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Mathematics confirms rich people aren't smart—they're lucky
It all boils down to the power law, also known as the 80:20 rule.
It’s part of the American ethos, hard work pays off. We believe we live in a meritocracy, where anyone with the gumption, grit, and determination can make it, no matter what obstacles lie in their way. But with income inequality at an all-time high in the US and most other developed countries, people are starting to question whether or not meritocracy exists at all. A 2015 Harvard Institute of Politics poll found that 48% of millennials believe the American dream is dead. A growing number of them are even feeling sunnier about socialism, which is indeed is a specter among the more conservative-minded. That doesn’t mean a belief in unfettered, free market capitalism is completely dead, yet.
Some evangelical ministers today continue to preach the prosperity gospel. This is a uniquely American concept which states that those who are wealthy have been predestined to be “saved” by the creator. The idea stems all the way back to the Puritans. According to them, the way you could tell who was saved from the fiery pit was “outward signs of inner grace.” Being good-looking, effective, or prosperous meant you were going to heaven. But the Great Recession and its aftermath have damaged the concept of meritocracy and the prosperity gospel among the vast majority of young adults.
So what about those who are wealthy today? Did they really earn their place through the sweat of their brow, the cut of their jib, the brains in their head, and their unwavering determination? The answer is a definitive no. Rather than being gifted or special, the greatest determinant in acquiring vast wealth is merely being fortunate, according to a new analysis.
Three Italian scholars out of the University of Catania, using a computer model, wanted to find out if those who are rich got that way through talent or luck. Two were physicists, Alessandro Pluchino and Andrea Rapisarda, and the third was an economist, A. E. Biondo. Their first task was to take a computer model and fill it with aspects surrounding human talent. Then after feeding these into the machine, they showed it the ways in which people use those talents to advance themselves. Talent was defined as having intelligence, skills, a mindset for risk-taking, and so on.
Then researchers imbued a number of fictitious candidates with such talents, along the standard level of deviation, a bell curve. Most people have an average level of talent, as you might expect. Then each individual’s progress was charted over a (simulated) 40-year career, to see what determined where they ended up, income-wise. The trajectory wasn’t straightforward. Besides allowing for a bump up due to luck, researchers added unlucky aspects, which might sink one’s career.
After the 40-year period, researchers set about determining who were the most successful and what led them to become so. They ran the experiment through the computer several times, to double-check outcomes. Yet, the results could’ve been easily predicted. The computer spit out what’s known as the power law, or the 80:20 rule. A famous concept in economics, the power law says no matter what economy you look at, almost everywhere, 20% of the people own 80% of the wealth. What's more, luck was the single greatest determinant in wealth acquisition.
According to the authors of the study, “The largely dominant meritocratic paradigm of highly competitive Western cultures, is rooted in the belief that success is due mainly, if not exclusively, to personal qualities such as talent, intelligence, skills, smartness, efforts, willfulness, hard work or risk-taking.” While the authors admit that we do portend some of a person’s success to luck, more often than not, we downplay the role external forces play, though they may be the most significant.
Meanwhile, we play up the contribution talent has. Researchers found that the vast majority of the top 20% aren’t the most talented. Rather, they’re exceedingly average. “Maximum success never coincides with the maximum talent, and vice-versa,” researchers wrote. The funny thing is, many in the know aren’t the least surprised. Important works on business have stated as much, such as the seminal Life and Death on the Corporate Battlefield: How Companies Win, Lose, and Survive, and last year’s Success and Luck: Good Fortune and the Myth of Meritocracy.
Even so, there’s a difference between anecdotal evidence from observing the business arena, and a computer model spitting out cold, hard facts. Income inequality is a growing problem in the US and most developed countries in the world. Today, the top 8 billionaires own more wealth than the bottom 3 some-odd billion people in the world. This study will likely be obfuscated by those who wish to maintain their wealth, status, and power. Yet, one wonders when the breaking point will come and how best to implement a more equitable division of resources among our species.
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Construction of the $500 billion dollar tech city-state of the future is moving ahead.
- The futuristic megacity Neom is being built in Saudi Arabia.
- The city will be fully automated, leading in health, education and quality of life.
- It will feature an artificial moon, cloud seeding, robotic gladiators and flying taxis.
The Red Sea area where Neom will be built:
Saudi Arabia Plans Futuristic City, "Neom" (Full Promotional Video)<span style="display:block;position:relative;padding-top:56.25%;" class="rm-shortcode" data-rm-shortcode-id="c646d528d230c1bf66c75422bc4ccf6f"><iframe type="lazy-iframe" data-runner-src="https://www.youtube.com/embed/N53DzL3_BHA?rel=0" width="100%" height="auto" frameborder="0" scrolling="no" style="position:absolute;top:0;left:0;width:100%;height:100%;"></iframe></span>
Frequent shopping for single items adds to our carbon footprint.
- A new study shows e-commerce sites like Amazon leave larger greenhouse gas footprints than retail stores.
- Ordering online from retail stores has an even smaller footprint than going to the store yourself.
- Greening efforts by major e-commerce sites won't curb wasteful consumer habits. Consolidating online orders can make a difference.
A pile of recycled cardboard sits on the ground at Recology's Recycle Central on January 4, 2018 in San Francisco, California.
Photo by Justin Sullivan/Getty Images<p>A large part of the reason is speed. In a competitive market, pure players use the equation, <em>speed + convenience</em>, to drive adoption. This is especially relevant to the "last mile" GHG footprint: the distance between the distribution center and the consumer.</p><p>Interestingly, the smallest GHG footprint occurs when you order directly from a physical store—even smaller than going there yourself. Pure players, such as Amazon, are the greatest offenders. Variables like geographic location matter; the team looked at shopping in the UK, the US, China, and the Netherlands. </p><p>Sadegh Shahmohammadi, a PhD student at the Netherlands' Radboud University and corresponding author of the paper, <a href="https://www.cnn.com/2020/02/26/tech/greenhouse-gas-emissions-retail/index.html" target="_blank">says</a> the above "pattern holds true in countries where people mostly drive. It really depends on the country and consumer behavior there."</p><p>The researchers write that this year-and-a-half long study pushes back on previous research that claims online shopping to be better in terms of GHG footprints.</p><p style="margin-left: 20px;">"They have, however, compared the GHG emissions per shopping event and did not consider the link between the retail channels and the basket size, which leads to a different conclusion than that of the current study."</p><p>Online retail is where convenience trumps environment: people tend to order one item at a time when shopping on pure player sites, whereas they stock up on multiple items when visiting a store. Consumers will sometimes order a number of separate items over the course of a week rather than making one trip to purchase everything they need. </p><p>While greening efforts by online retailers are important, until a shift in consumer attitude changes, the current carbon footprint will be a hard obstacle to overcome. Amazon is trying to have it both ways—carbon-free and convenience addicted—and the math isn't adding up. If you need to order things, do it online, but try to consolidate your purchases as much as possible.</p><p>--</p><p><em>Stay in touch with Derek on <a href="http://www.twitter.com/derekberes" target="_blank">Twitter</a>, <a href="https://www.facebook.com/DerekBeresdotcom" target="_blank">Facebook</a> and <a href="https://derekberes.substack.com/" target="_blank">Substack</a>. His next book is</em> "<em>Hero's Dose: The Case For Psychedelics in Ritual and Therapy."</em></p>
Chronic irregular sleep in children was associated with psychotic experiences in adolescence, according to a recent study out of the University of Birmingham's School of Psychology.