Personal Experience
Ethan Frome, a novel by Edith Wharton, is about a married man who is actually in love with another girl who is boarding at his house. He grows to despise his wife because of the other girl. Interestingly, Wharton herself was living in a difficult marriage when she wrote the book. They say, "Write what you know.” Is this really effective? Did Wharton's experience help the novel at all?
The first thing to consider is imagination. Nobody can write a good work of fiction without being at least a little creative. The idea is to take readers to another world and, while everyone does have a unique and interesting perspective on life, that is hard to do without completely making some things up out of the blue. If you write only what you know, things can get quite boring.
Next, I want to think about authenticity. Writing based on the author's personal experience definitely feels more real. The author knows what the character is feeling, so they can then put words to that feeling, and readers can feel it, too. Imagination is necessary to fill in the cracks and make an interesting story, but that means nothing if readers can't connect to the character. An author's personal experience is what makes the work credible, so that readers can connect.
Finally, there are the emotions involved on the author's part. Sometimes it might not matter so much what the experience does for the novel, but what putting the experience in the novel does for the author. Once in a while when I have a question or problem I'm worried about, I'll give it to a character and write a story to figure it out. This is extremely relieving. If other authors also do this, then Wharton probably just started writing because she was frustrated and had nothing else to do about the situation. That is called writing for yourself first and then others, and a lot of stories come out better that way.
To answer the original question, writing what you know is very effective (although it's important to spice it up with creativity, too.) The personal life of an author helps shape the author and that shapes the author's work. Wharton's experience helped her novel by making it more credible and more compelling.
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