Cause (in case I’m smart enough at all) I have no courage to risk and implement a working thing by myself, while seeing others just do something much easier/simpler than any of my ideas and get their share. You don’t get anything by not trying, trust me on that.
Average IQ is 100, but nobody has an IQ of 1,000 or 10,000
Do iq tests even work this way? I think there is not enough points to add up to 1000 or at least 200.
Edit: And even then, this iq thing is irrelevant to your whole life, because our minds are mostly sleeping, being carried around by waves of automatic thoughts, whose iq is minimal.
No that's not how it works. 15 IQ pts is 1 standard deviation. So a 115 is 83rd percentile, 130 is 97.5 percentile, and 145 is 99.85 percentile. 1000 would be 60 standard deviations, so there aren't even enough humans on earth to establish what that is.
They work following a standard deviation so 99% of the population have an IQ lower than 135, 99.6% lower than 140, etc. So maybe, among the billions of people who ever lived on the planet or will live in the future, someone will have an IQ of 200.
Anyway, IQ is just a tiny aspect of intelligence, which is a loosely defined term.
No they do not. I think the author was making a point that peoples' IQ can not differ by 2 or 3 levels of magnitude but their wealth can and often does differ by 3-9 levels of magnitude.
> Cause (in case I’m smart enough at all) I have no courage to risk and implement a working thing by myself
The risk of the same action (e.g. spending a year on getting a startup to work out) differs based on your background, too.
Let's say you make minimum wage. That reduces the amount of money you can invest in your startup, lowering the chances of success while also shortening the runway. The risk here is might even be homelessness.
If you are backed by a reasonably wealthy family, you can invest more and your runway is longer, making it more likely to succeed (or at least fail not that hard). The risk here is having "wasted" one year of your life.
This doesn't even take into account other factors like family/friend connections.
Of course there are always counter examples to this, I'm just talking about probabilities.
Good point. I’ve come up with a similar strategy: no wealth, but have a handful of life-years in savings before starting something. If it doesn’t work out in a year, there is still a good safety net and time to re-evaluate. Heh, it must be much easier to reason about when you have backup just by default.
My anecdotal observations are closer to; successful people aren't critical thinkers enough to argue themselves out of ideas and they just do stuff naively and customers can only buy products that exist, not hypothetical better products.
If society is a lottery, then the smart move will leave you sliggtly better off than the gamvlers, but not as rich as the guy who takes the gamblers losses.
Whether this fits, depends on how many businessmen ruined themselves with a stupid idea for every success.
Of course, if you win the lottery and then they let you pay to change the rules, its more of an aristocracy.
I’ve never understood why people find the force of chance so difficult to accept.
I am lucky I am a white man born in the UK in 1969. So much of what I am is due just to that fact, irrespective of whether I am smart or not, hard working or not.
Fascinating, but I'm not sure about the assumptions. This model mainly doesn't account for risk in the calculation.
The company owner might only work twice as much as the 9-5 salaryman. But he increases the value of his equity, while the salaryman just draws a monthly salary.
Eventually that equity is valued at millions by investors, and that is how the company owner becomes rich. Or it could be valued at zero.
Meanwhile, the salaryman is not even exposed to any of these extremes because he never took the risk.
This reminds me a bit of Larry Niven's idea of breeding for psychic luck in his Known Space stories, in which Birthright lotteries are held which gave the winners the chance to have children.
So, if wealth is indeed due to luck, one could make the whimsical case for luck being heritable.
And indeed, it seems that the world's wealthiest tend to have more children, on average, according to this article:
It's possible that success isn't determined by something that's normally distributed like intelligence or hours worked. Say the key factor is what they call "grit" or determination. If this occurs according to a power law instead of a normal distribution, you could have a situation where the average person has a score of 0.1 and an all time determined person has a score of 1, or 10 or 100.
We can see easily that no human has an IQ of 10x the average. But determination to accomplish a goal is difficult to measure, empirically or subjectively. I can't really say that super rich person X didn't just want it 10x or 100x more than everyone else.
