IT MIGHT be described as the “George Best versus Kevin Keegan” question. In their day, each was considered the finest footballer in Europe. But the first was a natural talent for whom the game came easily. The second was less gifted but reached the top through unstinting determination. Which would represent the better signing?
Choosing whether to hire someone who displays innate ability over a hard worker is not just a question for fantasy-football punters. Investors and recruiters sometimes face the same choice.
In an experiment, Ms Tsay presented would-be investors with profiles of a group of fictional entrepreneurs, including attributes such as their leadership experience, management skills, IQ and the amount of capital they had raised. In one variant of the experiment, it was hinted that each entrepreneur had reached his position more through natural ability or talent. In another variant, it was stated explicitly that they were either naturals or strivers, though the investors were not told that this was the factor of most interest to the researcher. The study then calculated how much, on average, the investors would be willing to trade off any of the entrepreneurs’ other attributes in order to choose a natural or a striver.
The investors were divided between those with real-life investment experience and those without. Both groups showed a clear preference for the supposed naturals. To gain backing from an experienced investor, for example, a striver would need on average 4.5 more years of leadership experience, 9% better management skills, a 28-point higher IQ and nearly $40,000 more accrued capital than a natural. Yet before the experiment, most participants had expressed a proclivity for someone who could demonstrate motivation and hard work. This suggests that the bias for natural talent over hard work is unconscious.
Achieving goals through determination is a recurring cultural meme—think of the American dream, say, or the Protestant work ethic. So maybe it is not surprising that people parrot it as an ideal. When it comes to investing, however, the UCL experiment suggests that such puritan values fall by the wayside.
The same may apply for employers. In a 2012 study, Michael Norton of Harvard Business School found that recruiters show a “preference for potential”. That is, they will choose someone unproven for whom they think glory may lie ahead, over someone who can demonstrate a glorious past. It may be that those who have reached their position through hard work do themselves no favours by over-stressing their achievements so far at the expense of other qualities. Ms Tsay suggests that naturals may be chosen because they are deemed to be better at adapting to an uncertain future.
If people do have a predisposed bias for naturals, then they may end up nursing some regrets. Let George Best serve as a salutary tale. While his football career fizzed brightly it also fizzled out early. He quickly got distracted by champagne and the serial pursuit of Miss Worlds. As a penniless Best later lamented: “I spent a lot of money on booze, birds and fast cars. The rest I just squandered.”