Olympic host cities routinely underestimate costs, starting with optimism and ending with massive overruns. Many professionals make similar forecasting errors when choosing prestigious or safe career paths. The solution isn’t to avoid risk, but to understand the distribution of outcomes before you commit.
Every city that hosts the Olympics believes it will be different. Nearly every one runs over budget. We’re not just talking about cost overruns, but massive miscalculations. Bent Flyvbjerg, Alexander Budzier, and Daniel Lunn’s paper “Regression to the tail: Why the Olympics blow up” found that all Olympics games face significant cost overruns, averaging a whopping 172% over budget. Some of the causes identified include planning fallacy, optimism bias (it won’t happen to me), and base rate neglect (selectively choosing good examples and ignoring more general trends in the data).
In a previous Olympic article, “Careers Risks in the Olympics and the Office” I compared the sacrifice that athletes make in the hopes of winning big to sacrifices people make hoping to get their dream career: doctor, partner at a law firm, managing director in finance, or successful startup. But there’s a second risk. Just as cities can win the Olympic bid only to find it was more than they bargained for, so, too, can that happen in our careers.
Many young lawyers get into their dream job at a Big Law firm only to realize that prestige is costing them on other fronts. Lawyers in Big Law, notoriously work 80-100 hours a week. The money may be good, but their social lives wither and there is a physical and emotional cost to their dream job. Even when they make partner, the need to continuously land and retain clients, miss time with their families, and navigate corporate politics may turn out to be too much more than they bargained for.
Cities bid for the Olympics believing it will be an economic boon, but it doesn’t always work out as planned. The 2002 Winter Olympics in Salt Lake City projected 35,000 new jobs. In the end it was only 4,000 - 7,000 jobs created, and many went to people already employed. The abstract to the paper “Employment Effects of the 2002 Winter Olympics in Salt Lake City, Utah” ends with, “the Games had little to no effect on employment after 12 months.”
Similar size misses can happen in your career. Your startup company may not work out; that’s generally understood by anyone who joins a startup. On the other hand, becoming a doctor was once seen as a well paying career, but due to cuts to reimbursements by the government and insurance companies, there’s now a huge financial strain on many practices. In the movies, people working on Wall Street look like they can print money, but in reality they have boom and bust cycles just like everyone else. Today, software engineers, whose salaries grew rapidly during the last thirty years, are facing a very difficult labor market and the risk of job loss due to AI. In other words, the sure-thing career may not be so certain after all.
In all these cases there’s tail risk. Everyone looks at the average income, but half the people are below average; some people out in the tail are very far below average. The average doctor’s practice doesn’t go bankrupt, but a non-trivial number do. The average income over a lifetime on Wall Street is good, but some years are very poor, and if you’re in the wrong sub-industry at the wrong time it can negatively impact your finances or career for years to come. A career isn’t a single path; it’s a distribution of possible outcomes. You can influence the probabilities, but you don’t fully control where you land.
What’s the answer? Flyvbjerg, author of the paper cited at the start of this article, is also the author of How Big Things Get Done (which I have on my list of recommended books). He’s tracked large projects (e.g., Olympics, large bridge and tunnel projects, airport construction, large software projects, home renovations) and found patterns. Anyone undertaking such a project would be wise to read his book and know what they’re getting into.
While we may not have access to a database of large projects like Flyvbjerg’s, we do have access to scores of people in our chosen profession. By talking to them we can create our own data set and understand the tail risks and other volatility that we might face. Flyvbjerg doesn’t discourage large projects, he simply wants people to better plan for them.
Similarly, we’d all be better off knowing what’s coming down the pipeline in our jobs. Talk to anyone on Wall Street and they’ll tell you of boom and bust cycles. It would be foolish to think that can’t happen again during your career. Even if software professionals couldn’t recall the weak labor markets of the dot com crash and Great Recession, looking at any technology we see early high growth, maturation, and decline as newer technologies replace it. The timing may vary by industry, but the pattern is there. While doctors beginning their careers couldn’t predict regulatory changes, they could look at long cost projections of medical care, as well as trends in medicine such as the rise in private health insurance in the mid century to the growing control of medical services by PE firms today.
One reason Olympic cities get trapped in deficits is irreversibility; a city can’t simply cancel the project if it goes over budget. Instead, they just go deeper down the hole, sometimes taking decades to pay off the debt incurred by hosting. While you can walk away from your career and move to a new one, it’s not without costs. Years spent training and experience in roles and the industry will be discounted in your next career. I say discounted because knowledge and experience are transferable, but rarely at full value. (Additionally, most hiring processes tend to focus on narrow industry knowledge instead of fundamental ability, which will further discount your prior experience. See “The Streetlamp Effect in Hiring” to go deeper on this.)
Cities bidding on the Olympics begin by meeting with prior host cities. They review their plans to understand what worked, what didn’t, and where the risks are. While each city is unique, they can use other cities' prior hosting as a baseline. Likewise, we don’t need to plan our career alone.
Talk to people in your field about their career. Not just one or two, but dozens. Ask them:
You can supplement all these conversations with articles, podcasts, and other sources of information. You can even use AI as a brainstorming partner.
A career is a significant commitment and investment. By getting input from others in the field (including related fields), we can create a plan to help derisk the future volatility, and, just as importantly, make sure we know what we’re signing up for. Once the torch is lit, it’s very expensive to change course. This isn’t to discourage high-risk careers or volatile paths, but rather to make sure you go in with your eyes open and an understanding of the full distribution of possible career outcomes.
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