know, I give a 45 minute talk about the role of luck in life. And and here are all these lifelong conservatives who will come up and they'll start telling me about how it's played out in their own lives. And yes, we really do need to be investing more heavily in infrastructure and so on.
So I think if you can if you can get enough air time and you don't need a two week seminar, you know, 30 minutes is plenty. You can get most people to to rethink their histories and start noticing. Yeah, luck was a part of my story, too. But I think if you if you don't have much time, the only strategy I've come across that works is I call it ask, don't tell. So so if if you're talking to a successful person, don't try to point out to that person that she's been lucky, that that's likely to elicit a defensive reaction.
Ask the person. Can you think of examples of times when good fortune smiled on you? And and if you do that, it's an amazingly different reaction.
They don't. They don't. Angry, they don't get defensive, their eyes light up, they think of examples, each one they think of they want to tell you about. And then after a short conversation along those lines, they they're starting to volunteer examples of investments that we ought to be making and we're not making. So so, yeah, it's it's really quite a powerful framing force.
If you ask about people's experience, they're open. If you tell them they've been lucky. Nope. They don't want to hear that.
So do you have a perspective on whether like a prescription for whether we should be promoting the role of luck or not, given that it it could reduce people's motivation to work hard or like assuming that it could reduce people's motivation to work hard? I'm not actually conceding that point.
Yeah, I, I would want to tell kids growing up, look, it's all up to you. You know, the world's a tough place out there. You want to become an expert at something. It's hard to do that. But, you know, the people who manage to do that are way more likely to succeed than others.
So you'd say, well, it's all up to you and you're way more likely to succeed are two different messages there. The latter seems true.
Well well, you're more likely to see succeed and which is true. And it's all up to you, which is not true, but nonetheless possibly a useful message. Well, look, I hope I won't offend anybody if I say that or just ask what if religion were not true?
What if there were no higher force that that had anything to do with our lives? Might it nonetheless be useful for people to believe that there was such a thing?
It's easy to construct a narrative in which it would be so very funny, because that was going to I was going to bring up that case.
But with the different conclusion, I was going to say, you know, if someone points out that religion has has useful benefits like it gives meaning to people's lives, surely the right conclusion from that is not OK, great. We'd better keep encouraging people to believe in religion. Surely the right conclusion from that is, OK, great, we'd better find a different way to get meaning from life, right?
Yeah. And that that's my view as well. But you know, many of my friends are quite contemptuous of people who embrace religious faith.
I think that's a very odd posture. It's such a widespread phenomenon in humanity. It's really adaptive in some way to to be open to the idea of a higher power guiding things along that. All right. So maybe somebody can construct a plausible narrative according to which people who embrace that belief actually do better than people who deny it. Maybe maybe the people who deny it sit around worrying all the time what's going to happen when I go into the void and the other people don't worry about that.
They focus on today and they get more stuff done. I'm not arguing for any of those narratives. I'm just saying it's possible to imagine that people who believed something that was in fact false could do better in this world. Yeah.
And so so in that sense, if you believe that luck has nothing to do with your prospects, maybe that's a good thing to believe. But you definitely once you've succeeded, you don't want to look back and say, I did it all by myself, that you're going to contribute to the formation of a pretty mean society, if that's your view. Right.
I guess my my problem with the self-deception or society wide deception, because it's useful argument, is that it setting aside the ethics of it, it feels like getting stuck on a local maximum to me that like, yes, there is a cost to, you know, giving up the deception. Yes, we're going downhill. But like in general, in the long term, if we want to get to that higher point that that global maximum, aren't we better off giving up the deceptions?
I think that's a hard question. Yeah, this is empirical. Yeah. This comes up in in discussions of free will. So, you know, I fall on the No. One as free will side of that debate. You know, I think sooner or later it's a it's at least in principle possible to know what someone's going to do in a given circumstance before it happens. But is it useful for someone to believe that there have been experiments done trying to probe that and so you can prime people to believe either that free will is a thing or that it's not a thing?
And the people who are primed to believe that there is no free will, they don't work as long or as assiduously on a heart problem that you give them to work on lots of other things that they do differently.
So, you know, it's. It's at least possible to imagine that believing in free will is adaptive in some in some way. Does that mean we need to believe in free will in order to make our way? No. Does doesn't apply that.
