Princeton Baccalaureate 2012: Michael Lewis

[Applause] I've never been up here Thank You president Tillman trustees and friends parents of the class of 2012 wherever they've put you members of the class of 2012 once you give yourselves a round of applause yeah and so the next time you look around a church and see everyone dressed in black it'll be awkward to do that but enjoy the moment enjoy the moment it's a 30 years ago I sat where you said I must have listened to some older persons share his life experiences I don't remember a word of it I don't eat I couldn't even tell you who spoke and you won't be able to either what I do remember vividly is graduation and I'm told you're meant to be excited maybe even a little relieved that you're getting out of here and maybe all of you are I was not I was I was totally outraged here I'd gone and given them for the best years of my life and this is how they rewarded me by throwing me out at that moment I was sure really have only one thing I was of no possible economic value to the outside world I had majored in art history for a start even then majoring in art history was regarded as an act of insanity I was on almost certainly less well prepared than you are for the marketplace yet somehow I've wound up rich and famous sort of I'm gonna explain briefly how that happened and because I want you to understand just how a mysterious careers can be before you go out and have one for yourself so I graduated from Princeton without having published a word of anything anywhere I didn't write for the prints or for anyone else but at Princeton studying our history I felt really the first twinge of literary ambition it happened while I was working on my senior thesis my advisor was a really gifted man at professor named William Charles the thesis I wrote for him tried to explain how the Italian sculptor Donatello used Greek and Roman sources that's actually totally beside the point but I've always wanted to tell someone that God knows would professor Child's thought of it but he helped me to become engrossed actually more than grossed totally obsessed when I handed it in I knew what I wanted to do for the rest of my life I wanted to write senior theses or to put it differently to write books then I went to my thesis defense it was just a few yards away from me over at McCormick Hall I listened and waited for professor Charles to tell me how well-written it was he didn't so after about 45 minutes I finally said so what'd you think of the writing put it this way he said never try to make a living at it and I did not really I did what everyone does who has no idea what to do with themselves when they get out of college I went to graduate school I wrote at nights without much effect mainly because I had in the first clue what I should write about one night I was invited to a dinner where I sat next to the wife of a big shot of a big Wall Street investment bank Salomon Brothers she more or less forced her husband to give me a job I knew next to nothing about styling the brothers but Salomon Brothers happened to be where Wall Street was being reinvented into the Wall Street we've come to know and love today when I got there I was assigned almost arbitrarily to the very best job in the place to observe the growing madness they turned me into the house derivatives expert a year and a half later Salomon Brothers was handing me a check for hundreds of thousands of dollars to give advice about derivatives to professional investors now I had something to write him out Salomon Brothers Wall Street had become so unhinged that was paying recent Princeton graduates who knew nothing about money small fortunes to prevent to pretend they were experts about money I'd stumbled into my next senior thesis at that point I called up my father and I told him I was going to quit this job that promised me millions of dollars to write a book for an advance of 40 grand there was this long pause on the other end of the line you might just want to think about that one he said why I asked you could stay at Salomon Brothers for ten years you can make your fortune and then you could write your books he said but I didn't even think about it I knew that I knew what intellectual passion felt like because I felt it here at Princeton and I wanted to feel it again I was 26 years old had I waited until I was 36 I would never have done it I'd have forgotten feeling and it would have felt too risky the book I wrote was called liars poker it sold a million copies I was 28 years old I had a career a little Fame a small fortune and a new life narrative all of a sudden people were telling me I was a born writer this was absurd even I could see that there was another more true narrative with luck as his theme what were the odds of being seated into that dinner next to the Salomon Brothers ladies loved landing inside the best Wall Street firm to write the story of the age of landing in the seat with the best view of the business of having parents who didn't disinherit me but instead sighed and said do it if you must of having had that sense of must kindled inside of me by a professor of art history at Princeton of having been let into Princeton in the first place so this just this isn't just false humility it's false humility with a point my case illustrates how success is always rationalized people really really don't like to hear success explained away his luck especially successful people as they age and succeed people feel their success will somehow inevitable they don't want to acknowledge the role played by accident in their lives there's a reason for this the world doesn't want to