It's interesting that the authors were able to come up with a simulation that roughly matched real world wealth distribution. But there are a large number of potential factors that they did not and could not account for in a model. I fully agree with the idea that all great wealth comes from luck and chance in some form or another. This article is definitely stating what I believe to be true. But I don't know if they really proved anything.
> We can see easily that no human has an IQ of 10x the average.
IQ is by definition normally distributed. If you define wealth the same way as you define IQ (basically as position in normal distribution), not even Jeff Bezos will have 10x "wealth IQ". He is richer than ~99.9999999857% of people, but he will score in such test test around ~6.3 standard deviations, as you can verify through https://keisan.casio.com/exec/system/1180573188 That would correspond to score 250 IQ (Cattel scale).
And about cognitive abilities in general - yeah, some people exhibit 10x times bigger working memory (roughly corresponding to RAM) than average.
Not every kind of "smartness" is rewarded on the job market or on the market in general. As a hired employee, I am 5x wealthier than a couple of my peers who enjoy solving a Rubik cube in 20 moves, or excel in IQ tests. It takes a bit of social aptitude and common sense to approach the right social circles, to present yourself in a likable manner, to reason in abstract terms.
You don't even need to go as esoteric as "good rubik cube solver". My first job was at a physics laboratory as a research assistance. At least some of the people holding physics PhDs from elite institutions (the one I worked in is internationally renowned and a source of many nobel prize winners) are definitely "smarter" (for some definitions thereof) than a lot of people working at FAANG companies earning multiples of their salaries.
According to the model, those qualities only prevent you from being eliminated from the race. Winning it still requires a repeated stream of good luck events.
"Oh, this is an easy one. When people say a child is talented they mean he or she is a good learner. But a talented adult is a good do-er. High potential people who fail to make an impact are stuck in child-mode, because that is what they were always praised for." -- goatinaboat @ HN
Because most rich people are born into wealth and all its advantages. "Luck" indeed. I think something like significantly more than half of 1%ers were born into 1%er families.
Another is height. There's a very strong correlation between height and lifetime earnings; tall people are seen as better leaders, trusted more, and frankly, more physically intimidating. Tall men are much more desirable to partners.
Getting back to wealth...let's run down just some of the advantages.
Having parents with the free time to do things like read to you as a baby. Babies start figuring out language pretty much the second they're out of the womb. Their little brains are working out the rhythm of the language in order to figure out where the word separation is, so they can learn words.
Childcare (and childcare that likely isn't religiously affiliated.)
Going into Pre-K. Again, likely not religiously affiliated. You're learning useful stuff, versus being brainwashed.
Better chance of living in a good school system, or even if you don't - your parents recognizing you're in a shitty school system and getting you outside tutoring, being involved in your education (helping with homework, going to parent-teacher conferences, etc.)
Having regular doctor's visits, dental care, vision, etc.
Having enough to eat, and probably good quality food as well. A shocking number of kids in the US go to school hungry. And we charge kids to eat in school - somewhere they are required to be. It's bananas.
Better access to exam prep/tutoring/ability to participate in enriching afterschool activities
Likely less stress in the home. Sure, rich families have their own dysfunctions. But likely nobody's worried about paying the grocery bill that week, you're clothed, etc.
Able to work internships that are of academic value as opposed to a job that makes money because you / your family need the money. Parents are likely well connected and able to leverage their network to help you get an internship of value.
Better access to nicer colleges both financially and due to access to things like exam preparation/tutoring, and the aforementioned good-looking internships.
Let's also not forget that college applications cost a considerable amount of money, which is a scam and a half. You can literally buy your way into a nicer school by applying to more schools than the kid whose parents can only afford to apply to one or two.
You're more likely to get help with purchasing a home, so you don't flush a ton of money down the drain renting - which means you can be pumping money into investments, both retirement and otherwise. Or pursuing an advanced degree, and the income bump that comes with it. Maybe even both. Early investing in retirement pays huge dividends later. This also means late in life you're not scrambling to stuff every dollar you can into retirement savings so you're not eating rice and beans when you're too old to have any sort of luck finding a job in tech...which means mid life is a lot more pleasant.
>Another is height. There's a very strong correlation between height and lifetime earnings; tall people are seen as better leaders, trusted more, and frankly, more physically intimidating.
