Study says being rich is determined by chance rather than intelligence or talent

[cr_liev]

Yes, I believe it can be. But being rich and successful is not only a matter of chance, but more of personal qualities! What about this qualities build the prerequisites for the smile of fortune?

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[Hell-raiser]

Bill Gates is a living example of how much chance and luck play in one's life. If Microsoft didn't get a contract from IBM in early 1980's, we would probably never hear of either Windows or even Microsoft itself. But the contract they managed to procure from this corporation was mainly due to his mother's connections in IBM. Back in the day, Microsoft was just one among a multitude of small software companies, nothing extraordinary to speak about. So I think the saying "to turn up in the right place at the right time" sums it up pretty well.

[alyssa85]

I'd say being rich is determined by your appetite for risk, rather than either chance or intelligence.

Many intelligent people spot opportunities but they can't bring themselves to take the risk. The poster above mentions Bill Gates - he took a chance and dropped out of University in order to develop Microsoft. His father was upset, thinking his boy was taking an almighty risk. Bill Gates' dad was probably as intelligent as him - but had a lower tolerance for risk.

[boy130]

It is probably more accurate to say that the biggest factor in becoming rich is chance and/or opportunity. Obviously being intelligent and talented makes you a prime target for such opportunities, but there is still a massive chance element, as there are thousands of other people out there also vying for the some chances, and it's rarely the absolute best candidate that gets it.

Focus, determination and experience are the major keys to success, these can allow you to play the odds, and increase the number of chances you have, that's what it's all about really. Increasing the number of routes to success that are available to you.

[bulls3y3]

They say that chance only knock ones you have to grab it but also you have to do something you have to work on it wisely. Chance combined it with intelligence it will be better a chance to be rich.

Yes,  i agree what youve said "chance combined by your intelligence and perseverance will be better to be rich". A man need to do something to become successful that he can change their way of living in the future.

[Hell-raiser]

I'd say being rich is determined by your appetite for risk, rather than either chance or intelligence.

Many intelligent people spot opportunities but they can't bring themselves to take the risk. The poster above mentions Bill Gates - he took a chance and dropped out of University in order to develop Microsoft. His father was upset, thinking his boy was taking an almighty risk. Bill Gates' dad was probably as intelligent as him - but had a lower tolerance for risk.

Well, thanks for taking my reference to Bill Gates as an example, but honestly, I don't see how he fits in here. He didn't drop out of Harvard into nowhere because he had already been running a business of his own, which was probably bringing him some dough by the time he decided to leave his alma mater. In this manner, I can't really see Bill Gates taking a lot of risk. I'd rather say it was an intelligent and wise decision to focus on what interested him more and which was likely more rewarding financially.



By the way, Bill Gates' dad, Bill Gates Sr., is still alive, so we could actually hear his opinion whether he was angry at his son's decision.

[Klausi]

I'd say being rich is determined by your appetite for risk, rather than either chance or intelligence.

Many intelligent people spot opportunities but they can't bring themselves to take the risk. The poster above mentions Bill Gates - he took a chance and dropped out of University in order to develop Microsoft. His father was upset, thinking his boy was taking an almighty risk. Bill Gates' dad was probably as intelligent as him - but had a lower tolerance for risk.

Well, thanks for taking my reference to Bill Gates as an example, but honestly, I don't see how he fits in here. He didn't drop out of Harvard into nowhere because he had already been running a business of his own, which was probably bringing him some dough by the time he decided to leave his alma mater. In this manner, I can't really see Bill Gates taking a lot of risk. I'd rather say it was an intelligent and wise decision to focus on what interested him more and which was likely more rewarding financially.



By the way, Bill Gates' dad, Bill Gates Sr., is still alive, so we could actually hear his opinion whether he was angry at his son's decision.

