Here are four pieces of recent research:
- children whose fathers lost their jobs in the 1980s recession did worse (pdf) in school and went on to earn less than otherwise similar children whose fathers kept their jobs.
- good-looking men earn more than ugly ones at any level of earnings.
- children who are bullied at school before the age of 12 go on to get worse grades and are more likely to take drugs or get pregnant in their teens.
- children who are taught in small classes between ages 10 and 13 go on to earn more in middle age than those taught in larger classes.
These apparently different findings have one thing in common. They all show that our fate in life depends upon luck. It's a matter of luck whether your dad kept his job or not; whether you are ugly or not (make-up doesn't get you far (pdf)); whether you're bullied or not; and how big your school classes were.
Granted, the average effects in these papers are smallish. But they are only a tiny subset of the ways in which luck affects us. Whether we get teacher and mentors who inspire us or not, whether we enter (pdf) the labour market in a recession or boom, whether we're members of the lucky sperm club or not and - most importantly - whether we are born in England or Ethiopia are all matters of dumb luck.
Ed Smith is surely right. Our success, or not, in life is surely a matter largely of luck. I can easily imagine that slight tweaks in my fortunes would have made me either a multi-millionaire or a convict - and I suspect the same is true for most folk.
In saying this, I am not taking a purely leftist position. In Law, Legislation and Liberty (ch 8), Hayek said that income inequalities between people "will often have no relations to their individual merits"and decried it as a "misfortune" that people defended free market on the erroneous grounds that they rewarded the deserving.
I fear, though, that mine, Smith's and Hayek's position is a minority one.Far more common is the belief that the successful have earned their rewards whilst the poor should work harder. Why do people belief such nonsense?
The obvious answers lie in cognitive biases. The just world fallacy causes us to find justifications, even spurious ones, for injustice. And self-serving biases cause the successful to believe that success and failure are due to individual effort - and, of course, the opinions of the rich carry far more weight in politics than those of the poor.
But how costly are these illusions? Hayek pointed out that they can have big benefits. The belief that our well-being depends upon our own efforts will spur us to study and work harder than we would if we thought our well-being merely a matter of fate. And this greater effort can make us all in aggregate better off.
There is, then, a trade-off between truth and utility.