SoylentNews is people
SoylentNews
MIT Tech Review reports on a new study which used computer model to analyze wealth distribution in society. It concludes that the majority of riches do not result from talent, intelligence or hard work - but luck. Those who succeed most in modern society are born well and experience several 'lucky events' which they exploit, but are of mediocre talent. The study's abstract states that the model has potential for encouraging investment in the genuinely gifted, and summarizes:
"...if it is true that some degree of talent is necessary to be successful in life, almost never the most talented people reach the highest peaks of success, being overtaken by mediocre but sensibly luckier individuals. As to our knowledge, this counterintuitive result - although implicitly suggested between the lines in a vast literature - is quantified here for the first time."
(Score: 2) by unauthorized on Sunday March 04 2018, @01:04AM (5 children)
Oh look, a study that (confirms/rejects) my biases, better completely ignore it and reaffirm my dearly held beliefs!
(Score: 2) by The Mighty Buzzard on Sunday March 04 2018, @02:20AM (4 children)
You'd prefer taking financial instruction from some schmucks who've never actually participated in the economy?
My rights don't end where your fear begins.
(Score: 5, Insightful) by unauthorized on Sunday March 04 2018, @05:04AM (3 children)
I prefer taking instructions from whoever makes the strongest argument, and an argument from authority is not a strong argument.
The wealthy know as much about economics as bodybuilders know about medicine. Success does not equal knowledge unless the measure of success overwhelmingly favors the knowledgeable, which is certainly not true for finance.
(Score: 3, Interesting) by khallow on Sunday March 04 2018, @03:50PM (2 children)
Ok, so why do you buy into the study [arxiv.org] then? Let's cover some of the problems with it. First, aggressive claims made in the abstract ("with the help of a very simple agent-based toy model"). Second, uncritically repeating rather stupid wealth inequality claims (first paragraph of the intro):
This ignores that someone without a cent to their name owns more wealth than the bottom 30% of humanity (that would be roughly 2.2 billion people!) because of all the otherwise wealthy people who have negative wealth as concerning these sorts of shallow studies due to debt.
Moving on, the actual model is broken with the claim that the ability to gain or lose capital is proportional to the amount of capital, "talent" scales with capital (your ability to increase X amount of capital is equivalent to your ability to increase 100X capital by the same factor), talent also is in practice quite bounded (most people are within a small multiple of each other in terms of talent), and there is no interaction between agents. In the real world, all of these don't happen. The difficulty of low capital agents to gain more capital is well known, but the difficulty of extremely high capital agents to gain more capital is poorly understood (they both require extensive interaction with low capital agents to increase that capital, and can only gain so much capital, if there is only so much in their talent-enabled niches to gain). Finally, variation in "talent" is not tightly normally distributed with areas that have high earning power (ignoring that in the real world, people often highly value niches based on prestige, working conditions, and other non-capital related things) tending to accumulate people with high levels of talents.
Generation of lucky and unlucky events was done by a bogus spatial system:
So right there, they contaminated the model with a variety of confounding factors which among other things would allow them the opportunity to tune the model to yield the desired power distribution outcome.
The end result is that the model for a fixed level of talent and position will generate a normal distribution over a logarithmic scale (it's just a random walk) which by itself will look like a power law. Integrating over all talent levels and positions results in significant smearing that would look like a power law distribution.
The model is also broken in the sense that it measures wealth inequality in the usual, broken manner as described above.
(Score: 2) by unauthorized on Tuesday March 06 2018, @03:39AM (1 child)
No. I made my comment without any opinion on the validity of the study and my point is not predicated on it's validity.
(Score: 1) by khallow on Wednesday March 07 2018, @03:01PM
Then why bother saying anything at all? Buzz's argument at least uses the context that is present. Let us also note that the "authority" is relevant here. As I noted, the study doesn't actually model wealth accumulation in any sensible manner. That is likely due to the ignorance of the people about matters of the economy the very lack of "authority" that The Mighty Buzzard noted in the first place.