I also agree with that point, bit not everybody has given the opportunity to be in the place where everything is given and comfortable to live or being rich. Being rich has many aspect like rich in money, rich in friends, rich in love and many others. Well, if being rich in money some says that its a luck wherein some people are not intelligent nor talented, but why are they rich? Maybe because their parents are rich and they were given a share with their money. There are also people who are talented and intelligent but not rich, may because its not yet their time to be rich or God has a plan and purpose why He gave that kind of life you have. However, if you are poor and you wanted to be rich you just have to be determined and motivated to do something thag would make you rich and inspire others to work for your success.

[Tharel]

This statement is true most of the time. Intelligence is not a measure of wealth. Thousands of graduates with honors are now unemployed, short in money, no house nor any wealth. That's the reason we should not judge a person. You never know when a beggar could be hit by luck and won a lottery worth a million dollars.

[keeee]

If you’re so smart, why aren’t you rich? Turns out it’s just chance

The most successful people are not the most talented, just the luckiest, a new computer model of wealth creation confirms. Taking that into account can maximize return on many kinds of investment.

The distribution of wealth follows a well-known pattern sometimes called an 80:20 rule: 80 percent of the wealth is owned by 20 percent of the people. Indeed, a report last year concluded that just eight men had a total wealth equivalent to that of the world’s poorest 3.8 billion people.

This seems to occur in all societies at all scales. It is a well-studied pattern called a power law that crops up in a wide range of social phenomena. But the distribution of wealth is among the most controversial because of the issues it raises about fairness and merit. Why should so few people have so much wealth?

The conventional answer is that we live in a meritocracy in which people are rewarded for their talent, intelligence, effort, and so on. Over time, many people think, this translates into the wealth distribution that we observe, although a healthy dose of luck can play a role.

But there is a problem with this idea: while wealth distribution follows a power law, the distribution of human skills generally follows a normal distribution that is symmetric about an average value. For example, intelligence, as measured by IQ tests, follows this pattern. Average IQ is 100, but nobody has an IQ of 1,000 or 10,000.

The same is true of effort, as measured by hours worked. Some people work more hours than average and some work less, but nobody works a billion times more hours than anybody else.

And yet when it comes to the rewards for this work, some people do have billions of times more wealth than other people. What’s more, numerous studies have shown that the wealthiest people are generally not the most talented by other measures.

What factors, then, determine how individuals become wealthy? Could it be that chance plays a bigger role than anybody expected? And how can these factors, whatever they are, be exploited to make the world a better and fairer place?

Today we get an answer thanks to the work of Alessandro Pluchino at the University of Catania in Italy and a couple of colleagues. These guys have created a computer model of human talent and the way people use it to exploit opportunities in life. The model allows the team to study the role of chance in this process.

The results are something of an eye-opener. Their simulations accurately reproduce the wealth distribution in the real world. But the wealthiest individuals are not the most talented (although they must have a certain level of talent). They are the luckiest. And this has significant implications for the way societies can optimize the returns they get for investments in everything from business to science.

Pluchino and co’s model is straightforward. It consists of N people, each with a certain level of talent (skill, intelligence, ability, and so on). This talent is distributed normally around some average level, with some standard deviation. So some people are more talented than average and some are less so, but nobody is orders of magnitude more talented than anybody else.

This is the same kind of distribution seen for various human skills, or even characteristics like height or weight. Some people are taller or smaller than average, but nobody is the size of an ant or a skyscraper. Indeed, we are all quite similar.

The computer model charts each individual through a working life of 40 years. During this time, the individuals experience lucky events that they can exploit to increase their wealth if they are talented enough.

However, they also experience unlucky events that reduce their wealth. These events occur at random.

At the end of the 40 years, Pluchino and co rank the individuals by wealth and study the characteristics of the most successful. They also calculate the wealth distribution. They then repeat the simulation many times to check the robustness of the outcome.

When the team rank individuals by wealth, the distribution is exactly like that seen in real-world societies. “The ‘80-20’ rule is respected, since 80 percent of the population owns only 20 percent of the total capital, while the remaining 20 percent owns 80 percent of the same capital,” report Pluchino and co.

