See Moneyball. Traditionally, people can't measure merit. They measure things which they think are proxies, but some popular proxies are hilariously inaccurate. Like, "Lines of code is a proxy for programming skill" hilariously inaccurate.

The thing is, in a competitive environment, people end up mismeasuring merit in totally different ways and the ones who end up closest to the mark end up winning. The point of Moneyball is that if you win at moneyball, you can win at baseball, too.

Though baseball (and other American sports) aren't generally a good example. With only 20-30 world class teams, it's easy to get contaminated by groupthink. Soccer is a better example. It's easy for all 32 NFL teams to have the exact same ideas about how to measure playing ability. It's hard for thousands of clubs in hundreds of countries to all have the same ideas. Even if English or American teams focus too heavily on size and strength, a Spanish team might take a chance on an undersized kid with a lot of speed and technical ability.

There's no question that professional sports is a meritocracy. Players like LeBron James, Albert Pujols, and Peyton Manning make the most money because they deserve to make the most money. They merit their contracts.

Moneyball deals with inefficiencies in antiquated markets, and fits well into Lewis's oeuvre (see Big Short, Liar's Poker for examples of how to take advantage of credit default swaps or the bond market). It has much less to do with "merit," as one can observe a player's true merit over a sufficient sample in baseball. If the guy's a bum, he'll live in Single A for the rest of his career.

tl;dr: baseball statistics are much better at quantifying a player's skills. See "WAR" and the recent Red Sox and Yankees teams for examples.

David Beckham isn't by any stretch the world's greatest footballer; his rise was directly alongside Ryan Giggs in the same team, and a comparison of their stats isn't favourable to Mr. Beckham. Yet his fame is such that teams will hire him, knowing they'll turn a profit on sales of his shirts.

Anna Kournikova was never a very successful tennis player but her earnings never reflected that.

Ferrari have a good F1 team, sure, but not necessarily the best; pre-Schumacher, their win rate was dwarfed by both Williams and McLaren. Yet their brand is strong enough that they uniquely can sell old cars to enthusiasts and run them at a profit, were able to get higher payments from the governing body and can license a new circuit (Yas Marina) to include a Ferrari-themed amusement park. All of which gives them a substantially higher baseline income from which to develop their cars.

Professional sports is as much about building and exploiting a brand as anything else in life.

I think sports is 'mostly' a meritocracy. You don't just walk into the first team of any of the top European leagues. And Beckham fully deserved his place in all the teams he's played in so far - just ask Capello. Capello initially refused to play Beckham (for whatever reason) in 2007, but would now acknowledge Beckham's role in helping Madrid win La Liga in the same year. I agree teams factored shirt sales when bidding for Beckham, but he couldn't have built his brand without being a top player.

Depending on how you define success, Kournikova was successful. You can't qualify routinely for grand slam tournaments unless you're a top tennis player - you get there purely on merit.

F1 is a different matter entirely. For all the love I have for it, it's hardly a pure sport. But even then, the top drivers do win the top drives. I remember telling my Spanish friend that Alonso was going to win the championship some day, after seeing him routinely out-qualify and out-race his teammate, and drivers in better cars.

You're confusing merit with scarce resources in high demand.

A nice tulip is a bargain at any price.

I haven't seen the movie, but my understanding was that someone used some math skills to better acquire skilled players, thus making professional athletics even more of a meritocracy than it was.

If I had to put a bunch of rich people on a chart with three axises of merit, luck, and inheritance, I still think professional athletes lie the closest to the pure merit line.

Definitely professional athletics seems to be an exception, since it has a clearly defined metric for merit, and big enough rewards to picking the winners to justify global search.

I'd assume at some level finance is like this; the algorithmic trading parts, not the "we went to Yale together and you have compromising pictures of me with that nun, so I'll give you this business" parts.

Actually finance is a very socially oriented business. Not to the extent that you use in your example, but frankly if the M.D. doesn't like the person they spend 60 to 100 hours/week with that person will be out of a job. Same thing goes on the client side; if they don't like you, you won't get their business.

Right, but in the long run, a really obnoxious guy who is right about the market more than everyone else could probably end up running money, using other people as buffers. A small hedge fund really doesn't have a lot of overhead, so one obnoxious genius could work with 2-3 other people.

There are lots of roles in finance where connections and likability are probably primary (once you pass a certain level of competence), though.

The main shift in Moneyball wasn't the math per se (its there, but wasn't really the secret sauce), much of it was a shift in which metrics were actually important. Billy Beane's ranking of players was still merit based, they just measured by a different ruler.

Nitpick: isn't inheritance a type of luck?

The military (kind of).