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

[radjie]

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.

I strongly agree with your opinion, that the fate of someone already there who determines. Everyone has their own way of life and their destiny has been determined by God. But to achieve that success is within ourselves, to be able to achieve it with the courage to face all the trials, because everyone must have experienced failure. In order to rise from failure we must keep trying to realize the expectations we want, because failure is not the end of everything, but failure is a delayed success.

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[Koadharber]

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.

I strongly agree with your opinion, that the fate of someone already there who determines. Everyone has their own way of life and their destiny has been determined by God. But to achieve that success is within ourselves, to be able to achieve it with the courage to face all the trials, because everyone must have experienced failure. In order to rise from failure we must keep trying to realize the expectations we want, because failure is not the end of everything, but failure is a delayed success.

But other people do easily give up when they do experience failure which it is really a sad thing.This would totally block us out into the things we are wishing or targeting it out.Ive seen in reality that even those normal people who do have average way of living but still striving to reach out goals without knowing the word surrender do reach out on having a financial freedom compared to those who do have the intellect but do lacks of actions.It do really differs.

[Betwrong]

“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.”

This is true, but only to an extent. For example there are individuals who have become rich by robbing their own people while holding positions of ministers, lawmakers and other governmental officials. Almost all of them are very rich although they are definitely not very talented. But can we call them "the luckiest ones"? I don't think so. Can you imagine saying "He was so lucky to have the opportunity to lay his hands on the money instead of transfering it to children's hospital!"?
IMO a great percentage of the richest people in the world are either the ones I described or their genetic relatives, and unfortunately the study doesn't cover this at all.

[decoder88]

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.

We all have so many perception in life but I believe that you want to really pursue something whether it is small or big thing you can reach it with the help not just by someone knowledge and skills or talent but with it's hard working personality and most of all that he/she do things with all of their heart I could say that being successful is when you are already happy of what your doing. That the meaning of being rich for me.

I can say that somehow being rich is by chance, because some people grow that their family is already rich. And they will inherit all of the properties of that person. But i must say that people can also be rich not just by chance but by hardwork and full of determination in life. Everything you want to achieve in life must be from what you want.

[aintnopassincraze]

“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.”

This is true, but only to an extent. For example there are individuals who have become rich by robbing their own people while holding positions of ministers, lawmakers and other governmental officials. Almost all of them are very rich although they are definitely not very talented. But can we call them "the luckiest ones"? I don't think so. Can you imagine saying "He was so lucky to have the opportunity to lay his hands on the money instead of transfering it to children's hospital!"?
IMO a great percentage of the richest people in the world are either the ones I described or their genetic relatives, and unfortunately the study doesn't cover this at all.

While that is true how do you ascend to those types of positions? Sure there is some luck involved in getting into the right university, or having the right family member be a part of a certain social circle, but at the end of the day you need smarts and credentials. And let me tell you as somebody who is somewhat smart and could get a university degree (completed 2 full years 3.0 GPA) I couldn't stand a minute of it. Putting in that effort and time for 4 years+ is extremely difficult and the people who do that, deserve a chance at better money imo. Everything in life has some degree of luck though, and everyone singular action in life has some risk, you just gotta make do with what is in front of you and hope for the best.

[richkellj]

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

It is just a factor for a success or loss. Mainly this have not huge effect on your trading and investing. These two things need skills and experience, plus hard efforts as input and true concern for getting much in return. Whiteout these you will not be succeeded in your race and ultimately losses will be waving at you. Better is to work on your skills, just leave luck while considering trade.

[keycellko]

I would have to agree with this. Most of the school dropouts end up being a millionaire or even billionaires. Steve Jobs of Apple, Bill Gates of Microsoft, Mark Zuckerberg of Facebook and Michael Dell of Dell laptops to name a few. These are all dropouts who managed to become rich despite not having to finish school.

[Satry]

Becoming rich takes a combination of luck, skill and patience. Because being intellegent sometimes their praised their own smartness, also they only see more faults in the world. Intellegence and talents is a good combination. But in reality being talented they're just getting rich rather than intellegence person. And it depends on how you handle your situation when it comes in spending.

