Scam Psychology: Luck Blindness, or why lucky people see it as skill, not luck

Success is dependent on many different factors, but it can usually be summarized as

...be at the right place, at the right time, with the right training to spot the opportunity, and have enough resources to call upon to take advantage of the opportunity. 

It should be readily obvious that rich people have a better chance at success because they started out with better starting positions. Donald Trump was practically born with a silver spoon (his father was a real estate tycoon). Conversely, poor people can't succeed if they don't find the right connections to make their talent known, no matter how hard working they are.

Outliers (book) (Photo credit: Wikipedia)

In the book "Outliers", Malcolm Gladwell reported that a good portion of professional hockey players found success due to their birthmonth, not solely via their talent. Why? If they were born in January, an arbitrary line used by the youth hockey leagues to divide up the years, they would enjoy physical advantage over the other kids who were born later in the year (generally speaking, of course) but still in the same league. And this physical advantage would lead to success, which would lead to them developing a taste for hockey, and eventually, into a pro career. Of course they trained hard, and they got some physical skills, but luck of having been born in month of January played a part in their success... They may not be aware of it, but that doesn't mean it didn't affect them.

Yet when you ask successful people how did they succeed, they will rarely if EVER mention luck. And in fact, some get downright offended if you try to bring up the role of luck in their success. This known as the "luck blindness" cognitive bias.

A few years ago Cornell economist Robert Frank wrote an opinion column for New York Times about luck and fairness, and for that he was invited on the air by Fox Business host Stuart Varney to talk about it. Varney opened the show by introducing Frank, then immediately jumped down Frank's throat: "Do you know how insulting that was, when I read that? I came to America with nothing 35 year sago. I've made something of myself, I think through hard work, talent, and risk-taking, and you're going to write in the New York Times that this is luck."  As you can imagine, it didn't go well for the rest of the interview.

Many people can look past their luck blindness though. Warren Buffet readily admits that he had won the 'genetic lottery' to have been born in the US to a loving family. And in a way, "gratefulness" (thanking God and the universe) is a way to acknowledge luck played a role.

How Luck Blindness Can Mislead You

Scammers know luck blindness is a button they can push to make you behave, along with sunk cost fallacy, hindsight bias, IKEA effect, and so on. By making you believe you are on your way to success, scammers will continue to take money from you, and you'll be happy doing so, because you believe you have learned skills, when it was either luck, or "arranged" success.

Scam Psychology: What is Survivorship Bias and How It Screws You Over (esp. in MLM)

Ever heard of "survivorship bias"? No? It means you gain a skewed view from examining only the "winners" (or survivors) of a particular process, and the skewed view is wrong. But to illustrate this, it's best to start with an example from the annals of history, namely, Mr. Abraham Wald, and Department of War Math.

Abraham Wald is a brilliant mathematician that lived in Hungary before World War II. Being a Jew, he was discriminated against, and when the Nazis took over, he emigrated to the US and quickly joined the new "Department of War Math", where he and other scientists are asked to help solve math problems that is related to war. And one of them is about bomber survivability.

English: Boeing Y1B-17 in flight (Photo credit: Wikipedia)

In World War II, the Allies launched huge bombing raids against the Axis territories and suffered tremendous losses. The chances of a bomber crew surviving two dozen missions is very very small. On some early mass bombing missions Allies suffered as high as 25% (i.e. 1 out of 4 bombers sent out were shot down). And remember, HUNDREDS were sent out at a time.  DAY AFTER DAY.

Obviously, one cannot armor the bomber enough to make it bulletproof, and make it still fly and carry bombs. So where should the armor be added? And how much? Where should the trade-off be done between bomb payload and armor? That's where Wald and his colleagues come in.

The story goes that the scientists and assistants flew to Washington, to be briefed by the US Army Air Corp generals and their staff, where they explained the problem, along with representatives from Boeing (the builder) who explains the structure of the aircraft and explains the problems. Then there's data from the USAAC where they present the data they gathered from the bombers that survived, where they are hit and patched, so on and so forth. And they tried armoring the parts that keep getting shot up, but it's not helping the aircraft to come back safely.

Allegedly Wald listened to some more of this, then stood up, told the generals that they are looking at it ALL WRONG. The parts that got shot up on the bombers that came back are the parts that should NOT be armored.

Wait, what?!

Really! He's right! Think about it for a minute...