Michael J. Mauboussin, David K. Hurst [Archive.org URL]

Michael J. Mauboussin offers this rough-and-ready test for discerning the difference between skill and luck in any given event: Ask yourself if you can lose on purpose. If you can, skill is involved; if you can’t, it’s pure luck. For a more mathematical assessment, figure out the correlation between a supposed cause and its effect. If the correlation is high, the cause is likely related to a skill, and a good process will usually have a good outcome. If the correlation is low, luck plays a larger role in the outcome, and a good process will produce good results only over time.

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