Napoleon Bonaparte, Benito Mussolini, Alexander The Great, Joseph Stalin, Hirohito, Silvio Berlusconi, Nicolas Sarkozy, Vladimir Lenin, Francisco Franco, Amenhotep I, James Madison, Mahatma Gandhi, Nikita Khrushchev, Kim Jong-il, Yasser Arafat, Mahmoud Ahmadinejad, David Ben-Gurion, Deng Xiaoping, Benito Juárez would all like to have a word with you. :)
Are most smart people even trying to optimise for net worth?
I worked with a lot of very intelligent people at my last job, and it just wasn't a priority for so many of the people there (company owners included).
"The winners of the 2021 Nobel Prizes will receive a gold medal and 10 million Swedish kronor ($1.14 million). The prize money comes from an endowment left behind by the prize’s creator, Swedish inventor Alfred Nobel, who died in 1895."
Earning $1.14 million for a whole life's work is peanuts when you compare it to bay area salaries where someone working for FANG can earn that much in half a year or less just by writing microservices.
So, no, Nobel prize winners are not necessarily rich when you compare them with lawyers, doctors, and software engineers of California.
Compared to most people in academia they are stinking-rich !
"whole life's work"
Yea sorry they don't always "win" it at the END of their careers !
"compare it to bay area salaries where someone working for FANG can earn that much in half a year or less just by writing microservices."
Guess you can say that about many careers just depends which you industry you compare it to ! Gardening,R&B Popstar,Maid,Teacher,Hollywood Actor,Tutor.
This isn't much money in the USA. The rule of thumb is to save 10 times your income if you want to retire by age 67. Given that an academic is at perhaps $100K salary a year, that would mean it would not even be enough to cover retirement since after taxes it would probably be less than $700K. In many parts to the USA, e.g., parts of California, that's not even enough to buy a modest home. It depends on where you live to assume that's enough to be considered even close to rich. About 10% of Americans have a net worth of over $1M.
10% @ 1mil sounds extremely high being that the median income is 31,133 USD(2019). Not sure I buy it, especially since the article claims this excludes home equity.
Most smart people do not care about becoming rich. Some of them do. But most of them do not. Most smart people I have met care about honing their skills and becoming better at what they do which is exactly what led them to being smart in the first place. Moreover not all kinds of smartness translate to more $$. The market rewards only certain kinds of smartness (computer skills, law skills, medical skills, etc.)
It does seem likely that most smart people aren't optimising for wealth. I know a lot of smart people who spend their entire income, and it is just difficult for someone to be wealthy and spend all their income at the same time. Wealth requires surplus.
But even for smart people trying to optimise their wealth - it isn't at all clear that smartness is something to be rewarded. A reasonably competent, hardworking small business owner can be quite wealthy. I would expect them to be of above average intelligence. But I've basically never paid someone because they are intelligent, so it isn't obvious why the market would save the best reward for them.
If I was hiring a tutor I wouldn't necessarily hire the most intelligent person I know. There are a lot of factors to consider.
I agree with this, but as I get older I realise what a mistake it was to be this way. Wealth is an enabler that helps us meet our goals, however high minded, and give us the freedom to do things the way we want. It gives us the ability to make our own mistakes instead of implementing others’.
Those who know this and are able to optimise for it will have a sustainable advantage over everyone else, creating a virtuous cycle.
I'm in my mid-to-late 20's and quit my job in early 2020 (just before COVID!) to start my own business.
I've landed on my feet completely - making about as much per quarter selling used video games[1] as I was per year as a software engineer, with a feasible and straightforward plan to double that before the end of 2022.
However, seeing the the numbers going the way they are, I've started to wonder if I'm perhaps optimising too much in this direction at the cost of other aspects of my life.
I'm not arguing that the pursuit of wealth is a waste of time or anything like that, but for someone who doesn't quite have Elon Musk-tier ambitions the cost-benefit analysis starts to weigh less favourably towards money the easier it gets to acquire.