That may not be surprising or unfair if the wealthiest 20 percent turn out to be the most talented. But that isn’t what happens. The wealthiest individuals are typically not the most talented or anywhere near it. “The maximum success never coincides with the maximum talent, and vice-versa,” say the researchers.

So if not talent, what other factor causes this skewed wealth distribution? “Our simulation clearly shows that such a factor is just pure luck,” say Pluchino and co.

The team shows this by ranking individuals according to the number of lucky and unlucky events they experience throughout their 40-year careers. “It is evident that the most successful individuals are also the luckiest ones,” they say. “And the less successful individuals are also the unluckiest ones.”

That has significant implications for society. What is the most effective strategy for exploiting the role luck plays in success?

Pluchino and co study this from the point of view of science research funding, an issue clearly close to their hearts. Funding agencies the world over are interested in maximizing their return on investment in the scientific world. Indeed, the European Research Council recently invested $1.7 million in a program to study serendipity—the role of luck in scientific discovery—and how it can be exploited to improve funding outcomes.

It turns out that Pluchino and co are well set to answer this question. They use their model to explore different kinds of funding models to see which produce the best returns when luck is taken into account.

The team studied three models, in which research funding is distributed equally to all scientists; distributed randomly to a subset of scientists; or given preferentially to those who have been most successful in the past. Which of these is the best strategy?

The strategy that delivers the best returns, it turns out, is to divide the funding equally among all researchers. And the second- and third-best strategies involve distributing it at random to 10 or 20 percent of scientists.

In these cases, the researchers are best able to take advantage of the serendipitous discoveries they make from time to time. In hindsight, it is obvious that the fact a scientist has made an important chance discovery in the past does not mean he or she is more likely to make one in the future.

A similar approach could also be applied to investment in other kinds of enterprises, such as small or large businesses, tech startups, education that increases talent, or even the creation of random lucky events.

Clearly, more work is needed here. What are we waiting for?

Ref: arxiv.org/abs/1802.07068 : Talent vs. Luck: The Role of Randomness in Success and Failure

https://www.technologyreview.com/s/610395/if-youre-so-smart-why-arent-you-rich-turns-out-its-just-chance/

A very interesting spin on anything that has ever been said about money, success or wealth!

I don't know what to think about this. The scaling argument which says 1% of the human population shouldn't own 40% of the world's wealth due to them not having IQ's of 200,000 or talent proportional to the highly disproportionate stake of wealth they control is something that will take time for me to digest and think about. Its certainly a novel concept.

Its also very interesting that they attempted to model along lines of standard deviation and wound up with a historical 20/80 wealth distribution. I think this is something which could use more exposure and media coverage. Its not often relatively original or new perspectives like this come along and the paradigm shift which can accompany them can often take decades to be fully appreciated within a pop culture vein.

I think I agree with you because most of the people who became rich is because they are lucky in their lives. Those intelligent and talented people often became rich. They only became successful in their lives but not all of them became rich not like those lucky people who became rich because of their luck.

[labs0918]

Yes I agreed. Like for example in this bitcoin forum you don't need to be intellegent enough or talented to earn and to be rich. I also believe in saying that being rich is determined by chance rather than intellegence or talent because many of all people became rich, not because of their intellegence or talent but because of their luck in life.

[BabyBoss]

If you’re so smart, why aren’t you rich? Turns out it’s just chance

The most successful people are not the most talented, just the luckiest, a new computer model of wealth creation confirms. Taking that into account can maximize return on many kinds of investment.

The distribution of wealth follows a well-known pattern sometimes called an 80:20 rule: 80 percent of the wealth is owned by 20 percent of the people. Indeed, a report last year concluded that just eight men had a total wealth equivalent to that of the world’s poorest 3.8 billion people.

This seems to occur in all societies at all scales. It is a well-studied pattern called a power law that crops up in a wide range of social phenomena. But the distribution of wealth is among the most controversial because of the issues it raises about fairness and merit. Why should so few people have so much wealth?

