One way to answer this question is to say: Luck matters more in an absolute sense and hard work matters more in a relative sense.
The absolute view considers your level of success compared to everyone else. What makes someone the best in the world in a particular domain? When viewed at this level, success is nearly always attributable to luck. Even if you make a good initial choice—like Bill Gates choosing to start a computer company—you can’t understand all of the factors that cause world-class outcomes.
As a general rule, the wilder the success, the more extreme and unlikely the circumstances that caused it. It’s often a combination of the right genes, the right connections, the right timing, and a thousand other influences that nobody is wise enough to predict.
As a general rule, the wilder the success, the more extreme and unlikely the circumstances that caused it.
Then there is the relative view, which considers your level of success compared to those similar to you. What about the millions of people who received similar levels of education, grew up in similar neighborhoods, or were born with similar levels of genetic talent? These people aren’t achieving the same results. The more local the comparison becomes, the more success is determined by hard work. When you compare yourself to those who have experienced similar levels of luck, the difference is in your habits and choices.
Absolute success is luck. Relative success is choices and habits.
There is an important insight that follows naturally from this definition: As outcomes become more extreme, the role of luck increases. That is, as you become more successful in an absolute sense, we can attribute a greater proportion of your success to luck.
As Nassim Taleb wrote in Fooled by Randomness, “Mild success can be explainable by skills and labor. Wild success is attributable to variance.