Title: The Drunkard's Walk: How Randomness Rules Our Lives Authors: Leonard Mlodinow Published: May 2008 Length: 272 pages
After taking two quarters of statistics and two of probability, I wasn't sure that I would learn much by reading The Drunkard's Walk. Fortunately, the history of the evolution of thought regarding chance and the ramifications of randomness on everyday life were explained to the point where I gained new insights into this area. It reinforced and clarified existing views that I had as well.
The most important point that was made is that there are a large class of things that humans typically see as being based on skill but are more likely based a great deal on luck. While CEOs and Hollywood film producers are paid top dollar for their skills, there seems to be little correlation with actual skill for their positions. Many events that involve human decision are unpredictable to the point that they can be considered random. I enjoyed the discussion of reversion to the mean presented throughout the book. Essentially, we tend to praise someone and see them as smart or skilled when they succeed, and then tend to disparage the same person when they do not appear to succeed. Mlodinow explains that our approval or disapproval often has little to do with someone's next attempt because often the performance in the event is somewhat random. When I yell at someone, it is likely that they will do better than before. When I praise someone, it is likely that they will do poorer than before. Likewise, a mutual fund manager is likely to be lauded when she does well, and given the boot when she does poorly, even though picking stocks is a mostly random process.
