Wealthy People Are Lucky People

The article "If you’re so smart, why aren’t you rich? Turns out it’s just chance." from MIT Technology Review reports on research using modeling to figure why wealthy people can get so wealthy and others do not fare so well. It turns out, according to the study, that it has much more to do with luck than talent:

     ... When the team rank individuals [in their simulation] 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.” 

I suppose it starts with whether you were lucky enough to be born into a wealthy family.