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

[CarltonWyatt]

This was a really interesting read. It's not what you know it's who you know is the saying.

[bitgolden]

LOL that’s true. No matter how intelligent you are and no matter your level of education, for you to get rich, it will always be a thing of luck or chances. Being intelligent or going to school does not make you rich, you’re just intelligent and nothing else.

I know lots of my friends that spent years of study in school and got their degrees, but till now they are still borrowing money from their parents and are still looking for jobs. But I see some people who knows nothing, but they are very rich.

[Noelbetty12]

It could be true on some instances, where luck pulls somebody to become rich. But not all really. Luck doesn't really give you millions, Your skills do. You might not be so intelligent to deal on things but you have at least a working brain to figure out the best option leading to fortune. Say you have luckily won from a gamble like lottery. Your luck just got a hold of you. The question is this now? Are you really going to be a millionaire your whole life? or just that day when you won the lottery? This question is answerable by both yes and or no. Yes, because when your capital will be used to put up a well planned business, you may be able to gain more. On the other hand failure, causes you to lose your money. So what is now needed to insure that you will gain from it?  You need your skill and brain. So I believe we need to have at least the luck or chance, the skill and brain. Merge the three and we will be rich in the future.

[Yakamoto]

It could be true on some instances, where luck pulls somebody to become rich. But not all really. Luck doesn't really give you millions, Your skills do. You might not be so intelligent to deal on things but you have at least a working brain to figure out the best option leading to fortune. Say you have luckily won from a gamble like lottery. Your luck just got a hold of you. The question is this now? Are you really going to be a millionaire your whole life? or just that day when you won the lottery? This question is answerable by both yes and or no. Yes, because when your capital will be used to put up a well planned business, you may be able to gain more. On the other hand failure, causes you to lose your money. So what is now needed to insure that you will gain from it?  You need your skill and brain. So I believe we need to have at least the luck or chance, the skill and brain. Merge the three and we will be rich in the future.

You still shoot into the area where you have the capital to make more money due to luck. It's still determined by chance and it's just maintaining it after that initial point; something that is very, very easy to do as long as you are able to put money in the right places and listen to some people here and there. Hell, you could even get a financial manager to do it for you at a point.

And it makes sense when the article says it is more determined by luck than skill, there's a lot of times that you need to be in the right place at the right time for your skill to be useful and profit off of it. It's not like there's an equal opportunity for the same skills or talents everywhere and people need to find ways to put themselves in the most beneficial situation.

[robbietobby]

With you post, I really love to come up with the idea of equational basis.

SMART + TALENTED = RICH
SMART + BEAUTY = RICH
INTELLEGENT + SMART + TALENTLESS = POOR
BEAUTY + TALENTLESS = RICH

What does I want to imply in that equation I created above is that all of us critique life. Although nowadays, talent is required in every circumstances of our life. I don't want to give attention to those beautiful people, but I can say is that life is made to strategize complex ideas into simpler one. We are all stuck in these conditions. But we must bear, absolutely.

[burner2014]

LOL that’s true. No matter how intelligent you are and no matter your level of education, for you to get rich, it will always be a thing of luck or chances. Being intelligent or going to school does not make you rich, you’re just intelligent and nothing else.

I know lots of my friends that spent years of study in school and got their degrees, but till now they are still borrowing money from their parents and are still looking for jobs. But I see some people who knows nothing, but they are very rich.

It is very rare to some of the people that has been intelligent in school but become successful, I do have lot of friends who have many awards in terms of academic school but in actual job they were defeated by a rich person who does not have even award. It is so sad to think that way, but that is the truth.

[gabbie2010]

I agreed with of the most opinions here getting rich is by chance, the rich men around world didn't attend ivy league schools to attain their financial status it is rather by chance they achieved their wealth, majority of them think beyond the horizon by finding solutions to what people lacks globally.
 Bill Gates discovered that we need OS Operating System in various laptops , PC, phones e.t.c he finds the solution by creating  or inventing Windows Operating System which was globally acquired in various computing manufacturing companies thus raking in millions of dollars having sold millions of the software.

[Smarty14392]

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.