The conventional answer is that we live in a meritocracy in which people are rewarded for their talent, intelligence, effort, and so on. Over time, many people think, this translates into the wealth distribution that we observe, although a healthy dose of luck can play a role.

But there is a problem with this idea: while wealth distribution follows a power law, the distribution of human skills generally follows a normal distribution that is symmetric about an average value. For example, intelligence, as measured by IQ tests, follows this pattern. Average IQ is 100, but nobody has an IQ of 1,000 or 10,000.

The same is true of effort, as measured by hours worked. Some people work more hours than average and some work less, but nobody works a billion times more hours than anybody else.

And yet when it comes to the rewards for this work, some people do have billions of times more wealth than other people. What’s more, numerous studies have shown that the wealthiest people are generally not the most talented by other measures.

What factors, then, determine how individuals become wealthy? Could it be that chance plays a bigger role than anybody expected? And how can these factors, whatever they are, be exploited to make the world a better and fairer place?

Today we get an answer thanks to the work of Alessandro Pluchino at the University of Catania in Italy and a couple of colleagues. These guys have created a computer model of human talent and the way people use it to exploit opportunities in life. The model allows the team to study the role of chance in this process.

The results are something of an eye-opener. Their simulations accurately reproduce the wealth distribution in the real world. But the wealthiest individuals are not the most talented (although they must have a certain level of talent). They are the luckiest. And this has significant implications for the way societies can optimize the returns they get for investments in everything from business to science.

Pluchino and co’s model is straightforward. It consists of N people, each with a certain level of talent (skill, intelligence, ability, and so on). This talent is distributed normally around some average level, with some standard deviation. So some people are more talented than average and some are less so, but nobody is orders of magnitude more talented than anybody else.

This is the same kind of distribution seen for various human skills, or even characteristics like height or weight. Some people are taller or smaller than average, but nobody is the size of an ant or a skyscraper. Indeed, we are all quite similar.

The computer model charts each individual through a working life of 40 years. During this time, the individuals experience lucky events that they can exploit to increase their wealth if they are talented enough.

However, they also experience unlucky events that reduce their wealth. These events occur at random.

At the end of the 40 years, Pluchino and co rank the individuals by wealth and study the characteristics of the most successful. They also calculate the wealth distribution. They then repeat the simulation many times to check the robustness of the outcome.

When the team rank individuals by wealth, the distribution is exactly like that seen in real-world societies. “The ‘80-20’ rule is respected, since 80 percent of the population owns only 20 percent of the total capital, while the remaining 20 percent owns 80 percent of the same capital,” report Pluchino and co.

That may not be surprising or unfair if the wealthiest 20 percent turn out to be the most talented. But that isn’t what happens. The wealthiest individuals are typically not the most talented or anywhere near it. “The maximum success never coincides with the maximum talent, and vice-versa,” say the researchers.

So if not talent, what other factor causes this skewed wealth distribution? “Our simulation clearly shows that such a factor is just pure luck,” say Pluchino and co.

The team shows this by ranking individuals according to the number of lucky and unlucky events they experience throughout their 40-year careers. “It is evident that the most successful individuals are also the luckiest ones,” they say. “And the less successful individuals are also the unluckiest ones.”

That has significant implications for society. What is the most effective strategy for exploiting the role luck plays in success?

Pluchino and co study this from the point of view of science research funding, an issue clearly close to their hearts. Funding agencies the world over are interested in maximizing their return on investment in the scientific world. Indeed, the European Research Council recently invested $1.7 million in a program to study serendipity—the role of luck in scientific discovery—and how it can be exploited to improve funding outcomes.

It turns out that Pluchino and co are well set to answer this question. They use their model to explore different kinds of funding models to see which produce the best returns when luck is taken into account.

The team studied three models, in which research funding is distributed equally to all scientists; distributed randomly to a subset of scientists; or given preferentially to those who have been most successful in the past. Which of these is the best strategy?