[paxmao]

I would have to agree with this. Most of the school dropouts end up being a millionaire or even billionaires. Steve Jobs of Apple, Bill Gates of Microsoft, Mark Zuckerberg of Facebook and Michael Dell of Dell laptops to name a few. These are all dropouts who managed to become rich despite not having to finish school.

Not finishing school or university because you have a better opportunity is not only a sign of talent, but a sign of one of their ability to take risks and prioritise their time.

[Betwrong]

“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.”

This is true, but only to an extent. For example there are individuals who have become rich by robbing their own people while holding positions of ministers, lawmakers and other governmental officials. Almost all of them are very rich although they are definitely not very talented. But can we call them "the luckiest ones"? I don't think so. Can you imagine saying "He was so lucky to have the opportunity to lay his hands on the money instead of transfering it to children's hospital!"?
IMO a great percentage of the richest people in the world are either the ones I described or their genetic relatives, and unfortunately the study doesn't cover this at all.

While that is true how do you ascend to those types of positions? ~

The first option is with a revolution, by simply killing those in power and taking over their places. The second option is by cheating on elections: either directly, registering non-qualified voters and destroying votes of opposition, or indirectly, deluding voters with false promises. And voila, you are in charge.

~ And let me tell you as somebody who is somewhat smart and could get a university degree (completed 2 full years 3.0 GPA) I couldn't stand a minute of it. Putting in that effort and time for 4 years+ is extremely difficult and the people who do that, deserve a chance at better money imo. ~

I absolutely agree with you on this. And exactly that's why I hate when people say that if someone is paid better than you, you, who have put so much energy and effort into study, then that person is either smarter than you or more lucky than you. There are other options. For example, that person could be born in a rich family or marry a girl from a rich family. I can't call such a person neither smart, nor lucky. That was my point.

[Janodevera]

My having cheated death does not make me an authority on luck. But it has motivated me to learn much more about the subject than I otherwise would have. In the process, I have discovered that chance plays a far larger role in life outcomes than most people realize. And yet, the luckiest among us appear especially unlikely to appreciate our good fortune. According to the Pew Research Center, people in higher income brackets are much more likely than those with lower incomes to say that individuals get rich primarily because they work hard. Other surveys bear this out: Wealthy people overwhelmingly attribute their own success to hard work rather than to factors like luck or being in the right place at the right time. That’s troubling, because a growing body of evidence suggests that seeing ourselves as self-made rather than as talented, hardworking, and lucky leads us to be less generous and public-spirited. It may even make the lucky less likely to support the conditions (such as high-quality public infrastructure and education) that made their own success possible.

[Tapyaks72]

I would have to agree with this. Most of the school dropouts end up being a millionaire or even billionaires. Steve Jobs of Apple, Bill Gates of Microsoft, Mark Zuckerberg of Facebook and Michael Dell of Dell laptops to name a few. These are all dropouts who managed to become rich despite not having to finish school.

Not finishing school or university because you have a better opportunity is not only a sign of talent, but a sign of one of their ability to take risks and prioritise their time.
[/quote
Being rich  is not  just because you're  talented or because of your  education it is the combination of factors that  makes  you rich one  of those are luck like for instance you are the siblings of well off family chances, opportunity being  a risk taker, and  determine to do things you believe that is good. Because there's no such  a perfect science of becoming  rich.

[Hell-raiser]

“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.”

This is true, but only to an extent. For example there are individuals who have become rich by robbing their own people while holding positions of ministers, lawmakers and other governmental officials. Almost all of them are very rich although they are definitely not very talented. But can we call them "the luckiest ones"? I don't think so. Can you imagine saying "He was so lucky to have the opportunity to lay his hands on the money instead of transfering it to children's hospital!"?
IMO a great percentage of the richest people in the world are either the ones I described or their genetic relatives, and unfortunately the study doesn't cover this at all.