Yeah. Interestingly, one of our recent episodes was I was with Greg Caruso is a philosopher who argues basically we have no free will and also that our society would be better off if we acknowledge that we had no free will, because for one thing, we would we would be able to pursue a justice based on without retribution, essentially.
Yeah. And rehabilitation or just utilitarian concerns in general. Yes.
Those are strong arguments, too, but I would have been interested to hear him say how he felt about the empirical findings that people who, you know, have to take into account that people have limited capacity to understand and embrace the implications of various beliefs like this. How does he feel about the empirical finding that if you don't believe in free will, you don't work as hard on a challenging problem that's before you?
Yeah, no, I mean, it is it is a good question. And these are kind of an interesting companion episode in a way to each other. I had not planned it that way. But yeah, his episode was sort of about, uh, about people not deserving the bad things that happened to them, like getting punished for crimes they commit because of, you know, accidents of genetics and environment, etc.. And this episode is a little bit about people not deserving the good things that happen to them because of their success.
It's kind of a nice parallel. But but before we leave the this thread, I do want to push back a little bit on the idea that that acknowledging the role of luck reduces people's motivation. I don't have empirical evidence to point to here, like in the form of studies, but. But when I look at a case, studies like. Like take a casino, if you look at the time and effort that people spend playing slot machines, for example, I think, well, actually I kind of do have studies to point to here, because what I'm what I'm thinking of is the phenomenon where variable rewards are more motivating and keep people trying for longer periods of time than certain rewards.
And the slot machines that I was getting to at the casino are an example of variable rewards. So people don't know exactly how much they're going to get. They don't know when pulling that lever is going to is going to give them a huge payout. And that is part of what motivates them to keep playing for so long. I think that if you if people knew exactly like, OK, if I pull the lever 20 times, I will earn two dollars that the people would not play slot machines nearly as often.
And I know that the expected payout of slot machines is negative, but I think that only makes my case stronger, that people that the variable rewards are motivating are so motivating that they overcome the negative payout. Does that so, you know, how does that how does the power of variable rewards intersect with the idea that the people just will shrug and give up if they're told that they don't have, you know, that it's not all up to them?
You know, there's a lot more to every story than just that what you believe about luck is going to drive you to behave one way or another. Some people are incredibly resilient. They pick themselves up, dust themselves off. They keep trying. And then if you try often enough, even if it's all random, sure enough, you will succeed in the end just by luck. So, yeah, I don't think telling people that that luck is an important part of the story is going to extinguish all motivation.
It's not my position, certainly, that we shouldn't tell people about luck or or try to keep them in the dark about the fact that not everybody who tries hard and is talented is going to succeed. No, I'm just trying to call attention to the possibility that there may be some adaptive features to not focusing too much on the fact that luck's an important part of the story.
Yeah, and I guess now that now that I've made that argument, I notice that there's a subtle but important difference between the casino case and the, you know, working hard to succeed case in that the casino case is, in fact, determined by luck. But but that's not it's not necessarily people believing that it's about luck. That is motivating. Whereas you're talking about what do people believe about the role of luck? Not not what is actually the role of luck.
So maybe the best scenario is where luck does play a role. And so people get variable rewards, but they believe that if their skill sets getting them the rewards and that is what people do seem to believe, you know, when they succeed, they think it's because of their skill.
When they fail, they attribute that to bad luck. And that's that's oddly adaptive in a way, too, because, you know, if you succeed. Well, talent and effort, those are persistent traits that past success would encourage you to seize a new opportunity that comes along. You're still talented. You're still able to expend effort. So you'll probably succeed here, too, if you fail and you attribute that to bad luck, you could say to yourself the next time an opportunity got well, I might as well try here.
I just failed last time because of bad luck. I'm not going to be lucky unlucky every time. Right, right.
Well, we have a few minutes left and at the end of my the episode I was just referencing with Greg Caruso, we talked about about how society could benefit if people accepted that that that free will there or that criminals weren't wholly, entirely responsible for their choice to commit crimes. And so I'm I'm wondering if you have suggestions for how society could benefit if people acknowledged a greater role of luck and success. Are there policies, for example, that we could collectively have find the will to pass that we otherwise couldn't?
Yeah, I think the big issue is that if you're born in a place that has good institutions and infrastructure, you have such a much bigger chance to succeed than if you're born in South Sudan or some war torn, poor country where you really have very few chances, no matter how good you are or how much you work. So the problem here is that we just haven't been maintaining those investments. You know, we've all been lucky.
