A Simple Worldview
Humans have an uncanny ability to make the world as simple as possible. It is both staggering yet effortless, and receives almost no notice or acknowledgement from anyone. The reality of the world we experience everyday is a combination of both natural selection — which is difficult to quantify — and the constant clashing of an infinite number of causes — which is impossible to understand. Despite all the craziness going on around us, we don’t necessarily spend much time paying attention to how everything interacts. In fact, we couldn’t, even if we wanted to. The world is so infinitely complex in how it interacts that we have developed an automatic and intuitive ability to simplify the world. Without us knowing it, our brain will break the world down into simple cause and effect. By doing so, it allows us to feel as if we have some understanding of what’s going on, and control over what happens to us.
When we think of concepts like luck and risk, these are things we understand in theory. In practice, it is difficult to quantify the role of luck or risk as it is simply baked into everything we do. It doesn’t present us with anything concrete or tangible we can pull from, to explain what is going on. In order to deal with this uncertainty, we substitute the intangibles for things like narratives and stories, a natural product of our ability to simplify what is going on.
There is a very acute form of existential anxiety in a world where you understand that you don’t really know the truth of how things happen, or how anything works. For this reason, telling ourselves these stories is perfectly fine. Given how we lack the capacity to understand these complexities, I’d say it’s actually preferred. However, despite the ease and control it provides us, there are a few consequences which need to be ironed out, if we seek to be both simple and accurate.
One of the stories we tell ourselves is based on a cognitive bias known as the halo effect. The halo effect is our propensity to assign positive (or negative) values to all the qualities of a person based on our judgment of one attribute that is significant. When we have a good first impression of someone, or they qualify in a social metric we value, we are biased to believe that they are good in all their qualities. The halo effect keeps a tight lid on the can of worms — the truth — and keeps us focused on a story which is simple and coherent. Simple inputs, simple outputs.
Consider, and try to visualise this sentence: Hitler loved dogs, and he loved little kids.
Although this statement is true, it just doesn’t feel right when we read it. This is because it violates the narrative we have built for Hitler. He did evil things, so he has to be an evil guy in all realms of life. This isn’t a particularly fruitful learning opportunity, but it does serve as a decent example of the halo effect. The greater risk we expose ourselves to is the narrative and story we tell ourselves about those we admire, and those we take inspiration from. For example, these are a few of the things you might think of, when you get asked about who Bill Gates was:
Bill gates has a monster history of successful entrepreneurship
He founded a world-famous charity organisation (The Bill & Melinda Gates Foundation)
He is one of the wealthiest people on the planet
Luck & Risk
Now that Bill Gates’ life has been so well documented, it is easy for us to connect the dots looking backwards. We develop a simple and coherent story of talent and determination and intellect and relentless work ethic which ultimately led to the success of Bill Gates. Although necessary qualities, these are not sufficient in telling the whole story. Let’s revisit one of the points we mentioned before: He is one of the wealthiest people on the planet. What we are dealing with is an extreme observation. Statistics theory tells us that decisions made by those of extreme observations do not have predictable and straight forward outcomes. The same or even superior inputs to that of Gates’ does not inherently mean the same or superior outcomes.
For every Bill Gates there is a Kent Evans.
The lesson is in how we choose to judge other people’s decisions. By giving the role of luck and risk their proper respect, you realise that when judging other people’s success, it is never as good or bad as it seems. Everything worth pursuing has less than 100% odds of succeeding, and risk is just what happens when you end up on the side that fails. Consider these examples:
Countless fortunes (and failures) owe their outcome to leverage
The best (and worst) managers are ultra hardworking and drive their employees as hard as they can
Countless sporting successes (and failures) were talented and determined in their youth
Are the successful ones to be admired while the failures are deemed as incompetent? Or did one just fall on the wrong side of the same coin?
The line between inspiringly bold and foolishly reckless can be a millimeter thick — Morgan Housel
The rise and fall of businesses and individuals dominate the news and our attention. These stories soothe our tendency to simplify the world and what’s going on, and identifies clear causes and effects while ignoring the crucial role of luck in the outcome. Be careful who you praise and admire, and be careful who you look down upon and avoid. Be careful in assuming 100% of outcomes can be attributed to effort and decisions.
Not all success is due to hard work. Not all failures are due to laziness.
Just Something To Consider
🔗 Sources
Housel, M. (2020). The Psychology of Money. Harriman House.
Kahneman, D. (2011). Thinking, Fast and Slow. Farrar, Straus and Giroux.