acknowledge it either I actually wrote a book about this called Moneyball it was ostensibly about baseball but was in fact about something else there for teams and rich teams in professional baseball and they spend radically different sums of money on their players when I wrote my book the richest team the New York Yankees was was then spending about a hundred and twenty million dollars on his twenty five players the poorest team was the Oakland A's and they were spending about thirty million dollars and yet the Oakland team was winning more games or as many games as the New York Yankees and more games than every other team all of whom were richer than they were this isn't supposed to happen in theory the rich teams should buy the best players and win all the time but the Oakland team had figured something out that no one else had figured out the rich teams didn't really understand who the best baseball players were the players were miss value and the biggest single reason they were miss valued was that the experts did not pay sufficient attention to the role of luck in baseball success players got given credit for things that did they did that depended on the performance of others pitchers got paid for winning games hitters got paid for knocking in runners on base players got blamed and credited for events totally beyond their control where balls that got hit happened to land in the field for example so forget baseball forget this is even sports you have these corporate employees being paid millions of dollars a year they're doing exactly the same job that people in their business have done for more than a century in front of millions of people each of whom think they're an expert on what a good baseball player is that they had statistics attached to every move they made on the job and yet they were miss valued because the wider world was blind to their luck so I think you have to ask if a professional athlete paid millions of dollars a year can be miss valued who can't be if the supposedly pure meritocracy a professional sports can't distinguish between lucky and good who can the Moneyball story has it has practical implications if you use better data you can find better values and you there are always marketed inefficiencies to exploit and so on but to me it has a broader and less practical message don't be deceived by life's outcomes life's outcomes while not entirely random have a huge amount of luck baked into them above all recognize that if you had success you've also had luck and with luck comes obligation you owe a debt and not just to your gods you owe a debt to the unlucky I make this point because along with this speech it's something that you're very likely to forget I now live in Berkeley California a few years ago just a few blocks from my home a pair of researchers in the Cal psychology department staged an experiment they began by grabbing students like you used to use them as lab rats then they broke the students into teams segregated by sex three men or three women on a team they then put these two teams of three into a room an arbitrarily assigned one member of the team to be the leader then they gave them some complicated moral problem to solve say what should be done about academic cheating or or how to regulate drinking on campus exactly thirty minutes into the problem-solving the researchers interrupted each group they entered the room bearing a plate of cookies for cookies the team consisted of three people and there were these four cookies every team member obviously got one cookie but that left a fourth cookie just sitting there it should have been awkward but it wasn't with incredible consistency the person arbitrarily appointed a leader of the group grabbed the fourth cookie and ate it not only ate it but ate it with gusto lips smacking mouth open drool pooling at the corners of their mouths in the end all that was left of the extra cookie where the crumbs on the leaders shirt so this leader had performed no special task he had no special virtue he'd been chosen at random 30 minutes earlier his status was nothing but luck but it left him with a sense that this cookie this fourth cookie should be his so this experiment explained helps to explain Wall Street bonuses CEO pay I'm sure lots of other human behavior this is how people behave when they're blind to their own luck but it's also relevant to you to new graduates of Princeton University because in a general sort of way you've been appointed leader of the group your appointment may not be entirely arbitrary but you must sense right now it's arbitrary aspect you are the lucky few lucky and your parents lucky in your country lucky that a place like Princeton exists they could take in lucky people introduce them to other lucky people and increase their chances of becoming even luckier lucky that you live in the on the in the richest society the world has ever seen in a time when no one actually expects you to sacrifice your interest to anything all of you have been faced with the extra cookie all of you who will be faced with many more of them in time you'll find it easy to assume that you deserve the extra cookie for all I know you may deserve the extra cookie but you will be happier and you will be better off if you at least pretend that you don't so never forget in the nation's service in the service of all nations thank you and good luck [Applause]

Channel: Princeton University

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Keywords: michael lewis, baccalaureate, princeton

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Length: 13min 41sec (821 seconds)

Published: Tue Jun 05 2012