Teasing apart luck from skill in our decisions is difficult.
While most outcomes involve a combination of both, our improvement requires identifying what we should have done differently and what was out of our control.
Trouble is, when we try to identify what we did right or wrong, and what was good or bad luck, we tend to find ways of maintaining our positive self-image.
We want to look good in our own eyes and sometimes telling the truth would jeopardise that image. Unfortunately, that delusion can get in the way of becoming even better.
Where to Place the Blame
In 1958, Fritz Heider detailed the attribution theory, describing the ways people attach causes to actions and events. He lumped them into two categories:
- External, situational causes.
- Internal, dispositional causes.
A student who does poorly on a test might say the teacher doesn’t like them (external) or that they didn’t study hard enough (internal).
Related to the attribution theory is the fundamental attribution error — we overemphasise the internal causes of others’ behaviour. However, when we examine our own failings, we tend to look towards external causes.
The student will blame the teacher, the teacher will blame the student.
At least, that’s how it happens for bad outcomes. The narrative can flip when it comes to good outcomes, in which case the fundamental attribution error becomes the self-serving bias.
The self-serving bias suggests that, when outcomes go our way, we readily accept their causes as being internally generated.
Our intuitions here are usually not inclined towards realism, but in keeping our personal narrative pleasant and comfortable.
They do this by convincing us:
- our beliefs are correct
- good outcomes are due to skill
- bad outcomes are due to luck
- we compare favourably to our peers
“The way we field outcomes is predictably patterned: we take credit for the good stuff and blame the bad stuff on luck so it won’t be our fault. The result is that we don’t learn from experience well.”—Annie Duke, Thinking in Bets
(There is a caveat here: not everybody follows this pattern, particularly those with depression, or in cases of imposter syndrome. But in these cases it’s difficult to say we’re being more accurate. If the goal is to discern skill from luck, an overly pessimistic view is still in need of refinement — perhaps even more so.)
Given there are differences in our interpretations of our behaviour and others’ behaviour, it can be advantageous to switch places. Putting yourself in someone else’s shoes can help counterbalance the luck-skill seesaw.
When you fail or succeed, think about how you would interpret the same results had someone else been the recipient. What would you tell them if they came to you and asked for your interpretation?
Beyond imagination, you can ask someone else’s interpretation. Asking a neutral observer for their interpretation can yield a more accurate insight, as it’s not coloured in the feelings of failure or success.
What’s more, you can learn from others. Don’t assume their good results were lucky, find what they did right and adopt that behaviour into your own decision-making toolkit.
To improve your decision-making, Annie Duke recommends practising:
- giving credit where it’s due
- admitting mistakes
- finding mistakes in good outcomes
- being a good learner
“If we put in the work to practice this routine, we can field more of our outcomes in an open-minded, more objective way, motivated by accuracy and truthseeking to drive learning.”—Annie Duke, Thinking in Bets
Knowing luck from skill will help you learn more efficiently. You’ll know what to practice and what to ignore. You’ll be less likely to make unnecessary adjustments or dismiss problems.
Don’t trust your gut reaction in these matters, dig a little deeper, be honest with yourself, and you might learn something new.