The strategy that delivers the best returns, it turns out, is to divide the funding equally among all researchers. And the second- and third-best strategies involve distributing it at random to 10 or 20 percent of scientists.

In these cases, the researchers are best able to take advantage of the serendipitous discoveries they make from time to time. In hindsight, it is obvious that the fact a scientist has made an important chance discovery in the past does not mean he or she is more likely to make one in the future.

A similar approach could also be applied to investment in other kinds of enterprises, such as small or large businesses, tech startups, education that increases talent, or even the creation of random lucky events.

Clearly, more work is needed here. What are we waiting for?

Ref: arxiv.org/abs/1802.07068 : Talent vs. Luck: The Role of Randomness in Success and Failure

https://www.technologyreview.com/s/610395/if-youre-so-smart-why-arent-you-rich-turns-out-its-just-chance/

A very interesting spin on anything that has ever been said about money, success or wealth!

I don't know what to think about this. The scaling argument which says 1% of the human population shouldn't own 40% of the world's wealth due to them not having IQ's of 200,000 or talent proportional to the highly disproportionate stake of wealth they control is something that will take time for me to digest and think about. Its certainly a novel concept.

Its also very interesting that they attempted to model along lines of standard deviation and wound up with a historical 20/80 wealth distribution. I think this is something which could use more exposure and media coverage. Its not often relatively original or new perspectives like this come along and the paradigm shift which can accompany them can often take decades to be fully appreciated within a pop culture vein.

Very well said there are many valedictorians or talented persons but some some of them until now has low level job or not yet rich. They might take some fit courses for them and graduated persons but some of them until now are still not yet totally successful because yes it's true that we can achieve our dreams and success through our dedication spending time and effort to what we do.

[BUK2016]

I strongly believe in the study that says being is determine by chance and not how intelligent you are or what so ever. I have seen so many people who are extremely intelligent but very poor because they cannot put what they know in practice or in other word, their intelligent has equally create fear of the unknown outcome in them and that has made people who are intelligent to be poor. 

[kabzeon]

People really don’t like to hear success explained away as luck – especially successful people. As they age, and succeed, people feel their success was somehow inevitable. They don’t want to acknowledge the role played by accident in their lives. There is a reason for this: the world does not want to acknowledge it either. But luck + smarts plays an equal role in getting or not rich! But that s my humble opinion.

[Lieldoryn]

I agree that becoming rich is often made possible by chance. But in our life not everything is clear. Very often people become rich thanks to the start-up capital that they inherited. But they become successful only in the case where they can gather around him a highly intelligent team and provide these people possibility to work. IQ is a very primitive indicator.

[Clavulanic]

Bill Gates is a living example of how much chance and luck play in one's life. If Microsoft didn't get a contract from IBM in early 1980's, we would probably never hear of either Windows or even Microsoft itself. But the contract they managed to procure from this corporation was mainly due to his mother's connections in IBM. Back in the day, Microsoft was just one among a multitude of small software companies, nothing extraordinary to speak about. So I think the saying "to turn up in the right place at the right time" sums it up pretty well.

I guess it's a matter of self determination that counts why people become successful and become rich when they want it to happen. That's pretty amazing how Bill Gates got his luck that early times despite several cases of failures but through his instinct and perseverance, it works well then and up to the present. So I must say that either by chance or have intelligence or talent, being rich will be given as long as you deserve what is yours and you have the heart to work on something that makes you successful.

[CarnagexD]

I am not entirely surprised by this at all actually, anecdotally I have always felt people who achieved success where mainly in the right place right time. Whether that be born to a certain family or class, or to a certain country, or area of a country, these things all effect where we will end up. Good to know us average folk can still make it in this rigged world

Our success is determined by several factors that affects the quality of living that we have. Some are acquired, some are inherited, and some are from chance, but all of these still needs hardwork and intelligence. We can not achieved our goals if we sleep half of our life doing nothing at all. Given the fact, that we got lucky and become rich from chance, we might loose it all, if we do not have the right attitude and failed to become a responsible person.