[1] For what it's worth, if you are smart, have strong technical skills and want to make money, I personally advise against starting a business that is "high tech" or "cool". Gaining domain expertise in a low-tech but scaleable area, then optimising it into the stratosphere is relatively low-risk and potentially ridiculously high-reward.
Everyone around me in academic neuroscience seems pretty smart and is most certainly not optimizing for net worth. I'm guessing many in tech don't interact with that type of individual often, though many exceptions undoubtedly exist.
> 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.
I believe luck is a bigger part of life than we'd like to admit to ourselves. However, saying talent doesn't play a role in success (especially in science) seems plain wrong.
Wealth follows a power law because there is a positive feedback loop. Having some wealth makes it easier to get more wealth. So, if you're smart/lucky enough to get a bit of wealth, you can continue to use whatever smarts you have to get more.
The article seems to imply that since other human traits follow normal distributions, then wealth distribution should also be normal if it's determined by human traits. But that doesn't follow because it ignores feedback. Being a little tall doesn't help you get more tall. Most human traits don't reinforce themselves the way wealth does. A smart person with a million dollars can make money a lot more easily than a smart person with zero dollars. A smart person with a billion dollars can do even more.
It's easier to make money if you have money, but it's not impossible to make money if you don't. A flash of genius and/or stroke of luck can still take you from no money to some money, and if you continue applying skill and have reasonable luck (and take steps to mitigate bad luck) then it will only get easier to make more money. Then you'll also be able to set up your kids to start in a luckier position.
It's a compelling origin story though. Past financial hardship can be spun as rags quite easily, so we hear the story a lot more than it "really" happens.
But if you look at the distribution where some people have 1,000x the median wealth it’s usually not because they slowly built it up over time but rather had 1 or maybe 2 massive exits.
I would say wealth follows a normal distribution if you’re looking at number of people at each level. Very few people have <$0 over their lifetime and a same small number have >$25M over their lifetime.
But the outliers are so extreme at the top end you end up with the power distribution of wealth.
> Most wealth in the world is inherited and grows over generations.
According to "Inheritances and the Distribution of Wealth Or Whatever Happened to the Great Inheritance Boom?":
> Of the total wealth of the population, Kessler and Masson estimated that 35 percent originated from inheritances or gifts. Among those who had reported receiving an intergenerational transfer (who were about two and a half times richer than the average household), the corresponding proportion was 40 percent.
This proportion will probably drop if we exclude land.
Sounds about right. Add compounding stock gains on the inherited wealth, rent and growing land prices, and you'll have more than half.
> This proportion will probably drop if we exclude land.
Sure and if we exclude stocks it will drop further, but there's no reason to exclude land, the single most important form of property, from the calculation.
It can skew results, because poor (by income) people can own some wealth in land, because they don't want to sell it for legal or sentimental reasons. My own grandmother keeps some wasteland, because she believes that someday her children (medical professionals) will farm it.
Let me guess, they inherited small 40m fortunes, and the thirtyfold total return of the stock+property market since the eighties made them billionaires?
> Wealth follows a power law because there is a positive feedback loop.
You even get a power law if you have a game where everybody gives 1 dollar to a random person (if possible). If you play that game for enough steps, then the wealth distribution becomes exponential.
If you are so smart why don’t you have more free time to live your life? Is mostly the challenge I see to people in my circle of peers family and friends, regardless of money status
This is where our whole society fails. Somehow the general plan is always more money and never less time.
Once when everyone was getting their raise, my proposal was less hours for the same money. I got it, and subjectively I was just as productive as before but now had won a whole extra day for ME.
For me it worked out to working less and less and eventually started to earn more and more because I had time to focus on things I am actually passionate about.
That said I am lucky Switzerland even has the concept of working ex. 80%. In Austria it is usually either 'fulltime' or 'halftime' (which barely anyone can afford)
My main point is that if you work less hours does not directly mean you produce less code. More concrete sometimes when I sit around and do nothing I find a way to reduce 8 hours coding to 1. And yes I realize that only works in some jobs
Working 80% means 50% more free time and 20% less pay. (If - as in your case - this comes with a raise, even better.)
I'm pretty sure most people (at least around here on HN) could do with 20% less income and still get out more quality of life.
