As skill rises and becomes more uniform among competitors, luck explains more of the difference between their results.
Mauboussin set it out in 2012, following Gould's account of the disappearance of the .400 hitter in baseball. Batting averages did not fall; the variation among players fell as training and selection improved, so extreme averages stopped occurring. When everyone in a field is excellent, what remains to separate them is what nobody controls.
In practice
- A fund manager beating the market by a wide margin is easier to find among amateurs than among professionals.
- An Olympic final is decided by hundredths of a second that the same two athletes would reverse the following week.
- Standing
- Follows from the arithmetic of variance rather than from a study of skill, which is what makes it general. Compare regression to the mean and survivorship bias.
- Subject
- Sport & Performance
- Essay
- The best-measured contests there are