Opinion | What Works for Golf Works for Life

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Rory McIlroy of Northern Ireland, one of the greatest golfers of his generation, suffered a crushing loss at the U.S. Open this month when he missed short putts on two of the last three holes.

Please keep reading even if you don’t give a bogey about golf, because I’m going explain how the strategies that make someone a better golfer can help in other parts of life, such as personal finances. It comes down to focusing on what really matters and avoiding dumb mistakes.

My main source for today’s newsletter is Mark Broadie, who has dual credentials that are more related to each other than you might expect. He’s both an expert on golf strategy and a professor at Columbia Business School specializing in security pricing, computational finance and programming for business research.

Ten years ago, Broadie wrote a book, “Every Shot Counts: Using the Revolutionary Strokes Gained Approach to Improve Your Golf Performance and Strategy.” It’s not about how to square your shoulders or adjust your grip on the club. It’s insight gained from dynamic programming, which is a tool that’s extensively used by economists, for example in calculating the optimal saving rate.

(An aside: Broadie is a former champion of Pelham Country Club. I, on the other hand, have higher golf scores than bowling scores.)

Back to McIlroy. Immediately after his loss, people said he needed to work harder on his putting because, as is often said, tapping the ball around the green accounts for 40 percent of the strokes in a typical game.

That’s bad advice for a whole bunch of reasons, according to Broadie. Sure, McIlroy could certainly benefit from more consistency on the greens, but putting isn’t the main difference-maker in golf, he said.

“The question is, how did he get into the position where the putt on the 72nd hole mattered?” Broadie told me. (Golfers play 18 holes a day for four days, so the 72nd hole is the last one of the tournament.)

Every shot counts, as the book’s title says, not just the errant ones that get replayed constantly. “The conclusion that I would not draw is, ‘Oh, short putts are the most important thing to win the U.S. Open.”

Broadie invented a measure called “strokes gained” that zeros in on where golfers do well and where they need work. It’s a single metric that sums up all parts of the game, instead of incommensurate rules of thumb for different aspects such as distance on fairways and number of putts on greens. Strokes gained is analogous to alpha in investing or to expected runs in baseball.

“Choosing the best path to navigate through multiple shots on a golf hole is one dynamic programming challenge,” Broadie wrote. “The optimal decision on a tee shot depends on what can happen on the tee shot, and what decision and outcomes can happen on the second shot, and so on.”

Broadie compares how a golfer performs on each shot to the average for golfers of various skill levels. Let’s say the PGA Tour average for a ball that’s 33 feet from the cup is two strokes. If a golfer holes it in one shot instead of two, that’s one stroke gained versus the tour average. Eight feet from the cup, the tour average is 1.5 strokes, so holing it in one shot would be a half-stroke gained. The system works the same for tee shots. Let’s say the golfer has a spectacular tee shot on a par 5 and drives the ball to a spot from which an average player would take three more strokes to get the ball in the hole. That’s one stroke gained versus an average drive, from which the average golfer would require four more shots to hole out.

Some players will tend to gain strokes on drives and lose them on approach shots and greens. Others will do the opposite. The beauty is that now there’s a yardstick. The strokes-gained concept is usable on any course, but for the full experience you need to play on a PGA Tour course, where data has been collected. The Tour says its ShotLink operators collect 256,000 bits of data each week using hand-held devices and laser range finders.

One of my editors who saw a draft of this piece wrote that it “sounds like a complicated rephrasing of trying to beat par.” Well, sure, the goal is always to shave strokes wherever possible. But with this you have a better idea of which parts of your game need the most work.

To me, the interesting part is strategy. Let’s say you’re playing a hole where missing a little to the right of the fairway will put the ball out of bounds, while missing a little to the left will leave you in a wide swath of playable rough. If you hit it out of bounds, you have to try again from the same spot and add a one-stroke penalty. A strokes-gained analysis makes clear that your smart move, unless you’re an excellent golfer, is to deliberately aim for the rough. Likewise, it’s smarter to play it safe and aim for the middle of a green than to go straight for a hole that’s placed off to one side near a sand trap. True, a lot of golfers realize this already, but strokes-gained analysis locks in the intuition.

