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3 July 2012

Cameron needs to stop rewarding the lucky

Martha Gill's Irrational Animals column.

By Martha Gill

If we’ve learned anything in the past few weeks, it’s that life at the top is even better than we thought and life at the bottom is probably just going to keep getting worse.

The thought for the day was brought to you by David Cameron, who seems to be operating under the healthy, no-nonsense, fresh-air-and-cold-showers theory that removing housing benefits from the unemployed will make them all the more determined to do well (rather than, say, depressed to the point of comatose). The super-rich, on the other hand, deserve gold stars for their achievements, and tax law like a cable-knit jumper. It’s motivational.

There are many problems with Cameron’s approach but, in the interests of staying within my word count, I’m going to distil them into one – which is that he is not the headmaster of a small private school. The world of work, you see, operates a little differently. A recent study from Oxford’s Saïd Business School highlighted how, in professional life, ending up at the very bottom or the very top is much more to do with luck than whether you pull your socks up and stop smoking behind the sheds.

Such is the power of luck that society’s biggest failures share a surprising similarity in approach to society’s biggest successes. To demonstrate this, the experimenters created two computer models, simulating five million players of differing skill going through a win/lose game of 50 rounds. The “success” of each person was then modelled on how many rounds they won.

The first model showed that in careers where success builds on previous success (ie, most jobs), luck has a vastly magnified impact on those at the top. Those giving “exceptional performances” were of lower skill, on average, than those giving merely very good performances. The important factor was an early chance success, which then snowballed. Similarly, “extreme failures” (the long-term jobless) were not the least able – they were just unlucky early on.

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Highs and lows

The second model looked at careers in which there is an element of risk (investment banking, for instance). Results showed that both the highest and lowest achievers took the riskiest paths. The experimenters noted again that huge success did not correlate well with skill.

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They concluded that we should be more careful about dismissing the failed and praising the exceptional, writing of the danger that “high rewards for exceptional performance may tempt other people to deliberately take risks or to cheat because they are unlikely to achieve extreme performance otherwise”. Instead, we should strive to copy the second- or third-in-command.

What can we take from this? Well, first, we should throw out our Mark Zuckerberg biographies and fill our shelves with titles such as Making It to the Middle: How I Only Gave Up on Some of My Dreams and Reaching for the Stars: How I Once Groped John Barrowman. But perhaps we should also take another look at Cameron’s penchant for punishing the unlucky and rewarding the already fortunate. Lady Luck is a harsh mistress, and the day she is allowed to dictate policy is the day she becomes a tyrant.

This article appeared in New Statesman edition 02/07/12