[Mpamaegbu]

Being rich is according to fate and predestination

This is pure African mentality and belief. I know it when I see it. Not as if it is a bad thing anyway.

I believe that being rich is determined by "Decision Taken" and not by chance. Intelligence or talent is way out of it. So, let's discuss decision taken in perspective. Take the profile of any known rich person and you would read in it how he made a certain decision that was either later favourable or went against him. And how he went back and took another decision that turned things around. Bill Gates didn't meet chance until he took that decision to drop out of school. The same applies to Zuckerberg. Even Africa's richest man, Aliko Dangote, at a point in his life had to take that decision of going into manufacturing which is today his greatest asset. Chance without taking the decision won't amount to anything.

For me, the difference between a poor man and a rich man is decision taken.

[Hell-raiser]

I'd say being rich is determined by your appetite for risk, rather than either chance or intelligence.

Many intelligent people spot opportunities but they can't bring themselves to take the risk. The poster above mentions Bill Gates - he took a chance and dropped out of University in order to develop Microsoft. His father was upset, thinking his boy was taking an almighty risk. Bill Gates' dad was probably as intelligent as him - but had a lower tolerance for risk.

Well, thanks for taking my reference to Bill Gates as an example, but honestly, I don't see how he fits in here. He didn't drop out of Harvard into nowhere because he had already been running a business of his own, which was probably bringing him some dough by the time he decided to leave his alma mater. In this manner, I can't really see Bill Gates taking a lot of risk. I'd rather say it was an intelligent and wise decision to focus on what interested him more and which was likely more rewarding financially.

By the way, Bill Gates' dad, Bill Gates Sr., is still alive, so we could actually hear his opinion whether he was angry at his son's decision.

I also agree with that point, bit not everybody has given the opportunity to be in the place where everything is given and comfortable to live or being rich. Being rich has many aspect like rich in money, rich in friends, rich in love and many others. Well, if being rich in money some says that its a luck wherein some people are not intelligent nor talented, but why are they rich? Maybe because their parents are rich and they were given a share with their money. There are also people who are talented and intelligent but not rich, may because its not yet their time to be rich or God has a plan and purpose why He gave that kind of life you have. However, if you are poor and you wanted to be rich you just have to be determined and motivated to do something thag would make you rich and inspire others to work for your success.

While we are at Bill Gates and the importance of luck, let me quote here what Microsoft founder once said. He is reported to have said that if you are born poor it is not your mistake, but if you die poor it is your mistake. I cannot possibly agree with this thought. Gates himself was born into a well-off family by any metric (if not plain wealthy), so we should take his words with a grain of salt in this particular case. Essentially, he doesn't know what it means to be born in poverty and how much it takes to get out of there. Thus he simply can't judge, though I definitely like the phrase.

[BartS]

I am not entirely surprised by this at all actually, anecdotally I have always felt people who achieved success where mainly in the right place right time. Whether that be born to a certain family or class, or to a certain country, or area of a country, these things all effect where we will end up. Good to know us average folk can still make it in this rigged world

Luck plays a factor we have always known that but you still need the talent to take advantage of the opportunity life gives you, look at bitcoin, we know we can make money with it but if you lack the talent then you are not going to make much money with it, but with the right skill you can make a fortune, this is why even if lucks plays a factor we cannot say it is everything, there have been several studies that shows that those that have an higher IQ and more education have greater salaries and get better outcomes.

[xaviervilla]

Yes, I really do agree with your point since hard work really does pay off. but the thing is, no matter how true is that study is, inborn intelligence can really do help a lot with the individual gifted with this type of power together with great talents that most of us will surely want to be able to experience or at least get a hold of and see someone really using it in real life. But then again, gifts and talents alone cannot give you success, the thing that really can deliver success is patience, hard work and perseverance. Which is why having all is still better than having less. Because if you do something and do not go slacking off, you will really reach success one day.