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Are you well off financially? Rich? Well, it's only because you won life's lottery, or so says the 'statistics' published in MIT review by a bunch of Italian researchers. Life is no different than pulling the slot machine handle in Vegas according to the brilliant research they've conducted. What these eggheads don't realize is that luck is when opportunity and preparedness meet! Trying to predict outcomes based on normal and log distributions is one thing. Sitting on your lazy arse is another. It will guarantee you a certain outcome - but it certainly won't be wealth. Kinda reminds me of Obama's infamous "you didn't build that" con foisted upon us in order to make sure you're a 'fairsharer'.

Quote
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 in 2017 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?

We finally 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 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?


https://getpocket.com/explore/item/if-you-re-so-smart-why-aren-t-you-rich-turns-out-it-s-just-chance


Yours in Liberty,

BL
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Originally Posted by Ben_Lurkin
Are you well off financially? Rich? Well, it's only because you won life's lottery, or so says the 'statistics' published in MIT review by a bunch of Italian researchers. Life is no different than pulling the slot machine handle in Vegas according to the brilliant research they've conducted. What these eggheads don't realize is that luck is when opportunity and preparedness meet! Trying to predict outcomes based on normal and log distributions is one thing. Sitting on your lazy arse is another. It will guarantee you a certain outcome - but it certainly won't be wealth. Kinda reminds me of Obama's infamous "you didn't build that" con foisted upon us in order to make sure you're a 'fairsharer'.

Quote
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 in 2017 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?

We finally 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 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?


https://getpocket.com/explore/item/if-you-re-so-smart-why-aren-t-you-rich-turns-out-it-s-just-chance

They’re probably right as far as the very wealthiest people not necessarily being the highest IQ but having some level of talent and then getting lucky. Bill Gates for example is obviously bright be it fugged up but he’s not a rocket scientist. Same for Phil Knight and most of them but so what.

What they get wrong is that America for all of its problems is still a country that someone with a roughly average IQ that is willing to work hard and make good choices will usually do reasonably well for themselves and enjoy a lifestyle unimaginable in a lot of the world or over human history. A few will hit the lottery equivalent and get rich way beyond their IQ… Sean Hannity, Obama, AOC, Biden.

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They’re probably right as far as the very wealthiest people not necessarily being the highest IQ but having some level of talent and then getting lucky. Bill Gates for example is obviously bright be it fugged up but he’s not a rocket scientist. Same for Phil Knight and most of them but so what.

What they get wrong is that America for all of its problems is still a country that someone with a roughly average IQ that is willing to work hard and make good choices will usually do well for themselves. A few will hit the lottery equivalent and get rich way beyond their IQ… Sean Hannity, Obama, AOC, Biden.


Wealth and IQ have never correlated well. The reason is what people think IQ measures and what it actually measures aren't the same thing. Working in engineering, I know a lot of high IQ people. That doesn't translate into aptitude or common sense in many cases. It also doesn't correlate with how big a risk taker or how risk averse a person is. In fact, some of the most risk averse folks I know are engineers.

You are completely correct about hard work bringing success. A friend of mine hired five people last year. Three were great candidates and knowledgeable, but lazy. They were all eventually fired. Two were so-so candidates but worked their butts off and learned. They're both still working there, one of which he promoted recently. Funny they didn't bother studying that.


Yours in Liberty,

BL
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I have beer and food in the fridge, a lifetime of ammo and a few bucks in my pocket. That is rich enough for me.


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Lots more to wealth than an IQ curve. Typical rubbish from a university.

Drive, work ethic, caffeine intake, ability to get along, managerial skills, etc., etc., etc. all contribute.

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Any conclusions drawn by an Italian regarding hard work, drive, and ambition should be disregarded immediately.

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Damn Auk1124 you went and did it now. No more real Italian pizza for you boy.LOL Edk

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Years ago, I read of an interview once conducted by a reporter who was interviewing Mark Twain, (aka Samuel Clemens.) During the interview, the man said, "Mr. Clemens, you have certainly been lucky in life, haven't you?"

Clemens looked at him and said, "I have always found that the harder I work, the luckier I get."

I saw almost nothing in that Italian study addressing "hard work."

L.W.


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Originally Posted by Leanwolf
Years ago, I read of an interview once conducted by a reporter who was interviewing Mark Twain, (aka Samuel Clemens.) During the interview, the man said, "Mr. Clemens, you have certainly been lucky in life, haven't you?"

Clemens looked at him and said, "I have always found that the harder I work, the luckier I get."

I saw almost nothing in that Italian study addressing "hard work."