One of the main conclusions from strokes-gained analysis is that whacking the heck out of your drives is a winning strategy. It gets you closer to the hole, of course. And from analyzing millions of shots, Broadie found that there’s not much decrease in accuracy. The long-driving Fred Couples was one of the first golfers to realize this, Broadie said. At the time of the book’s publication, McIlroy was driving 20 yards longer than the PGA Tour average, and it was paying off for him big-time, Broadie found.

One reason golfers don’t lose much accuracy when they increase the length of their drives is that their form necessarily improves. “It takes perfect timing and great technical skill to generate that club speed,” he said. “Shifting weight well, turning well.”

There are exceptions to the long-driving rule, Broadie said. “You shouldn’t hit a driver where you have more than a 5 percent chance of hitting into woods or water. You’ve got to pay proper respect to the hazards.” (That’s advice for pros. For me, I probably have about a 5 percent chance of hitting it into the woods or water even after I’m already on the green.)

On any given day, luck plays a big role, and not only in golf. “Baseball science may still give a team a slight edge, but that edge is overwhelmed by chance,” Michael Lewis wrote in “Moneyball: The Art of Winning an Unfair Game.” He added: “The baseball season is structured to mock reason.”

In the long run, though, skill tends to win out. That’s what Broadie teaches his finance students at Columbia. He referred me to a book by Joseph Peta, who spent two years as head of performance analytics at Point72, a hedge fund run by Steve Cohen, the owner of the New York Mets. The book, published last year, is “Moneyball for the Money Set: Using Sports Analytics to Predict the Returns of Portfolio Managers with Startling Accuracy.” I bought a copy.

Peta argues that the important question to ask in investing is, “What’s repeatable?” He says he’s teased out two factors that reflect portfolio managers’ skill, not luck, and are thus repeatable. One is consistency in picking winners. The other is “explosiveness” — not just identifying winners, but picking the best of the winners while avoiding the worst of the losers. (A third supposed skill, choosing the ideal size of an investment, turns out not to vary much between managers, he found.)

These ideas come straight out of “Moneyball”-style analysis in sports, Peta writes. He credits Broadie’s book as a forerunner. The concept of measuring performance against a benchmark is broadly applicable. Teachers, for example, shouldn’t be rewarded on the basis of their students’ end-of-year test scores (because maybe they just got lucky and were assigned a lot of bright students), but on the basis of how much the students’ scores improved over the course of the year compared with the improvement by students in other classes.

It’s human nature to underappreciate the role of luck. A person who was born on third base thinks he hit a triple. Novice investors on a winning streak need to be reminded not to confuse genius with a bull market.

The same goes for bad luck. It doesn’t last forever, as Broadie’s book, and now Peta’s, remind us. McIlroy had some bad breaks at the U.S. Open, but his performance tells you that he’s still capable of winning it all. And one of these times, he most likely will.

Elsewhere: Natalie Foster on ‘The Guarantee’

I recently interviewed Natalie Foster about her new book, “The Guarantee: Inside the Fight for America’s Next Economy.” Foster is the president and a co-founder of the Economic Security Project, whose vision is that “every American should have the freedom and stability required to thrive.” Her book says the government should guarantee everyone housing, health care, a college education, “dignified” work, family care, an inheritance and an income floor.

I asked her if a sturdy safety net would discourage people from working, as some conservatives charge. On the contrary, she argued, a guarantee helps people recover from setbacks and gives them the confidence to take chances. “People are done, done, done with the old way of doing things and looking for something new,” she told me. “What we’re talking about here is the floor, not the ceiling. The ceiling is as high as you can jump.”