Of course we always need to compare ourselves (and our positions and possessions) to other people in our peer group and money earned is just such a nice way to compare yourself to others. How else are you going to acquire all these nice status symbols that show how important you are?
Everything's about luck. Are you smart? Luck. Are you good looking? Luck. Are you rich? Again, some combination of things that are all essentially about luck.
That's not what the model says. It says that being smart and good looking do not have a large effect in the long term; having repeated streaks of luck do.
(Being rich counts as having already had several lucky breaks, you or your family.)
If being rich counts a already having had several lucky breaks, aren't they just presenting a circular conclusion?
In the real world, opportunities can also be manufactured, increasing the odds to be lucky. I don't think the model from the article has that many interesting things to tell us.
"Being rich" doesn't appear as an input factor on the model, that's my interpretation.
The paper describes how, assuming a meritocratic setup where everyone starts out the same, wealth accumulates as a function of repeated lucky events, largely unaffected by the particular talents of the individual.
We all know that money makes money and the wealthy have a lot more ways of seizing opportunities than those without resources, using wealth as a leverage way more powerful than personal talent. Nevertheless, the model works as a thought experiment showing what would happen if everyone began from the same starting point; even in that case, talent would have little weight in how wealth accumulation would evolve.
There was another experiment a while ago about songs becoming hits. Iirc they started with presenting random songs to users, but their "likes" could affect further suggestions. Then it also was random which songs ended up becoming hits.
That seems like a much more interesting experiment, and in the real world, too.
Also the "Matthew Effect" is well known. I find it very dangerous to latch onto such an experiment because it "feels right", though.
People don't realize and don't want to realize how much of their success in life is based on pure, sheer luck.
I'm not going to say that hard work is irrelevant, but it's very much overrated. Because you can work hard yourself to death and not get any penny to your name. Whereas if you luck out, you luck out - no hard work required.
I guess that we - as narrative creatures - aim to have a satisfactory story to our lives. We that are successful want this success to be our own achievements, not the random fluctuation of chance.
But human brains are very bad with randomness and so we see patterns; the people close to us are good and honest and hard working, no wonder they are rich and successful. They earned it! we think, not taking into consideration confirmation and selection bias.
It's just a shame that we are also lead to believe the reverse is true. That poor person over there? He must be slacking off and is not putting in enough elbow grease - he deserves to be poor and miserable.
If you need brain surgery, you want a very good brain surgeon. Does it really matter to you if he was just lucky to become so good? Personally I would still be willing to pay more money to get the better surgeon, no matter HOW they became so good.
Same for all other things. I want the best leader for my country. Does it matter if they are a good leader because they were lucky (born with intelligence, good education and so on)? No, all I care is that they are good, not why they are good.
(Assuming all act morally - if the brain surgeon only got so good because he abducted people and experimented on their brains, I would not be OK with it).
Their proof that their model is correct seems to be that it ends up creating a 80:20 distribution. But many processes do that, that's why it is such a famous rule. So I don't think they can simply conclude their model is the correct one.
I don't think anybody disputes that luck is also a factor.
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[ 3.6 ms ] story [ 100 ms ] threadAverage IQ is 100, but nobody has an IQ of 1,000 or 10,000
Do iq tests even work this way? I think there is not enough points to add up to 1000 or at least 200.
Edit: And even then, this iq thing is irrelevant to your whole life, because our minds are mostly sleeping, being carried around by waves of automatic thoughts, whose iq is minimal.
Anyway, IQ is just a tiny aspect of intelligence, which is a loosely defined term.
The risk of the same action (e.g. spending a year on getting a startup to work out) differs based on your background, too.
Let's say you make minimum wage. That reduces the amount of money you can invest in your startup, lowering the chances of success while also shortening the runway. The risk here is might even be homelessness.
If you are backed by a reasonably wealthy family, you can invest more and your runway is longer, making it more likely to succeed (or at least fail not that hard). The risk here is having "wasted" one year of your life.
This doesn't even take into account other factors like family/friend connections.
Of course there are always counter examples to this, I'm just talking about probabilities.
Whether this fits, depends on how many businessmen ruined themselves with a stupid idea for every success.
