Fascinating article in the Observer on Sunday in which Daniel Kahneman argues, in an extract from his book Thinking, Fast and Slow, that the evidence clearly shows that successful traders in the money market cannot demonstrate that their success is down to anything but luck. In other words the luckiest ones are seen as the best and faith continues to be put in them on that basis.
He established his theories by trying to assess how well soldiers would do in leadership based on observing their performances in a series of tests. It turned out that there was virtually no correlation between someone taking charge of a log-dragging contest and actual leadership skills in the theatres of war or management. But no-one believed him and continued to run the sort of obstacle courses admired by management consultants the world over.
He explains how, once we see an illusion of skill - a cognitive illusion - we find it very hard to respond in any other way than as if it really is skill. Many of those we revere as successful have simply thrown several sixes in a row. Whilst there may be some advantage in being friends with someone who has just done that we need to be aware that runs of luck are runs of luck and no more.
So, who do you think is good at their job? And are they, or are they just lucky?