Saturday Morning Links

Miscellaneous material for your weekend reading.

- Chris Dillow discusses the connection between the failure to understand the role of luck in producing unequal outcomes, and the perpetuation of policies which exacerbate inequalities:

As Ed Smith writes in his lovely book, Luck: “randomness is routinely misinterpreted as skill.”

Why do people do this? I suspect it’s not just because of a lack of statistical literacy: many of the subjects in the experiments I’ve cited had taken statistics classes. It’s also because of two reinforcing biases. One is the outcome bias. We judge a performance by its result so if a team wins the game, or if a fund manager beats the market, we infer that they did well rather than got lucky. The other is the narrative fallacy. We are story-telling animals. We seek links between things and detailed explanations even if the truth is only that a bit of good luck happened, then a bit of bad. I suspect that most football punditry is like this.

All this is about how we attribute skill rather than luck to other people. But of course, we also do so to ourselves, and asymmetrically: good results are down to skill and bad to luck. A study of day traders has confirmed what you probably suspected:

Retail day traders in the forex market attribute random success to their own skill and, as a consequence, increase risk taking.

The upshot of all this is that the successful are apt to become bumptious arrogant prats because they attribute their success to their own talents rather than luck. And observers are apt to take them at their inflated self-estimation.

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This, of course, colours our whole social and political structure. Our tendency to see skill where there is just luck causes the successful to have an exaggerated sense of entitlement and the rest of us to be overly deferential to them. Very few people are luck egalitarians. This is one way – of perhaps many – in which inequality sustains itself.

- Meanwhile, Harry Glasbeek argues that capitalism (as opposed to democracy or liberalism) lies at the core of Canada's political power structure, resulting in the government's willingness to hand out corporate welfare at the drop of a hat while attacking workers and lower-income residents. And Rebecca Jennings examines some of the problems with a culture of CEO worship.

- Kristin Rushoway and Laurie Monsebraaten discuss how Doug Ford's plan to shred the regulatory state in Ontario will endanger children in child care. John Michael McGrath points out that a campaign promise not to do any harm to Ontario's greenbelt has been scrapped in favour of a scheme which will allow for its destruction at the whim of any municipality. And Edward Keenan notes that Ford has relabeled virtually any type of public protection from corporate excess and abuse as "red tape" to be systematically destroyed.

- Finally, Michelle Zilio reports on the consistent message from experts in the field that Andrew Scheer's anti-immigration bleatings about a UN migration compact lack any basis in fact. And Andrew Coyne connects the Cons' message to that of nativist and racist parties internationally.