Of course, if you win the lottery and then they let you pay to change the rules, its more of an aristocracy.
When the next billionaire tells us what we as a society should be doing remember that.
I am lucky I am a white man born in the UK in 1969. So much of what I am is due just to that fact, irrespective of whether I am smart or not, hard working or not.
The company owner might only work twice as much as the 9-5 salaryman. But he increases the value of his equity, while the salaryman just draws a monthly salary.
Eventually that equity is valued at millions by investors, and that is how the company owner becomes rich. Or it could be valued at zero.
Meanwhile, the salaryman is not even exposed to any of these extremes because he never took the risk.
1. Haven’t gotten lucky yet.
2. I dislike other people and don’t connect well with them.
Other than that, I got some pretty good ideas.
https://finance.yahoo.com/news/fascinating-things-top-billio...
Could smart and ambitious young people selling shares in themselves à la Mike Merrill in 2008 be made to work?
https://www.wired.com/2013/03/ipo-man/
https://www.mike-merrill.com/
We can see easily that no human has an IQ of 10x the average. But determination to accomplish a goal is difficult to measure, empirically or subjectively. I can't really say that super rich person X didn't just want it 10x or 100x more than everyone else.
It's interesting that the authors were able to come up with a simulation that roughly matched real world wealth distribution. But there are a large number of potential factors that they did not and could not account for in a model. I fully agree with the idea that all great wealth comes from luck and chance in some form or another. This article is definitely stating what I believe to be true. But I don't know if they really proved anything.
IQ is by definition normally distributed. If you define wealth the same way as you define IQ (basically as position in normal distribution), not even Jeff Bezos will have 10x "wealth IQ". He is richer than ~99.9999999857% of people, but he will score in such test test around ~6.3 standard deviations, as you can verify through https://keisan.casio.com/exec/system/1180573188 That would correspond to score 250 IQ (Cattel scale).
And about cognitive abilities in general - yeah, some people exhibit 10x times bigger working memory (roughly corresponding to RAM) than average.
Also financial smartness is a thing.
https://news.ycombinator.com/item?id=20722716
Another is height. There's a very strong correlation between height and lifetime earnings; tall people are seen as better leaders, trusted more, and frankly, more physically intimidating. Tall men are much more desirable to partners.
Getting back to wealth...let's run down just some of the advantages.
Having parents with the free time to do things like read to you as a baby. Babies start figuring out language pretty much the second they're out of the womb. Their little brains are working out the rhythm of the language in order to figure out where the word separation is, so they can learn words.
Childcare (and childcare that likely isn't religiously affiliated.)
Going into Pre-K. Again, likely not religiously affiliated. You're learning useful stuff, versus being brainwashed.
Better chance of living in a good school system, or even if you don't - your parents recognizing you're in a shitty school system and getting you outside tutoring, being involved in your education (helping with homework, going to parent-teacher conferences, etc.)
Having regular doctor's visits, dental care, vision, etc.
Having enough to eat, and probably good quality food as well. A shocking number of kids in the US go to school hungry. And we charge kids to eat in school - somewhere they are required to be. It's bananas.
Better access to exam prep/tutoring/ability to participate in enriching afterschool activities
Likely less stress in the home. Sure, rich families have their own dysfunctions. But likely nobody's worried about paying the grocery bill that week, you're clothed, etc.
Able to work internships that are of academic value as opposed to a job that makes money because you / your family need the money. Parents are likely well connected and able to leverage their network to help you get an internship of value.
Better access to nicer colleges both financially and due to access to things like exam preparation/tutoring, and the aforementioned good-looking internships.
Let's also not forget that college applications cost a considerable amount of money, which is a scam and a half. You can literally buy your way into a nicer school by applying to more schools than the kid whose parents can only afford to apply to one or two.
You're more likely to get help with purchasing a home, so you don't flush a ton of money down the drain renting - which means you can be pumping money into investments, both retirement and otherwise. Or pursuing an advanced degree, and the income bump that comes with it. Maybe even both. Early investing in retirement pays huge dividends later. This also means late in life you're not scrambling to stuff every dollar you can into retirement savings so you're not eating rice and beans when you're too old to have any sort of luck finding a job in tech...which means mid life is a lot more pleasant.