People my age, at any rate, came along at a time when we were sort of at the peak of our environmental support for people who wanted to work hard and had something to offer today. Poor kids can't can't get into a college and graduate with with any real likelihood. The chilling statistic I saw was that if you have top quartile math scores and you're from a lower income family, you're less likely to graduate than if you're from a high income family and have bottom quartile math scores.
What a horrible number that is. If you do graduate and it's not very likely that you will if your family didn't have money, you'll you'll graduate with 35 or 40 thousand dollars worth of debt when you come out. You know, those years when the miracle of compound interest should be working in your favor, it's instead working exactly against you.
So we we could rebuild the the social safety net in a way we could make it so kids all can go to college. We could end without coming out with debt. We could you know, the kids who go to elementary school now, if they wanted to do a music program or a sports program, the budgets have been cut. There aren't aren't those programs anymore. They may be offered on an extra curricular basis, but then you have to pay a fee.
Well, a lot of families can't muster that fee.
That's not the best. Of society to bring kids into and the the ironic thing is that everybody agrees in principle to that the only thing that keeps them from saying, well, yeah, let's invest, is that they they don't want to pay higher taxes. And I think the the biggest cognitive error of all time is the idea that if you're well-to-do, you'll somehow be worse off if you and others like you pay higher taxes.
And why is that?
It's because if you're well-off, you already have everything you need. The only question is, can you get what you want? What do you want? You want things that are special. Things that are special are defined in relative terms. It's a house with a view. It's it's a choice slip at the marina, a painting that everyone else wants. How do you get those things you bid against other people like you? The highest bidders walk away with them.
And so if I'm prosperous, you're prosperous, too. If we each pay a little more in tax, then how does that affect the bidding contest that determines who gets the apartment with a view of Central Park? Not one whit, so we could invest more heavily in the public sphere. Most of us feel we should do that. We're inhibited from doing it because we think it would be painful. Well, the truth of the matter is it would not be painful.
Is the idea here that we're in kind of a parado, suboptimal situation where we could make a change that would make everyone better off without making anyone worse off?
That's exactly where we are. Yes, it's it's exactly analogous to the situations where, oh, for example, if everybody stands to see better, nobody sees any better than if everybody and everyone we see is right.
Exactly. It's a collective action problem. I if I have less money and if I think about higher taxes, how do I think about the effect of that?
Well, it's hardly ever happened that we've raised taxes in recent memory. So if I want to think about the effect of higher taxes, how do I think about that?
Well, I try to think about other times when I've had less money, but those times typically are when I've lost my job or when my business has suffered a reverse or I've gotten divorce or I've had an earthquake hit my house or some other thing where I've had less money. But everyone else has the same money as before. And in those situations, having less money really does make you less able to get where you want.
But are there not people who would look like if we had more of a progressive tax, say, aren't there, even though everyone there's still a large component of a relative evaluation, not not just an absolute evaluation of how well-off people are. Aren't there still some people who would be made worse off by not being able to compete as strongly for for their share of the pie? Like, I'm sorry, I didn't say that very well, but let me give an analogy to what I mean.
I've heard people say, for example, that we would all be better off if if we just band wearing makeup, if women just like we're not supposed to wear makeup because, you know, makeup, well, we can model simply the same makeup makes everyone more beautiful. But still, that just shifts the scale of beauty. So still, it's only the top quarter or top 10 percent of people who get. Yeah, etc.. And so, you know, we start wearing makeup then, you know, no one would have to spend the time and effort on my makeup and that would still be the same scale just shifted lower, which makes sense, except that there are some people who benefit more from wearing makeup than other people.
Like if you have bad skin, for example, wearing makeup gives you more of an edge than someone with not good skin. And I'm wondering if there's an analogy here with with with shifting the the consumption scale.
Yeah, I think I think the analogy breaks down entirely in this case. The point you made is exactly valid. High heels don't don't matter for some people. They do for others. If we've banned them, that would cost some people more than others. Yes, that's true. But a more progressive income tax or better still, the tax. I advocate a much more steeply progressive tax, not on income, but on consumption and consumption. The total amount you spend tax your income minus your annual savings.
That's your consumption tax. That at a steeply progressive rate, then, you know, if if we if the big rates don't kick in until we're already up over a million dollars a year of consumption, then who can argue with a straight face that the next dollar you're about to spend at that level is really for something essential? We're all of us at that level buying things that are special in a relative sense. And if we all spent less on them, we'd end up with exactly the same amount of special as before.
