Chance, Luck, and Risk

Every so often, I’m asked to talk about my “career”, generally to people younger than I am. I realised early on that the path I’d taken was so full of unexpected turns that it would be ludicrous to talk about it as if it was the result of hard work and deliberate choices. I therefore chose to emphasise how lucky I’d been. Not only did this have the virtue of modesty but it genuinely seemed the most plausible explanation.

However, luck as an explanation didn’t get me very far when I looked at other people. The first hint was after I’d seen several instances where, for a given group of people, of a similar age, background, and talents, some ended up being more successful than others. What surprised me was how often my gut feeling about who would go on to do well, or not, turned out to be correct — far too often for luck, mine or theirs, to be a convincing explanation. The second hint was when I realised from reading history that some people were successful multiple times in their lives: it didn’t seem plausible to me that all of them had done so purely through luck.

As I currently think of things, there are at least three concepts that interact with each other. At the risk of overloading commonly used terms I think of them as:

• Chance: the probability that events (good or bad) will occur that affect us.
• Luck: the probability that, and degree to which, events that affect us are to our advantage.
• Risk: the degree to which we are willing to accept bad luck events in order to increase the chance of good luck events.

Let’s start with “luck”. At its most obvious, luck can be good or bad. But I also find it useful to split it as follows:

• Unearned luck: where through no effort on my part, good things happen to me. For example, I had the unearned luck to be born into a loving family in a rich, stable part of the world. I had no influence on this, and my life would have been much harder if either of those two things wasn’t true.
• Earned luck: where through hard work I have increased the likelihood of good things happening to me, even though I wasn’t sure which good things might result.

Earned luck underlies the well known aphorism “The harder I work, the luckier I get.” There is clearly some truth to this, but what I don’t like about this aphorism is that unearned luck comes along at random, both to those who’ve worked hard and those who haven’t [1]. Certainly, even as an adult, not every good thing that’s happened to me has been earned luck!

Chance is something that I think society as a whole underappreciates: fiction and film routinely portray characters able to anticipate multiple moves ahead; and biography often presents success as the result of deliberate choice. When I first read Clausewitz’s On War, I was astonished that he ranked chance as one of the three fundamental elements of war — I was rather more taken with his concept of “friction”. Over time, I think I’ve come to understand why “chance” as a concept was so important to him. Put succinctly, every activity we undertake – and, often, the activities we don’t undertake – interacts with the world in ways that we cannot fully predict. Thus both the events that result and the events that don’t result are largely or wholly due to chance. I classify the results of chance as luck (good or bad). For example, I might go to the baker’s to buy bread, only to find that they have run out because the van delivering flour broke down. I could not have predicted the van breaking down, so my inability to buy bread is the result of chance — resulting, in this case, in bad luck. But if, on my way home, I see a new market stall selling bread, I have again been subject to chance (I don’t know when new stalls might open) and the result is good luck.

It’s easy to dismiss chance as purely a synonym for “randomness”, but I no longer think that’s a satisfying explanation. In particular, some people consistently perform actions that increase not only the number of chance events that occur, but the likelihood that those chance events lead to good luck. For example, we might say that someone who found the perfect spouse was lucky. In some cases, that partnership might be the result of unearned luck (e.g. meeting someone in a supermarket queue). But what if that person not only went out of their way to put themselves in situations where they met new people, but chose situations such that it was more likely that the new people were potential partners (e.g. joining a new activity club)? I think it’s better to say that they understood chance and deliberately tried to both increase the likelihood of chance events occurring, and of those chance events leading to (earned) good luck.

Finally we have risk, which I think of as the willingness to increase the number, and/or magnitude, of chance events in the understanding that both bad and good luck will increase. For example, if I start a business, I’m increasing the likelihood that I’ll earn lots of money, but also increasing the likelihood that I’ll lose everything (higher risk). In contrast, if I stick in my current job, there are few situations where I could lose everything, but equally few situations where I’ll earn lots of money (lower risk).

Risk is a fascinating concept, and one that I think we don’t talk about enough. Ever since I was young, people have commented on how risk averse I am — and they’re mostly right. I have never been interested in high risk activities if I find the rewards low: the minor adrenaline rush I might get from a motorbike ride does not, for me, outweigh the increased likelihood of dying.

However, I have been willing to take big risks in my professional life, working on topics, and in a manner, which other people (including those who’ve told me to take more risks!) have told me is too risky. For example, when I decided to concentrate on creating software, foregoing frequent paper publications, several people told me that I was putting my entire career at jeopardy. In some sense they were absolutely right: I was clearly increasing the chances of being perceived as such a failure that I would not be able to recover from it. From my perspective, however, things did not look quite so dire. First, while I broadly agreed with their assessment of my chance of failing, failure is common — in most cases the degree of failure matters more. I felt the worst possible outcome (I failed so badly that I was fired) was not only one I could accept (there are plenty of jobs in this computer lark) but it seemed a low probability outcome. Furthermore, I felt that if I succeeded to some degree, I would be disproportionately more satisfied with my job. All in all, the risk looked worth it to me.

There are several interesting aspects of risk to me, but three stand out to me. First, chance and risk are intimately related. Without chance, there would be no risk, since we could predict everything in advance. Chance events multiply: the greater the span of time we are considering, or the more external entities we interact with, the greater the risk we are taking on. Second, risk forces (or, at least, should force) us to make predictions about the future even though we lack all the information necessary to do so, even without considering the inevitable role that chance will play. Third, risk and reward should be related: a high risk activity might be worth it if it could lead to high reward, but high risk and low reward is a combination that only the reckless or desperate should attempt.

Since I’ve started thinking along the lines I’ve written above, the world has looked a much different place to me. In particular, it seems to me that chance plays a far deeper role in our lives than most of us are comfortable acknowledging. Chance can cause sensible people with good plans to fail for reasons no-one could have predicted, and fools with bad plans to succeed despite seeming to do everything wrong. Most obviously, this has led me to be more forgiving of one-off failures, and more sceptical of what we can learn from one-off successes. More fundamentally, it’s made me realise that judging people by outcomes is easy but rarely sensible; it’s better, though harder, to judge them by the decisions they made given the information they had available to them at the time.

So where does this leave me? Well, I’m now more aware than ever of how often I’ve benefited from unearned luck!

Footnotes

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