Michael Lewis 2012 Commencement Speech to Princeton (Full Transcript)

But I didn’t need to think about it. I knew what intellectual passion felt like, because I’d felt it here, at Princeton — and I wanted to feel it again. I was 26 years old. Had I waited until I was 36, I would never have done it. I would have forgotten the feeling. And it would have felt too risky.

The book I wrote was called “Liar’s Poker.” It sold a million copies. I was 28 years old. I had a career, a little fame, a small fortune and a new life narrative. All of a sudden people were telling me I was a born writer. This was absurd. Even I could see that there was another, more truer narrative, with luck as its theme. What were the odds of being seated at that dinner next to that Salomon Brothers lady? Of landing inside the best Wall Street firm to write the story of the age? Of landing in the seat with the best view of the business? Of having parents who didn’t disinherit me but instead sighed and said “do it if you must?” Of having had that sense of must kindled inside me by a professor of art history at Princeton? Of having been let into Princeton in the first place?

This isn’t just false humility. It’s false humility with a point. My case illustrates how success is always rationalized. People really don’t like to hear success explained away as luck, especially successful people. As they age, and succeed, people feel their success was somehow inevitable. They don’t want to acknowledge the role played by accident in their lives. There is a reason for this: the world does not want to acknowledge it either.

I actually wrote a book about this, called “Moneyball.” It was ostensibly about baseball but was in fact about something else. There are poor teams and rich teams in professional baseball, and they spend radically different sums of money on their players. When I wrote my book the richest team, the New York Yankees, was then spending about $120 million on its 25 players. The poorest team was, the Oakland A’s, they were spending about $30 million. And yet the Oakland team was winning more games or as many games as the New York Yankees and more games than all the other richer teams.

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This isn’t supposed to happen. In theory, the rich teams should buy the best players and win all the time. But the Oakland team had figured something out that no one else had figured out: the rich teams didn’t really understand who the best baseball players were. The players were misvalued. And the biggest single reason they were misvalued was that the experts did not pay sufficient attention to the role of luck in baseball success. Players got given credit for things they did that depended on the performance of others: pitchers got paid for winning games, hitters got paid for knocking in runners on base. Players got blamed and credited for events totally beyond their control. Where balls that got hit happened to land on the field, for example.

Forget baseball, forget this is even sports. Here you have these corporate employees, is being paid millions of dollars a year. They are doing exactly the same job that people in their business have done for more than a century. In front of millions of people, each of whom think they are expert. They had statistics attached to every move they made on the job. And yet they were misvalued because the wider world was blind to their luck.

So I think you have to ask if a professional athlete paid millions of dollars a year can be misvalued, who can’t be? If the supposedly pure meritocracy of professional sports can’t distinguish between lucky and good, who can?

The “Moneyball” story has practical implications. If you use better data, you can find better values; there are always market inefficiencies to exploit, and so on. But to me it has a broader and less practical message: don’t be deceived by life’s outcomes. Life’s outcomes, while not entirely random, have a huge amount of luck baked into them. Above all, recognize that if you have had success, you have also had luck, and with luck comes obligation. You owe a debt, and not just to your Gods. You owe a debt to the unlucky.

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I make this point because, along with this speech, it is something that you’re very likely to forget.

I now live in Berkeley, California. A few years ago, just a few blocks from my home, a pair of researchers in the Cal psychology department staged an experiment. They began by grabbing students, like you to use them as lab rats. Then they broke the students into teams, segregated by sex. Three men, or three women on a team. They then put these teams of three into a room, and arbitrarily assigned one member of the team to be the leader. Then they gave them some complicated moral problem to solve: say what should be done about academic cheating, or how to regulate drinking on campus.

Exactly 30 minutes into the problem-solving the researchers interrupted each group. They entered the room bearing a plate of cookies. Four cookies. The team consisted of three people, but there were these four cookies. Every team member obviously got one cookie, but that left a fourth cookie, just sitting there. It should have been awkward. But it wasn’t. With incredible consistency the person arbitrarily appointed leader of the group grabbed the fourth cookie, and ate it. Not only ate it, but ate it with gusto: lips smacking, mouth open, drool pulling at the corners of their mouths. In the end all that was left of the extra cookie were crumbs on the leader’s shirt.

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