You know, the diamonds might be a little smaller, but because everyone's diamonds would be smaller, the the the power of a diamond to impress would be the same if it were in the 99 percentile, no matter how big it was in absolute terms. Right.
Right. I am I'm so tempted to keep talking about the progressive consumption tax now that we brought it up. But I that probably should be a whole other episode, which maybe we should do. But I'm happy to do it.
Yeah, I will at the very least. But setting aside the specifics of that consumption tax proposal, say that it seems pretty clear to me that appreciating the role of luck would would make possible a bunch of policies that would be good for society that are not that we don't really have the political will to pass yet. And I'm reminded of a frustrating conversation I had with someone who is who is basically arguing no luck has nothing to do with my success. It's all it's all about skill.
And he said, you know, look, we were talking on a global scale in that conversation. He said, yeah, you know, if I was if I was born a poor African, I would still have found a way to become successful. I would have just, you know, worked hard and, you know, been determined and I would etc. I would have found a way. I would have had grit. And and this seems like such is the power of that bully.
Yes, I know, but it's so weird because it's like he was he was imagining for him the phrase, if I were a poor African was sort of like he was imagining his current psychology, that it was, you know, developed as a result of his genetics and growing up in America, cetera, just transplanted into the body of a poor African. But actually, the counterfactual is more like, no, you would have been born to a poor African family and grown up in Africa.
And and if we want to know how that counterfactual turns out, all we have to do is look at how poor Africans actually behave. What what are their actual outcomes. That's the answer to the thought experiment. But that's a really counterintuitive step for people to make, it seems.
So these conversations help. I think, you know, somebody eavesdropping on this conversation, not everybody, but some who might have had the view of the person you're describing describing might want to rethink a little bit. So it's good to talk about these things hoping.
Well, at this point, we'll wrap up this conversation potentially to be continued to talk more about taxation in a later episode. And for now, we'll move on to the rationally speaking.
Welcome back. Every episode, I invite my guest on, rationally speaking to introduce the pick of the episode that's a book or article or website or something that has influenced his or her thinking in an interesting way. So, Robert, what's your pick for the episode?
Julia, I'm going to mention a book that was by the same author as a book mentioned by George H. Ainslee. When you talked with him, he mentioned Thomas Schelling's strategy of conflict. That's a great book. Yeah, that's in fact, the work of showing that the Nobel committee cited most prominently when it announced that shelling had won the Nobel Prize in 2006. So so, yes, I would feel perfectly comfortable with a reader running out to buy a copy of that and reading it.
But the book of Schelling's I want to recommend is one that the committee did not stress, but which I predict will in the end be seen as the far more important book of shilling's. And that's called Micro Motives and Macro Behavior. And in it, Schelling's theme throughout. This is a book I think you would particularly like if you don't know it, it's that the the actions that perfectly rational individuals choose to undertake are quite often productive of outcomes that none of them like.
Yes, I mentioned the example of all standing to get a better view, everybody being unhappy with the result. Why didn't we all remain seated?
Would have been more comfortable. Yes, there are probably hundreds of examples like that.
The shelling develops and it's a it's a very powerful way to reorient your thinking about what constitutes rational choice and behavior.
The prisoner's dilemma dilemma is an example of a of a choice like that. It's individually rational for us to defect, but we'd both be so much better off off if we would cooperate.
Yeah, I that I don't think I ever actually officially read that book, but the ideas in that book have have found their way to me and and and really influenced the way I see the world and how I interpret phenomena.
And what's so great about the book is that you don't need to summon any energy at all to read it. It's written in a very conversational style. He's a good storyteller and it's just magnificently interesting. Page by page. Excellent. Yes.
Well, we'll link to that as well as to the infamous interview that you did on Fox Business News, illustrating the unpalatable ness of the thesis to many successful Americans, as well as to your website, where our listeners can check out some of your research papers and other books. Robert, thank you so much for joining us. It's been a pleasure having you on the show.
My pleasure entirely. This concludes another episode of Rationally Speaking. Join us next time for more explorations on the borderlands between reason and nonsense. The rationally speaking podcast is presented by New York City skeptics for program notes, links, and to get involved in an online conversation about this and other episodes, please visit rationally speaking podcast Dog. This podcast is produced by Benny Pollack and recorded in the heart of Greenwich Village, New York. Our theme, Truth by Todd Rundgren, is used by permission.
Thank you for listening.