L.W.

I discovered the same thing as Mr. Clemens.

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Originally Posted by TimberRunner
Lots more to wealth than an IQ curve. Typical rubbish from a university.

Drive, work ethic, caffeine intake, ability to get along, managerial skills, etc., etc., etc. all contribute.


This holds true for pretty much any field of endeavor. If you want to get to the top in anything whether it's getting rich, athletics or writing code you need all of those plus some level of natural ability.

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Originally Posted by auk1124
Any conclusions drawn by an Italian regarding hard work, drive, and ambition should be disregarded immediately.

EXACTLY RIGHT.
I was lucky because I worked my ass off for 45+ years, made good decisions and didn't waste money. I'll bet there are quite a few on this forum that did the same.


"Guard with jealous attention the public liberty. Suspect everyone who approaches that jewel. Unfortunately, nothing will preserve it but downright force. Whenever you give up that force, you are inevitably ruined.”

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I've told my kids since they were little, you wanna be successful, you just need to out work those around you.

In a time like now, if you show up to work and are competent, you'll be promoted.

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What about this, being willing to do what’s necessary?

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Didn't grow up in a "well to do" family, in fact as a teen was homeless for a while, I took Advantage of every opportunity that fell in my lap, worked hard for it and made the best of it, my adult kids all have morals that I agree with and I have a nice little spread that I am proud of. I'm not wealthy but I would call myself RICH.


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To me hard works sometimes equates to desire. The few well off people I know, have some talent, work hard, have tons of desire, and get some breaks, or have some lucky breaks.

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They seem to be drawing an equivalence between an hour of Elon Musk's work or Warren Buffet, and an hour of, for instance, a welder, when we all know those are not comparable.

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Rich has little to nothing to do with money. Some of the best times our family had were when the kids were teenagers during the 2008 downturn. My wife and I combined made less than 20k one year, and not much better for a few years. During that time, we lived in a freshly remodeled home that was the nicest on our road, were warm enough in the winter to open windows when it was snowing, ate better than one could eat from a supermarket, and had a lot of fun as a family. We raised chickens, hogs, German Shepherds, and lots of fruit and vegetables. The pantry was full of all manner of canned meats, vegetables, jellies, and more, The freezers were full of pork, chicken and deer, even beef after I got half a cow for helping butcher it. We hunted, fished, smoked our own bacon, made our own sausage, had neighbors and friends over, went swimming, hiking and biking, and cut wood for heat together.

Kids still comment from time to time that they never had any idea how little money we had. It was constant work, to be sure, but no drudgery. All of us still think of those years as some of the best times of our lives. My wife and I are getting back to that life now, even though we make far more money than we did back then. It’s what we love. No matter how much money we have or don’t have, we feel rich looking around at all the food we grow, the wood we can cut, the fields and ponds that feed what feeds us. We have more land, better neighbors, and tools like a tractor and wood splitter that make things easier, but those “hard times” will always be pleasant memories for all of us. Money is not riches. Money is simply a medium of exchange for a person’s productivity. Riches are the parts of life that make you smile decades later, that make you proud or happy on your deathbed. A man who dies miserable and lonely with millions is a pauper compared to the man who dies in a home he built on land his family owns, with his successful and loving family around him.

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when I was 18 I was homeless, my parents sold the house out from under me and moved to the US Embassy compound housing in Nairobi.

I lived in mrs slumlord’s bedroom and we got married. Then moved upstairs into their attic like Anne Frank

I had 2 jobs, she had 2 jobs, we had a side hustle killing roaches in ghetto apt buildings and restaurants. I took on an additional side hustle working for real estate companies doing rental maintenance, repairs, chit work small jobs. She got a real estate affiliate broker license at 21, we bought our first rental house at age 20. We were also both going to the state university at night. Weren’t no online classes then.

Oh also, we started building our own house with physical help from her uncles, paid cash as we went, built in two years in ‘spare free time’ at age 22

You can actually work 18-20 hours a day when youre young. Easily.

I have zero sympathy for younger people today whining about society not treating them fairly.

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And another thing. Our asses were in church on Sunday’s too.


Not laid up sucking on french toast and watching a fuggin Lee Marvin marathon.

People squander time and when they are 60 ain’t got a pot to piss in.

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I have a neighbor who probably ins’t the sharpest knife in the drawer, but he’s a very hard worker. In the 20 years I’ve known him, he’s went from broke to very successful, just from hard work and good decisions. We’re I looking for an employee, I’d take him any day over a guy with an education or a high IQ test score.

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