Are the world's richest people just the luckiest?
TLDR: Study suggests that the richest people in the world are just the luckiest. This is confirmed via the pareto principle - in both life and the simulations completed by the researches, 20% of the population controlled 80% of the wealth and vice versa. In the study, this held true across all simulations, regardless of the level of talent (defined as skill, intelligence, ability, etc.) of the richest individuals. The study also explicitly states that the richest individuals were just as "average" talent-wise as everyone else, regardless of their level of wealth.
Came across this fairly short article and thought I'd post it here to see what everyone thinks.
https://www.technologyreview.com/2018/03/01/14495…
Yes I agree. However it should be noted that luck is a skill that can be optimized for
I think about this frequently when I watch Shark Tank.
Just because business people did well once in their career (and this includes hedge fund managers having one or two great years), other people (and frequently the rich people, themselves) think they know everything about everything. Take Mr. Wonderful (who I actually like): guy sold his educational business to Mattel or one of those companies for 3 bil... 5 or 10 years later, that buyer sold it for something like 90% loss. Now you can look at that a couple ways: Mr. Wonderful was so smart that he made this company worth 3 bil, or that his company wasn't really that great and the buyer was just kind of stupid. Also regarding Mr. Wonderful, I was watching CNBC last summer or fall when banks were in the shitter, and one panelist said they were buying banks stocks - and I'm virtually certain Mr. Wonderful said something to the effect of "Bank stocks suck, they're dead to me, I wouldn't touch them with a 10 foot pole." And of course now, they're all up 50-100% since then it less than one year's time.
So yeah, some people are super rich obviously because they're super smart and work super hard. But I'd say a good deal of them, if not most, just made one right call/got lucky and are riding that one fortuitous/lucky call all the way to the bank.
Haven’t read the article yet but yes luck has a lot to do with it. Nothing about business is intellectually hard - once you hit a certain level of intelligence plenty of people have the ability to be CEO of a F500 that are stuck somewhere in the middle.
I think it mostly depends on "the availability of the good environment for the success". Just think why most well-known researchers are from the developed countries but not from the poor countries? I pretty much can say that at least in poor countries there are as many as talented people just as in the developed world. However, in poor countries there is no "infrastructure for the success". Take for example the national football team of France in which most players have African roots. If they were stuck in Africa for all their lives no one would know anything about them. Take people like Elon Musk. If he was was born in poor African country, and couldn't move from there, nobody would know him. So, where you were born plays an important role. Secondly, your socio-economic background plays a role. Imagine that despite being born in developed country, you grew up in very poor family. And imagine that you have a super talent in art. However, because you cannot "afford to go after your passions" you don't develop your natural talents and they just fade away. Also, affording good education, connections all of that play their own respective role too.
But also we should mention that there are people who could escape from those situations with the help of their hard-work, luck, intelligence, and dedication. But those are few, like 1 out of every 1000.
Just look at history books. Most of the famous people there were possessing good backgrounds. However, some could achieve a lot without a good background.
Nassim Taleb: In the Investment Biz, Luck Trumps Skill
https://business.time.com/2012/08/17/nassim-taleb-in-the-investment-biz…
Taleb is a fucking G
I think life is like a big poker game. There will always be a singular winner for the person with the most money. Many people are trying to get there and the skilled players usually make a respectable income, but many are just plain lucky in advancing. They were at the right place with the right idea at the right time and executed.
Agree. The problem with life is that there aren’t enough hands.
In poker you have enough trials if you play enough hands that the averages tend to work out and the better players will usually end out on top. Even if they only win 5% more often than they would if the hands were all decided randomly, it adds up over time.
In life, a lot of things only happen once, or maybe twice. College admissions, recruiting cycle, getting a bad professor, getting a bad boss, making a big investment bet, a market crash, a well timed bubble, joining a startup that fails, joining a startup that becomes a unicorn, marrying the right/wrong person, starting a company, etc. Most of these things happen 1-3 times ever, so even if a skilled person would have a positive outcome 10% more often than random chance, it very often won’t work out since that’s still only a 60% chance if the event is equally likely to have either outcome. And for the events with worse odds (starting a startup that becomes a unicorn might be a 0.01% chance) then being even 10 times more likely to succeed still makes your chances minuscule. Even the most skilled person almost surely won’t succeed, and the guy who was only 2 times more likely than average but got lucky will think he never possibly could have failed.
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