The essence is not to totally rely on chance but at some point you just have to be very smart so that the chances that you get do not end up eluding you.

It is the way the world has been fashioned and why some have to work hugely for it, some may not even work much for it and still get a chance in life to become what they have always dreamt to become. I know it is not news, but the pizza boy and the 2000btc is a case study on chance.

[Cosbycoin]

Determination is highly needed when a person wants to become successful in life. If you are.determined to do what you want, then it is not impossible for you to become successful. If a person is not an intelligent  or a talented and have a determination to become one, then it is not impossible. Action speaks louder than words. Determination + Hardwork is equals to SUCCESS.

Determination, persistence and more attributed you can mention are all good, but sometimes, even with that, one little step you may take today that would not really require much effort can make you extremely wealthy for life. We do not even need to go far, let's say for instance you had the chance to just buy $50 worth of bitcoin early 2010 despite the intelligent ones giving reasons why you should not, I am sure you will be saying otherwise now.

[Hell-raiser]

It could be true on some instances, where luck pulls somebody to become rich. But not all really. Luck doesn't really give you millions, Your skills do. You might not be so intelligent to deal on things but you have at least a working brain to figure out the best option leading to fortune. Say you have luckily won from a gamble like lottery. Your luck just got a hold of you. The question is this now? Are you really going to be a millionaire your whole life? or just that day when you won the lottery? This question is answerable by both yes and or no. Yes, because when your capital will be used to put up a well planned business, you may be able to gain more. On the other hand failure, causes you to lose your money. So what is now needed to insure that you will gain from it?  You need your skill and brain. So I believe we need to have at least the luck or chance, the skill and brain. Merge the three and we will be rich in the future.

I don't see how this point challenges the main idea presented in OP. You get a lot of money by winning a lottery, and if you are able to remain sane after that, you can just buy some government bonds or simply open a deposit in a bank, and then live off the interest earned. It doesn't require either luck or brains above average. You only have to keep your common sense intact. In fact, many people who won a lottery went this path and they are quite happy with their life right now, enjoying it like pigs in clover.

[beej]

I think chance can play a major role in acquiring wealth in businesses. Its impact can completely
change the course of any aspiring entrepreneur or business. I also would like to add that sacrifice,
persistence, keen knowledge, analytical skills and initiative also contributes to certain success.
A lot can be said and expected with skills and chances when it comes to becoming rich, but hard
work still prevails. Chances and luck are ways smiliar to each other, I believe in the idea that
preparation is the vital key. Preparation meets opportunity gives out luck and chance.

[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.

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?

No, market utility is what induces people to spend money. Your explanation is superficial as it only looks at the surface level of what is happening (money changing hands) instead of looking at why money is changing hands (people find the product/service useful and agree to exchange their money for it). Money only represents wealth, market utility of products is what actually creates wealth. Money is just a representation of value that has been created, but market utility is what is what actually creates value.

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.

Let's assume this is 100% true as written. Luck played a part in that Mary Gates helped secure an early contract, but luck did not make Microsoft's products desired by IBM or the rest of the world. If the product was "shitty" as you say, IBM doesn't use it and the rest of the world doesn't desire it. Luck didn't make Microsoft's products useful and therefore demanded, intelligence of the builder and market utility of his product did.

[hermae]

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.

The essence is not to totally rely on chance but at some point you just have to be very smart so that the chances that you get do not end up eluding you.

It is the way the world has been fashioned and why some have to work hugely for it, some may not even work much for it and still get a chance in life to become what they have always dreamt to become. I know it is not news, but the pizza boy and the 2000btc is a case study on chance.

There are people who are lucky enough to be rich by chance, for example winning in a lottery. I know many intelligent people who still are not rich. But I dont think being rich is determined by chance or intelligence. I think to become rich is to work very hard for something that you want. In my country, the Philippines, the number one richest person was a very poor man. He was once a shoe shine person, then he makes shoes, and now he is the owner of the SM department stores that has a lot of branches all over the Philippines. So I dont think it is by chance that he become rich, it is through his great effort to achieve what he wants. Maybe it took him long time and many years before becoming rich, maybe he has been through ups and downs, he is maybe too patient and worked hard to achieve his status now. And I guess he has a lot of courage to take risks, and it is all worth it.