Napoleon Bonaparte, Benito Mussolini, Alexander The Great, Joseph Stalin, Hirohito, Silvio Berlusconi, Nicolas Sarkozy, Vladimir Lenin, Francisco Franco, Amenhotep I, James Madison, Mahatma Gandhi, Nikita Khrushchev, Kim Jong-il, Yasser Arafat, Mahmoud Ahmadinejad, David Ben-Gurion, Deng Xiaoping, Benito Juárez would all like to have a word with you. :)
I worked with a lot of very intelligent people at my last job, and it just wasn't a priority for so many of the people there (company owners included).
"The winners of the 2021 Nobel Prizes will receive a gold medal and 10 million Swedish kronor ($1.14 million). The prize money comes from an endowment left behind by the prize’s creator, Swedish inventor Alfred Nobel, who died in 1895."
Source https://www.forbes.com/sites/siladityaray/2021/10/08/2021-no...
So, no, Nobel prize winners are not necessarily rich when you compare them with lawyers, doctors, and software engineers of California.
"whole life's work"
Yea sorry they don't always "win" it at the END of their careers !
"compare it to bay area salaries where someone working for FANG can earn that much in half a year or less just by writing microservices."
Guess you can say that about many careers just depends which you industry you compare it to ! Gardening,R&B Popstar,Maid,Teacher,Hollywood Actor,Tutor.
https://spendmenot.com/blog/what-percentage-of-americans-are...
Seems totally believable to me.
Most smart people do not care about becoming rich. Some of them do. But most of them do not. Most smart people I have met care about honing their skills and becoming better at what they do which is exactly what led them to being smart in the first place. Moreover not all kinds of smartness translate to more $$. The market rewards only certain kinds of smartness (computer skills, law skills, medical skills, etc.)
But even for smart people trying to optimise their wealth - it isn't at all clear that smartness is something to be rewarded. A reasonably competent, hardworking small business owner can be quite wealthy. I would expect them to be of above average intelligence. But I've basically never paid someone because they are intelligent, so it isn't obvious why the market would save the best reward for them.
If I was hiring a tutor I wouldn't necessarily hire the most intelligent person I know. There are a lot of factors to consider.
Those who know this and are able to optimise for it will have a sustainable advantage over everyone else, creating a virtuous cycle.
I'm in my mid-to-late 20's and quit my job in early 2020 (just before COVID!) to start my own business.
I've landed on my feet completely - making about as much per quarter selling used video games[1] as I was per year as a software engineer, with a feasible and straightforward plan to double that before the end of 2022.
However, seeing the the numbers going the way they are, I've started to wonder if I'm perhaps optimising too much in this direction at the cost of other aspects of my life.
I'm not arguing that the pursuit of wealth is a waste of time or anything like that, but for someone who doesn't quite have Elon Musk-tier ambitions the cost-benefit analysis starts to weigh less favourably towards money the easier it gets to acquire.
[1] For what it's worth, if you are smart, have strong technical skills and want to make money, I personally advise against starting a business that is "high tech" or "cool". Gaining domain expertise in a low-tech but scaleable area, then optimising it into the stratosphere is relatively low-risk and potentially ridiculously high-reward.
I believe luck is a bigger part of life than we'd like to admit to ourselves. However, saying talent doesn't play a role in success (especially in science) seems plain wrong.
The article seems to imply that since other human traits follow normal distributions, then wealth distribution should also be normal if it's determined by human traits. But that doesn't follow because it ignores feedback. Being a little tall doesn't help you get more tall. Most human traits don't reinforce themselves the way wealth does. A smart person with a million dollars can make money a lot more easily than a smart person with zero dollars. A smart person with a billion dollars can do even more.
It's a compelling origin story though. Past financial hardship can be spun as rags quite easily, so we hear the story a lot more than it "really" happens.
I would say wealth follows a normal distribution if you’re looking at number of people at each level. Very few people have <$0 over their lifetime and a same small number have >$25M over their lifetime.
But the outliers are so extreme at the top end you end up with the power distribution of wealth.
