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

[Daimon88]

There are lots of people born into a wealthy family or inherited money. So I could see that this percentage could be high as compared to people that actually have to work hard to become wealthy. There is also a percentage of people that just happen to invest in the right stock or buy a winning lottery ticket but I think this percentage is probably relatively low as compared to just being born wealthy.

Yes i agree with you, we must be open-minded in every time especially when it comes to money.

You will only be able to make more money out of the money which you have in your pocket if you know this art of utilizing that money in a way that the money starts working for you. Otherwise, things will be very much difficult for you and that you will not be able to do anything good with your money. You need to invest that money at some place smartly and after giving enough of thoughts over it.

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[Xester]

Yes I agree to that because sometimes luck is one reason why people become rich.  Luck in terms of many ways. Being rich by intellegence or talent is also one reason why people become rich because they use their knowledge and talet but I mostly agreed of being rich by chance.

But being lucky is just sometime.  So we should not based it all on how lucky we are.  Many became rich because of their hardwork and itelligence.  Some are working smart that is why they became rich even just for a period of time.   I do not know about whose study is that.  It is just clear for me thst being industrious pays really well.

[cryptospacemedia]

It's not about intelligence or talent, it's about obsession.

[Harlot]

The way I see it being rich is really a hit or miss thing. No matter how intelligent or patient you are if you don't hit the thing that will make you rich you won't be rich. For instance in the business section you won't know your product will be a trendsetter or not if you haven't tried it in the market yet. Look at how Clash of Clans became a multi-billion dollar game for SuperCell they didn't know that it will be a hit for gamers until they have hit the app market. Being rich involves a lot of doing risk as you need to prepare to lose money in order to earn big.

[batang_bitcoin]

Being rich is according to fate and predestination

Hmmmm..

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.

Exactly and on point.

I have always felt people who achieved success where mainly in the right place right time

and with right decision.

It will be up to you if still want to become poor by doing nothing and just contented with that kind of life or will you strive harder so you can avoid this kind of life. I actually don't believe in fate but it is up to one owns decisions.

Those people that are contented with their lives and don't want to excel anymore is either happy with their current situation and they had enough for their living or too lazy and they already accepted their fate of becoming poor forever. It's a matter of choice and decision with a combination of encouragement and hard work.

[leonora galvan]

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.

yes i believe in intelligence or talent even if you do not go in school.if you have a talent in life and you can apply in your daily routine you can be rich,if people will give you a chance to do your intelligence and show them how it works then you have do it,and doing bitcoin right now is also a talent by giving you a chance.

[Hell-raiser]

This is really a subject of discussion without any reservation because there are several people that are smart but not rich. While I admit that chance is a determining factor, but it has to be supported by being smart. I have not seen anybody who is rich that is not smart even if chance is going to be on his smart.

The issue is that there is no measurement of smartness and its not even on the basis of formal education. I have seen people who didn't even acquire university education employing people who do to keep their accounting records while those who didn't do well in formal education went out to become entrepreneurs to hire the bookies. It then mean that they might not be smart in formal education but smart in areas of business and the taking of risk.

In conclusion, I would agree that its a combination of the two and not just focusing on one to be the determining factor.

But smart by its definition as people having a quick and astute mind is not associated with formal education in any way. So being rich still comes down to either luck or inheritance. It is conceivable and believable that someone can be smart and poor, but can you actually imagine someone dumb or even plain stupid who would be truly rich through his own effort without luck or wealthy relatives involved? This sounds like an oxymoron to me, a combination which is impossible in real life.

Well, maybe people like Mike Tyson fit here, albeit he still doesn't look like a complete idiot.

[jtbcoins]

Yeah, I think this is true. There is so many, really many people who have great talent or extra smart but they don't have money.

[DiabolicAnt]

I should say that it is sad, but true... Also as for me - in current world still rule strong and violent persons, those who can kill, lie and treason others...

[aso118]

People who invested in Bitcoin in the early years have grown their wealth manifold. Would you attribute that to chance. The study misses the wood for the trees. Sure, not all people who are intelligent or work hard become wealthy. But if you look at two groups- one with average talent and the other with exceptional talent, you can easily predict which ones will succeed. There will be exceptions, but you can't attribute everything to chance.

[kimochidesh]

I partially agree with you. It's true that luck matters a lot in your success but LUCK will only be with the wise. Successful people like Bill Gates, Steve Jobs, Mark Zuckerberg etc have talent and creativity with them. After developing a great platform, their luck supported them to be a successful person.

[BitHodler]

Yeah, I think this is true. There is so many, really many people who have great talent or extra smart but they don't have money.

If you are talented and smart according to yourself, but still haven't managed to utilize all that, you are either not as smart and talented as you think you are, or you just lack the opportunities. I personally go for the first mentioned.

I strongly believe that everyone with enough capabilities and skills can get the most out of himself as long as you are willing to work hard in order to achieve your target. Nothing comes to you without doing anything.

You have to work hard to get it, and that's the main point here. Luck is such a small and relative factor, that I don't find it worthy to even have it be part of any discussion. That's my personal opinion, and I strongly believe in it.

[jaysabi]

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.