[BTCMILLIONAIRE]

Bullshit study with bullshit researcher that tries to project his own insecurities into his paper. Sure, people often get rich by chance. But if you want to become rich and specifically work towards that goal you will get there, period.

[Hell-raiser]

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?

No, market utility is what induces people to spend money. Your explanation is superficial as it only looks at the surface level of what is happening (money changing hands) instead of looking at why money is changing hands (people find the product/service useful and agree to exchange their money for it). Money only represents wealth, market utility of products is what actually creates wealth. Money is just a representation of value that has been created, but market utility is what is what actually creates value.

But that's the whole point that I was trying to get across! I specifically came up with this "superficial" example to show you that your "market utility" is actually of the same kind of superficiality. I could rephrase your own words and say that you are looking at only the effect instead of looking at the cause which made this utility possible in the first place. In today's world of relentless competition you should have a lot of luck to find something which would be worth marketing and could obtain that utility.

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.

Let's assume this is 100% true as written. Luck played a part in that Mary Gates helped secure an early contract, but luck did not make Microsoft's products desired by IBM or the rest of the world. If the product was "shitty" as you say, IBM doesn't use it and the rest of the world doesn't desire it. Luck didn't make Microsoft's products useful and therefore demanded, intelligence of the builder and market utility of his product did.

You obviously fail to see my point. You don't see the forest for the trees. Microsoft's products were not shitty, they were so-so at best (in fact they quite were). There were more than enough competing products likely much better than Microsoft's but their developers didn't have their mothers on friendly terms with CEO's of biggest corporations. This is where luck comes to matter a lot, actually enough to make all the difference.

[DrYe5]

Bullshit study with bullshit researcher that tries to project his own insecurities into his paper. Sure, people often get rich by chance. But if you want to become rich and specifically work towards that goal you will get there, period.

The maximum success never coincides with the maximum talent, and vice-versa. But the wealthiest individuals are not the most talented although they must have a certain level of talent

[Betwrong]

LOL that’s true. No matter how intelligent you are and no matter your level of education, for you to get rich, it will always be a thing of luck or chances. Being intelligent or going to school does not make you rich, you’re just intelligent and nothing else.

I know lots of my friends that spent years of study in school and got their degrees, but till now they are still borrowing money from their parents and are still looking for jobs. But I see some people who knows nothing, but they are very rich.

That's what I can observe too. As I was pointed out in my previous replies those rich people are from rich families mostly and thus they don't need neither talent nor luck to become rich.

However, it doesn't mean we should stop trying. We have to learn as much as possible and work as hard as we can and then with some luck we can become rich (in a good sense of the word).

[Zeque02]

Intelligent people are not willing to take risks and not willing to try risks!

The risk of what? Being rich? Everybody wants to be rich.

The rich see the benefits behind the risks, and are willing to make bold attempts! Seize the opportunity!

An attempt to what?

A lot of wise people work under the rich!

Yes, they are wise but not intelligent enough to make themselves rich. Thats the different between a wise person and an intelligent person.

Yes one reason to be rich is having an opportunity to do such thing. Its not base on intelligence of a person to be rich,there are different ways to earn money, but as what I observed to those in a high position they are not totally rich. That's why I conclude that being rich is totally a chance so if it comes, grab it.

[aencarnaci]

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.

That’s true. As you can see, most graduates are depending on the government to provide them with jobs, but the government is not always able to provide jobs for all of them. Only a few are lucky to get jobs. You might be the most intelligent in your class, but that doesn’t mean you will be rich. You might end up as an intelligent-poor-dude. So it’s all about chances or should I say all about lucks.

[jakoylantern]

For me, yes that is right if you have a bright idea that you know it will be popular and click on many people why not. Many famous and wealthy person become billionaire even they stop studying or drop out students, like Steve Jobs, Bill Gates, Mark Zuckerberg and many more. Yes, they are intelligent and talented, but they are much determined to fulfill their invention rather than finishing college. But it not means that we most all drop out in college, it means that if you have an excellent idea be determined to accomplish it.