I tend to disagree with you on this one. Unless you have a favor of an influential figure or come from a prominent family, you should be exceptionally lucky to get into a position on your own where you can "lay your hands on the money". I think the competition in the "field" should be even more cut-throatish than anywhere else. It doesn't mean that it is not possible, but there is always something which we don't know and maybe don't even want to know behind some random dude rising to power.

And just to survive in a revolution you should be twice as lucky. Revolutions devour their children.

[Slash61]

Some people who are lucky to have wealth down, some people work hard for it. Can a lazy person become rich with laziness? I think that's impossible. The point of wealth is the opportunity that is maximized by every individual in a certain field that they mastered before. I think the factor of intelligence and talent is only supportive.

[TwoLeafs]

True but hard work and intelligence are still the best indicators of success we have.

[The Alchemlst]

I agree with this, most people who are rich are those who tend to step out of their comfort zone and manage to be  in the right place at the right time. The opportunities to become rich are money and it is up to us to grab it and take risks. Though I still believe that talent and intelligence are essential to hold and manage your wealth.

[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.

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.

The market itself decides what has market utility and what doesn't. The fact that everyone tries for the most market utility for their products in pursuit of wealth and not everyone achieves it is proof that the market picks the winners and losers. If you re-read what I wrote, I haven't written off lucky completely, I said it doesn't hurt. But ultimately, market utility of your product and not luck determines the wealth you take from it. Indeed it is NOT very different from saying that your wealth is determined by how much money you have and earn, because that's literally the definition of wealth. I'm just saying that the wealth comes from the market utility of what you as an individual create, not luck.

When Bill Gates built Microsoft, it wasn't luck that he built a tool that everyone just happened to find useful. He built a tool that everyone found useful because he surmised (correctly) that everyone needed it.

[Blue Bell]

I would have to agree with this. Most of the school dropouts end up being a millionaire or even billionaires. Steve Jobs of Apple, Bill Gates of Microsoft, Mark Zuckerberg of Facebook and Michael Dell of Dell laptops to name a few. These are all dropouts who managed to become rich despite not having to finish school.

Not finishing school or university because you have a better opportunity is not only a sign of talent, but a sign of one of their ability to take risks and prioritise their time.

It is up to the per son that after finishing the school what they choose fro them as some people will go for the investment of the bitcoin and some use to make other business with bitcoin, it is good to learn about bitcoin for them as it is the early age learning and it will be good for them to have better life forever. Being rich is not only the chance but it is about your skills and your way of earning that how you have the spirit to deal with the rise and fall of bitcoin price and how you go through it, so be determined and then earn the highest profit ever.

[eucliffe]

Yes I think so as well, being rich may be determined by chance rather than those traits but it doesn't mean that we must rely on chances, I'd rather use those intelligence and talent than to rely on those odds. With the right amount of intelligence and talent with lots of hard work, I'm pretty sure I will live a better life, may or may not be rich, but surely a better life.

[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.

The market itself decides what has market utility and what doesn't. The fact that everyone tries for the most market utility for their products in pursuit of wealth and not everyone achieves it is proof that the market picks the winners and losers. If you re-read what I wrote, I haven't written off lucky completely, I said it doesn't hurt. But ultimately, market utility of your product and not luck determines the wealth you take from it. Indeed it is NOT very different from saying that your wealth is determined by how much money you have and earn, because that's literally the definition of wealth. I'm just saying that the wealth comes from the market utility of what you as an individual create, not luck.

In this manner, it could be just as well said that it is not market utility per se, which produces wealth, but rather money which people pay for a product or service marketed. And what does it take from my argument? I think nothing. Or do you think that market utility, or customers money, for that matter, comes on its own? You also need plenty of luck to find a bestseller idea that you can make money on. So how is it actually different from saying that you still need luck, plenty of luck, to become wealthy nowadays?

When Bill Gates built Microsoft, it wasn't luck that he built a tool that everyone just happened to find useful. He built a tool that everyone found useful because he surmised (correctly) that everyone needed it.

Microsoft had been a no-name until they stroke a contract with IBM, which was thanks to his mother being a friend of an IBM CEO. They had nothing apart from a shitty version of a shitty computer language.