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The plateauing of cognitive ability among top earners

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Re: The plateauing of cognitive ability among top earners

#101

Post by roughly »

epistemer wrote: post #58
solatic wrote: post #28

Implicit is the presumption that the smartest people optimize for wealth, or that the smartest people are good at optimizing for wealth. Outside of Wall Street, "smart" people - academics, doctors, lawyers, engineers, etc. - are just as likely to make bad personal finance decisions and/or to stay in labor (rather than management) positions for most of their careers (leave aside the dual-track IC/management ladder at…

It also disregards the type of lottery game that is a part of wealth accumulation. Of course, it is not all luck but to believe wealth accumulation is a type of purely deterministic meritocratic game without a giant stochastic factor is ridiculous. That might even be the dumbest aspect of our society. Believing the powerball lottery winner is a genius for picking the numbers they picked is obviously stupid. Yet we ba…

> It also disregards the type of lottery game that is a part of wealth accumulation.

The article does not disregard this - luck and family wealth are the two factors they propose as causative.

Re: The plateauing of cognitive ability among top earners

#102

Post by ss2003 »

onos wrote: post #94
Qem wrote: post #83

Earlier quoted context omitted.

Nailed it. If you're Elon Musk, do some dumb mistake and lose 200 billion, your life barely changes. If you live on minimum wage, and loses half of it, starvation ensues for your family. The impact of losses is disproportional between rich and poor.

So you’re saying the poor have much more to gain through hard work and shouldn’t be discouraged?

You have it completely reversed. Hard work for the poor most likely means they will still be poor and therefore have very little to gain from it.

Re: The plateauing of cognitive ability among top earners

#103

Post by manimino »

adverbly wrote: post #37

Here is one wacky theory behind the drop at high levels: maybe this is mostly a function of which jobs require certain cognitive levels, and how much those jobs pay. For example, there are quite a few jobs that pay well which require above average abilities such as management, engineering, medicine, law. But arguably there are jobs that have higher requirements such as theoretical scientists, mathematicians, universi…

Businesses solve the problems people have right now. It is good at scratching itches.

Academics solve long-term problems. They do not need to chase profits, so they can tackle bigger ideas. The risk is higher, but the rewards to humanity as a whole can be far greater - just less immediate.

Note that there is a significant amount of "academia" that happens inside large tech co's, such as Google / Facebook / Microsoft, just as Bell Labs did in yesteryear.

Re: The plateauing of cognitive ability among top earners

#104

Post by ShamelessC »

robertlagrant wrote: post #79
epistemer wrote: post #58

Earlier quoted context omitted.

It also disregards the type of lottery game that is a part of wealth accumulation. Of course, it is not all luck but to believe wealth accumulation is a type of purely deterministic meritocratic game without a giant stochastic factor is ridiculous. That might even be the dumbest aspect of our society. Believing the powerball lottery winner is a genius for picking the numbers they picked is obviously stupid. Yet we ba…

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Re: The plateauing of cognitive ability among top earners

#105

Post by onos »

ss2003 wrote: post #102
onos wrote: post #94

Earlier quoted context omitted.

So you’re saying the poor have much more to gain through hard work and shouldn’t be discouraged?

You have it completely reversed. Hard work for the poor most likely means they will still be poor and therefore have very little to gain from it.

We certainly disagree. You do you guys.

Re: The plateauing of cognitive ability among top earners

#106

Post by jandrewrogers »

sidlls wrote: post #90
angarg12 wrote: post #86

Earlier quoted context omitted.

Not accounting for luck as a factor of success is one of my pet peeves. I'm reading "So good they can't ignore you" and although I'm loving it, it's also guilty of that. Cal Newport tells the story of a Clean Tech VC and how he got the job using a personal connection to VC. But then he dismisses it by saying that "such small breaks are relatively common". Why is it so hard to admit that someone success is partially d…

Because few people are objective enough to put aside their deep emotional attachment to the notion that their particular bit of hard work and skill meant nothing without that luck. I’m wealthy now: very wealthy by any standard (mid 7-figure net worth). I came from humble beginnings (nearly homeless frequently as a youth with a single mom), but I am quite intelligent (PhD in physics) and I worked hard. I would have re…

Many people with your net worth grind it out without any windfalls, the product of consistent hard work and reasonable choices over decades. It was always a possibility. Most people don't require an IPO to achieve that. Luck can accelerate that outcome but it is not necessary in any meaningful sense.

It requires significantly greater extremes of wealth before luck plays a more frequent role. I know people well into 8-figures who were never anything more than blue-collar grinders. They worked hard and smart for decades with nothing that you could identify as being particularly lucky.

Re: The plateauing of cognitive ability among top earners

#108

Post by friedman23 »

amelius wrote: post #88
friedman23 wrote: post #80

Earlier quoted context omitted.

> It also disregards the type of lottery game that is a part of wealth accumulation. It's not a lottery game, it's a poker game (and in reality, it's much easier than poker because the economy is positive sum and poker is zero sum). If you only consider "wealthy" to be people who have made billions or hundreds of millions then it's a lottery. But someone that consistently makes decisions that maximize expected moneta…

No, the game is Monopoly. And those who entered the game late are out of luck.

Ah yeah, you should have told that to my immigrant parents who came here with nothing.

Re: The plateauing of cognitive ability among top earners

#109

Post by pcrh »

fwlr wrote: post #61

It’s tempting to theorise why this might be, but it’s most likely just a simple statistical feature inherent to correlations themselves. I’ve heard it called “the tails come apart” - in a scatter plot of two correlated variables, the highest y value will not have the rightmost x value, and the rightmost x value will not have the highest y value. Ellipses don’t come to a sharp point at their tips, if you overlay them…

Interesting, that might explain the fairly low level of income at which cognitive ability and income correlated in the OP (under US$ 57K).

Re: The plateauing of cognitive ability among top earners

#110

Post by pas »

onos wrote: post #94
Qem wrote: post #83

Earlier quoted context omitted.

Nailed it. If you're Elon Musk, do some dumb mistake and lose 200 billion, your life barely changes. If you live on minimum wage, and loses half of it, starvation ensues for your family. The impact of losses is disproportional between rich and poor.

So you’re saying the poor have much more to gain through hard work and shouldn’t be discouraged?

They are already pretty motivated and usually do work a lot more than middle class folks.

The poor people who burn out completely and stop working end up on the street and either die pretty fast or find some more motivation to keep going even in that state.

Also, sadly what many poor people lack is not work ethic but capital, in the sense that they can't just take on a ~20-30M loan to send their kids to school and wait for them to start working and then pay it back. So instead of doing this they are forced to do very near-zero ROI things.

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