Global Courant
By white Lotus Unpleasant Succession, television dramas about the super rich are in high demand. The characters in these shows are typically portrayed as straight, hollow, and sad. But they are not necessarily portrayed as unintelligent. So are rich people rich because they are smart?
In the midst of a cost-of-living crisis, this question goes beyond scientific curiosity and touches something deeper.
If people’s net worth was only a result of their intelligence, the gigantic wealth gap that we see in our society may be considered less intolerable by some – at least by some. Inequality would be the price to pay if the smartest lead us all to a better future.
There is little doubt that intelligence contributes to one’s economic and professional success. Take the self-made billionaires Elon Musk, Jeff Bezos and Ray Dalio, to name a few. It would be surprising if top innovators in advanced fields like technology and finance turned out to be average.
In fact, intelligence is the best predictor of both learning performance And job performance. And academic and professional success, in turn, is a pretty good predictor of income. But that’s not the whole story.
Not all highly intelligent people are primarily driven by a desire for wealth – they are often hungry for knowledge. Some may instead choose relatively lower-paying jobs that are more intellectually rewarding, such as architecture, engineering, or research.
A recent Swedish study showed that cognitive tests rank among the top 1% of earners did not differ significantly to the scores of those who earned slightly less.
But to what extent does intelligence increase prosperity? Before diving into the evidence, we need to clarify what researchers mean by “intelligence.” Intelligence can be defined as the ability to successfully perform a wide variety of cognitive tests.
And these seem to be connected. If someone is good at solving a particular cognitive test, they are likely to do well in other cognitive tests as well.
Tesla’s Elon Musk. Photo: AFP/Brendan Smialowski
However, intelligence is not a monolithic trait. In fact, it consists of at least two broad constructions: fluid intelligence and crystallized intelligence. Fluid intelligence uses core cognitive mechanisms such as speed of processing stimuli, memory capacity, and abstract reasoning. Conversely, crystallized intelligence refers to those skills developed in a social environment such as reading and writing, arithmetic and knowledge about specific subjects.
This distinction matters because these two types of intelligence evolve in many different ways. Fluid intelligence can be inherited, cannot be stimulated and decreases rapidly with age. Crystallized intelligence, on the other hand increases throughout most adulthood and only begins to decline after about age 65.
But fluid intelligence helps build crystallized intelligence. Fluid intelligence represents the brain’s ability to acquire and process information. Crystallized intelligence is largely acquired information.
This means that if your reasoning skills are sharp, you will process new information quickly. You integrate new information accurately with old information. Ultimately, this will accelerate learning in any discipline and contribute to your academic and financial success.
Education is a factor
That said, innate abilities aren’t the only thing that matter. Another important factor is education.
a quantitative assessment found that the more years of education, the higher the intelligence scores of students. Crucially, these improvements come from training in specific skills rather than improving general intellectual ability. So school teaches you useful things for both professional success and taking intelligence tests.
Unsurprisingly, education is in turn influenced by the socio-economic status of the family. Thus, expensive schools and private tutors deliver the student very efficiently personalized instruction. Access to top quality education can therefore make a huge difference in future income.
Of course, the influence of the family’s socio-economic status on wealth does not only operate through education. Inheritance and networking are among the most obvious mechanisms. This is especially true for entrepreneurs, whose investment potential and connections are fundamental to business success.
The role of luck
So intelligence, education, and socioeconomic status all affect one’s income. However, these factors alone are unlikely to fully explain individual differences in wealth. In fact, one recent research suggests that luck has a major influence.
This study highlights that the statistical distribution of wealth differs from the distribution of intelligence. Intelligence is “normally distributed”, with most people sitting around the average. Wealth, on the other hand, follows onepareto distribution”, a formula that shows that 80% of a country’s wealth is owned by only 20% of the population.
Intelligence versus wealth distribution
The distribution of intelligence (left panel) and wealth (right panel; values in log scale). The data is simulated and is displayed for exhibition purposes only. Author provided
This means that intellect alone cannot explain the disproportionate differences between rich and poor in our society.
The study does not downplay the role of intelligence (or talent in general). A fine intellectual ability increases the chance of getting rich. Nevertheless, intelligence is no guarantee of getting rich. In addition, a series of lucky events can clearly turn unremarkable individuals into big earners.
That is, when it comes to getting rich, intelligence is neither sufficient nor necessary. But it does help.
“I’d rather be lucky than good,” says Chris Wilton’s (Jonathan Rhys Meyers) character in Woody Allen’s film Match point. In light of the evidence we just looked at, he may be right.
Being born into a wealthy and highly educated family is a happy event. Likewise, random windfalls (like winning the lottery) don’t come from years of hard work. We can even take the argument a bit further and conclude that being intelligent is itself a form of happiness.
Many things that contribute to achieving financial success are beyond our control. Most, if not all, extremely wealthy people have been blessed in one way or another by Lady Luck.
Conversely, it is certainly important to make the most of what happiness brings us. Admittedly, many people only cash in on the benefits of inherited privilege.
In any case, many small and large fortunes arise from intelligent use of the resources we are fortunately endowed with – be they intellectual, educational or socio-economic.
Giovanni Sala is a psychology teacher University of Liverpool And Fernand GobetProfessorial Research Fellow Psychology, London School of Economics and Political Science
This article has been republished from The conversation under a Creative Commons license. Read the original article.
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