These two aspects are particularly troubling about the methodology and logic of the argument. The logical argument made is that nobody should naturally have thousands of times more wealth than anyone else because nobody can have an IQ thousands of times higher than average or be thousands of times taller. First, there's no logical link there. Second, where the author faults nobody having an IQ of 10,000, it ignores the fact that an IQ can't even be 10,000, which is why nobody has achieved it. Similarly, nobody can be as tall as a skyscraper because it isn't physically possible. By using as a model the fact that these things don't happen as a guidepost for what should happen in wealth distribution naturally, it seems the author is comparing two things that can't be compared, and attributing the difference to luck.

Bill Gates isn't rich because he was the smartest man in the world, or because he was lucky. He's rich because he built a product that hundreds of millions of people found useful and paid for. The main driver of wealth isn't luck or intelligence (although either isn't going to hurt), the determining factor is market utility of what you do.

[pureclckr]

In my opinion, I don't really agree being rich is determined by chance rather than intelligence or talent, take Cristiano Ronaldo who is one of the best footballer in the world as example, he is one of the richest football player in the world due to his talented skills in the game.

Bill gates does have great intelligence to be able to create Microsoft and he also became the world richest man because of his own creation.

But without Alex Ferguson giving Cristiano Ronaldo a chance to be included in the first team of Manchester United in the past, Cristiano Ronaldo might not be able to gain his fame and popularity in such a short period of time so chance is also a very important aspect, and I would say being rich is actually determined by chance, intelligence and talent.

I absolutely agree with your own opinion Sir. Being rich not determine by chance rather than intelligence or talent. A good example Mr Bill Gates the person who become rich using his talent. The example of the person who become rich because of the chance are those person with skill with the help of other person in giving his chance to explore his talent.

You can’t go for one option solely. On the same side, you need talent and skills to show yourself off the market and likewise there must exists a chance to lift you up. Otherwise there are hinders and thousands of stories where talent is wasted only because they weren’t encountered with chances. Both are compulsory to each other, rather nothing is superior in such case.

That is absolute thing. One is nothing without other and here in such terrific field of work, where people are continuously taking risks, how can you say skills alone can be super hero. No, we must need a combat of these two thing, an amalgamation that can create a pool of chances for everyone who is interested to earn something. They are compulsory to each other like flower and color.

[Freddie Aguiluz]

Being rich is according to fate and predestination

It is also depend on your works, there are a lot of people who don't believe in deities and gods but still become rich and famous. There are also people that are not good in academics but in the end you can see them at the top. You are the one responsible on what will happen to your life. Live it well.

[Hexah]

On my own point of view it is always on the matter of every persons choice and his/her decision if he settles or not. Getting what you want to achieve in life is done by striving to get there and don't back down and mostly don't keep to your mind that the other person must decide who you to be. And, if chance or opportunity doesn't knock you can build a door.

[crutu]

I had time to think about the lives of people who can be successful around me, in terms of education when it is not too high and the mindset is also ordinary, but why they can be successful? I have the conclusion that success is not just from a person's genius but from a fortune that has been destined to be successful and perhaps their courage is also a major factor for continuing to try when it fails, they are not unyielding.

[superjeyy]

Chances do really come and go and somehow, I do agree that intelligence and talent are not enough to become rich in this world. Chances however, plays a big role in determining your fate, but you have to consider the fact that there are certain factors that led you to that opportunity or a chance of a lifetime. I believe strategy beats intelligence at any time of the day. Let's just say someone who did not study for a test gets a grade as high as the one who did study, that's what you call a person who is strategic. Since he can adapt to any situation and get through anything, obtaining chances for him would be easy. Just remember that if there's a chance awaiting upon you, grab it before it's long gone. You wouldn't want to miss out on an opportunity that is bound to change your life for the better. 

[Hell-raiser]

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.

These two aspects are particularly troubling about the methodology and logic of the argument. The logical argument made is that nobody should naturally have thousands of times more wealth than anyone else because nobody can have an IQ thousands of times higher than average or be thousands of times taller. First, there's no logical link there. Second, where the author faults nobody having an IQ of 10,000, it ignores the fact that an IQ can't even be 10,000, which is why nobody has achieved it. Similarly, nobody can be as tall as a skyscraper because it isn't physically possible. By using as a model the fact that these things don't happen as a guidepost for what should happen in wealth distribution naturally, it seems the author is comparing two things that can't be compared, and attributing the difference to luck.

Bill Gates isn't rich because he was the smartest man in the world, or because he was lucky. He's rich because he built a product that hundreds of millions of people found useful and paid for. The main driver of wealth isn't luck or intelligence (although either isn't going to hurt), the determining factor is market utility of what you do.

I wouldn't write off luck completely here. I don't deny that it is market utility of what you do that determines your success in the market at the end of the day but it is not very much different from saying that your wealth is determined by how much money you have or earn. Essentially, what you say is sort of tautology. Many people try to get that market utility but only few succeed. Huge corporations are spending billions on R&D to get there too. So how is it fundamentally different from the same people trying to become rich and wealthy? You still need luck to hit the jackpot with that elusive utility. You are simply revealing the specific mechanism or route by which luck makes wealth these days.

[Sowik]

It is true that luck plays a big role in our lives. For example you gotta be lucky if you invested in Bitcoin and it goes up but it won't be that much the luck's role if you are the one manipulating its price to go up