According to "Inheritances and the Distribution of Wealth Or Whatever Happened to the Great Inheritance Boom?":
> Of the total wealth of the population, Kessler and Masson estimated that 35 percent originated from inheritances or gifts. Among those who had reported receiving an intergenerational transfer (who were about two and a half times richer than the average household), the corresponding proportion was 40 percent.
This proportion will probably drop if we exclude land.
> This proportion will probably drop if we exclude land.
Sure and if we exclude stocks it will drop further, but there's no reason to exclude land, the single most important form of property, from the calculation.
Even people like Warren Buffett had a congressman for a father - which has quite a bit of privilege with it that can get you places.
You even get a power law if you have a game where everybody gives 1 dollar to a random person (if possible). If you play that game for enough steps, then the wealth distribution becomes exponential.
Once when everyone was getting their raise, my proposal was less hours for the same money. I got it, and subjectively I was just as productive as before but now had won a whole extra day for ME.
For me it worked out to working less and less and eventually started to earn more and more because I had time to focus on things I am actually passionate about.
That said I am lucky Switzerland even has the concept of working ex. 80%. In Austria it is usually either 'fulltime' or 'halftime' (which barely anyone can afford)
My main point is that if you work less hours does not directly mean you produce less code. More concrete sometimes when I sit around and do nothing I find a way to reduce 8 hours coding to 1. And yes I realize that only works in some jobs
Working 80% means 50% more free time and 20% less pay. (If - as in your case - this comes with a raise, even better.)
I'm pretty sure most people (at least around here on HN) could do with 20% less income and still get out more quality of life.
Of course we always need to compare ourselves (and our positions and possessions) to other people in our peer group and money earned is just such a nice way to compare yourself to others. How else are you going to acquire all these nice status symbols that show how important you are?
But we forget the price we pay for money.
(Being rich counts as having already had several lucky breaks, you or your family.)
In the real world, opportunities can also be manufactured, increasing the odds to be lucky. I don't think the model from the article has that many interesting things to tell us.
The paper describes how, assuming a meritocratic setup where everyone starts out the same, wealth accumulates as a function of repeated lucky events, largely unaffected by the particular talents of the individual.
We all know that money makes money and the wealthy have a lot more ways of seizing opportunities than those without resources, using wealth as a leverage way more powerful than personal talent. Nevertheless, the model works as a thought experiment showing what would happen if everyone began from the same starting point; even in that case, talent would have little weight in how wealth accumulation would evolve.
That seems like a much more interesting experiment, and in the real world, too.
Also the "Matthew Effect" is well known. I find it very dangerous to latch onto such an experiment because it "feels right", though.
People don't realize and don't want to realize how much of their success in life is based on pure, sheer luck.
I'm not going to say that hard work is irrelevant, but it's very much overrated. Because you can work hard yourself to death and not get any penny to your name. Whereas if you luck out, you luck out - no hard work required.
I guess that we - as narrative creatures - aim to have a satisfactory story to our lives. We that are successful want this success to be our own achievements, not the random fluctuation of chance.
But human brains are very bad with randomness and so we see patterns; the people close to us are good and honest and hard working, no wonder they are rich and successful. They earned it! we think, not taking into consideration confirmation and selection bias.
It's just a shame that we are also lead to believe the reverse is true. That poor person over there? He must be slacking off and is not putting in enough elbow grease - he deserves to be poor and miserable.
Sometimes we're very bad at thinking.
Yes luck plays a big role, but it also plays a big role in getting cancer (genetics), but you can move the needle through your own actions.
If you need brain surgery, you want a very good brain surgeon. Does it really matter to you if he was just lucky to become so good? Personally I would still be willing to pay more money to get the better surgeon, no matter HOW they became so good.
Same for all other things. I want the best leader for my country. Does it matter if they are a good leader because they were lucky (born with intelligence, good education and so on)? No, all I care is that they are good, not why they are good.
(Assuming all act morally - if the brain surgeon only got so good because he abducted people and experimented on their brains, I would not be OK with it).
https://en.wikipedia.org/wiki/Survivorship_bias
I don't think anybody disputes that luck is also a factor.