(image: Aimee Ray CC BY)

Unjust deserts

Many people see meritocracy as a worthy ideal: everyone gets what they deserve. Luck can mess this up: it is, by definition, something we don’t deserve. But is it really that simple?

Imagine you arrive home late one evening, only to realize you’ve forgotten your key. You whip out your phone, look for a locksmith nearby and you’re in luck: 10 minutes later a young guy with a toolbox turns up. He fiddles about for the best part of an hour, and eventually you hear the satisfying soft click of the lock surrendering to his efforts. Relieved, you enter your home, offer the locksmith a coffee while he completes his invoice, and in the end, you happily pay him £90 ($115, €105). That was well worth it!

Now imagine that instead of the novice locksmith, his boss had responded to your distress call. With his more than thirty years’ experience he would have picked the lock in less than five minutes. He would also have charged you £90 for this intervention, but £90 for five minutes work — come on!

This vignette is based on a story told by behavioural economist Dan Ariely (sadly no longer available it seems), and illustrates how we equate reward with effort (or time). Someone tinkering with a lock for an hour merits a payment of £90, someone fixing it in a mere couple of minutes much less so.

The concept of merit (and that of meritocracy, a term coined by the British sociologist Michael Young in his 1958 satire The Rise of Meritocracy) is closely linked with our sense of fairness. What, indeed, can be fairer than to be rewarded according to one’s merits, instead of according to one’s name, class, race or possessions? There is something profoundly unjust if someone manages to get ahead because they belong to a certain political party, attended a particular university, or indeed are someone’s daughter or son.

The power of luck

Yet, everyday life is full of good (and bad) fortune of this kind. The economist Robert Frank has devoted an entire book to this matter, Success and Luck: Good Fortune and the Myth of Meritocracy, in which he explores the degree to which luck is instrumental in economic success (as well as in other domains, including health). Of course, hard work and talent are important too — as the American writer Coleman Cox quipped, “I am a great believer in luck. The harder I work, the more of it I seem to have.” Frank recognizes this, but shows these factors are not sufficient for success. It is indeed not too hard to find examples of hard-working, talented people who are not as successful as they deserve to be.

In 2018, Alessandro Pluchino, a physicist at the university of Catania and two colleagues constructed a computer model that explains how luck messes with the link between merit and reward. They note that human ability tends to be normally distributed. For example, the average Intelligence quotient is 100, with 95% of the population scoring between 70 and 130. It is similar for strength, height, stamina and so on. Nobody has an IQ of 10,000, no one is 180m tall, and nobody runs 100m even 10 times as fast as the average speed of just over 13 km/h (8.3 mph), the equivalent to a time of 27 seconds — let alone 100 times as fast. Yet a typical FTSE 100 CEO earns 117 times the salary of the average worker, and similar applies in the field of sports and entertainment.

The team’s model ‘exposes’ 1,000 virtual individuals, each with talents that are normally distributed, and equipped with a ‘starting capital’, to random lucky and unlucky events. When someone encounters a lucky event, their capital will double with a likelihood in proportion to their talent (innovative ideas are more likely to benefit talented people), while an unlucky event halves it (everyone is affected in a similar way by accident or illness).

The findings are quite illuminating. First, the wealth is not normally distributed, but according to a power law, in which 20% of the people own 80% of the wealth. At the micro-level, any talented individual has a greater a priori chance to achieve a high level of success than someone with moderate abilities: they benefit more from lucky events. At the macro-level, however, the model shows how moderately gifted individuals dominate the top levels of success, despite their lower a priori probability. Because moderately gifted people are more numerous, they are statistically advantaged as a group to benefit more from lucky events.

This may all seem unfair and unjust, but is that really so? Individuals vary in their abilities and talents in this model, as they do in real life, much like we may be dealt a better or a worse hand in a game of poker. The luck of the draw, like the luck of the genes, is not a matter of fairness. Moreover, each individual in these researchers’ model had the same chance of encountering lucky and unlucky events — you can’t say fairer than that. And yet, the outcome might seem unfair.

Careful what we wish for

Perhaps we are just not all that well-equipped to judge fairness and chance accurately. We can see this in how we evaluate our own achievements: we tend to ascribe our successes to our own ability and effort, and our failures to external factors (this phenomenon is known as self-serving bias.

We also see it in our sense of entitlement. Most of you reading this are (like me) are likely to live in relatively wealthy circumstances. To be among the top 1% earners globally, you need to have an income of just $32,400 (£24,700, €29,100). In many first-world countries this means everyone earning more than median wage is in the 1%. If you find yourself in that category, do you feel that is because you’ve been particularly lucky, or rather that you actually deserve that income?

An interesting question remains whether we would really experience a more meritocratic society, where luck played no part and incomes reflected precisely individuals’ ability and effort, as fairer. In such a society, there would be a hard limit to the success we can achieve, set by our overall physical and cognitive abilities. The best we can do would be to work as hard as we can. How would we like that?

Two observations suggest we should be careful what we wish for. One is the popularity of lotteries, despite the fact that the winnings are evidently unjust deserts: there is no merit involved. The other one is the widespread and profound attachment we seem to have to inheritances. These, too, are entirely without merit (and help fuel inequality). In a meritocracy, there would be no such lucky breaks anymore — our economic success would be determined (and constrained) by our inherent abilities. Furthermore, we would no longer be able to blame our circumstances on bad luck (or lack of good luck): if we’re at the bottom of our league, we would only have ourselves to blame.

Luck is not in the way

A truly meritocratic society, once you look at it properly, does not seem to be quite what it purports to be, and in practice we appear quite happy with financial windfalls we do not remotely merit. Should we just stop getting wound up about the role of luck in success?

Mostly, yes.

It is not luck that is in the way of a fairer society. We should not ban lotteries, or tax away the winnings in the name of fairness. But we should make sure that everyone who wishes to play has access to a lottery ticket. And to do that, we should reconsider what precisely we perceive as ‘luck’.

Yes, it is good luck to inherit genes that make you smarter, or taller, or stronger than average, and it is good luck to inherit a tidy sum, or to be discovered as a writer or an artist. And it is bad luck to inherit the BRCA1 gene or the gene for Huntington’s disease, or to lose a limb in an accident.

But it is not “good luck” to be born a boy, or with a white skin, or in Switzerland, and it is not “bad luck” to be born a girl, or with a dark skin, or in Swaziland. The arbitrary favouring, or discrimination against someone because of their gender, their skin, their citizenship, or any other characteristic is despicable and we should be combat it. But it is not a matter of good or bad luck.

We might also want to widen our criteria of what we see as ‘success’. In The Winner-Take-All Society, Robert Frank and Philip Cook talk about two equally gifted salespeople: one who had the chance to pursue a lucrative career in financial services, and one who did not, and who sells children’s shoes. What makes either of them successful — their salary, or the fact that they love their job, and that they can be at home to have dinner with their children and read them a bedtime story?

Originally published at http://koenfucius.wordpress.com on January 10, 2020.

Thank you for reading this article — I hope you enjoyed it. Please do share it far and wide — there are handy Twitter and Facebook buttons nearby, and you can click here to share it via LinkedIn, or simply copy and paste this link. See all my other articles featuring observations of human behaviour (I publish one every Friday) here. Thanks!

Accidental behavioural economist in search of wisdom. Uses insights from (behavioural) economics in organization development. On Twitter as @koenfucius

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