There are More Dumb People in Top 1% Rich Than Smart People

Dumb people make more money than smart people and it took a study conducted by really smart people to prove it. A study out of Sweden found that the top earners have lower intelligence than the people and income levels directly below them. The plateauing of cognitive ability among top earners drew on data from 59000 men who had to take a compulsory military conscription aptitude test. It tracks their earnings over their professional careers to find the relationship between intelligence and income.

This data really works the relationship between intelligence and income. Strong smarter people earned more money but only up to 670000 Swedish krona or sixty four thousand dollars per year after that intelligence didn’t mean much anymore and at the very top end of income earners the one percent Dumber people actually did better.

So is this a sign that watching Tick Tock in reality TV is actually better for your career than going to college well maybe actually for two important reasons but there are also two reasons why you should probably ignore this and keep studying hard if you want to get ahead financially.

Two reason why dumb people are doing better than smart people

#1 Smart people fill in high Prestige jobs that don’t have high salaries

Academics and research scientists are some of the smartest people in the world but they don’t get paid well. Doctors lawyers and Elite financiers also need to be very smart to get through demanding schooling and Emissions exams and these professionals are typically compensated very competitively but most of them don’t make it all the way to the one percent in the USA.

To be in the top 1% of income earners an individual needs to make at least 597000 before tax and that’s just the minimum to join the one percent Club the average member of the one percent earns 1.4 million dollars before tax.

Some senior executives certain doctors lawyers and even bankers can earn this much money but they are in the minority, most people making this much money are business owners and there is less of an intelligence barrier to becoming a business owner compared to the genius level intellect a person needs to become a top surgeon. Business owners earning over half a million dollars a year in income still need to be smart but they don’t need to be as smart.

#2 Highly intelligent people that follow well-compensated career paths are less likely to make the transition to business.

People that are highly intelligent and have a desire for high income are also at a slight disadvantage to people that are only moderately intelligent and equally have a desire for high income. Highly intelligent people that follow well-compensated career paths are less likely to make the transition to business ownership because they will reach a level of income that they are satisfied with and won’t want to take the risky step of giving up their well-paid job to start a business that might not even succeed.

Moderately intelligent people with desire for high incomes on the other hand won’t have as many opportunities to make incomes in the top percentiles unless they go into business for themselves so they are on average more willing to take the risk because they won’t be giving up a career that was difficult to get into and equally difficult to get back into.

So by looking at the data if you want to be wealthy the best thing you can do is to be moderately intelligent with a lot of ambition right well as the great Mark Twain said

“There are 3 kinds of lies: lies, damned lies, and statistics.”

So it’s time to learn how money Works to find out why dumb people are earning more than smart people and why this trend is completely meaningless for your own career planning.

Let’s say all you care about is making as much money as possible and you are trying to pick what person you want to be to give you the highest chance of achieving that goal the first problem that you will have if you try to plan your career around replicating the success of people in the top one percent is all of the statistical complications that come with inferring outcomes Based on data like this the ceiling effect is what happens towards the extremities of data sets that are drawn on a scale like percentiles of wealth.

If a class of 10 students got given a 100 question surprise quiz and three students in a class got perfect scores and the Seven other students got a random mix of scores a statistician could conclude that a perfect score was the easiest result to get.

Because it’s the result that happened the most often no matter how smart the students taking this quiz are they can’t get more than a perfect score no matter how high someone’s income is the top one percent is the top of the scale if two of the three students with perfect scores were the smartest people in the class and the third student was average but just cheated on the quiz by copying the top student in the class the average intelligence of the students with perfect scores would be lower than the intelligence of the student who got 99 questions right.

Most people earning in the top one percent are very smart but their average is brought down by the people like the Kardashians. Most people in the top two percent are also very smart but they don’t have outliers stuck to the ceiling bringing down their average.

Less intelligent people earning the most money out of a population also have a problem with survivorship bias. A person of average intelligence starting a business for themselves is statistically very likely to fail and end up in the lower end of the income range at that point they can either then start another business or go back to a regular job. If they are successful though a business doesn’t need to get that large before it can generate enough profit to put the owner in the top one percent of earners.

A highly intelligent person starting a business will have slightly better odds of being successful but statistically it’s still likely to fail because there are less highly intelligent people than there are people of average intelligence there are going to be more successful businesses run by average people than run by intelligent people and if you remember highly intelligent people already earning good money in a position as an employee are less likely to start a business of their own in the first place they’re even less likely to end up as a successful or unsuccessful business owner.

There will also be many more business failures owned by people of average intelligence but because only the businesses that survive get counted in the one percent of income earners it changes the expectation that the best way to get rich is to be a business owner of average intelligence. The second problem with interpreting this study and all of the other studies you hear about is that the traits of wealthy people goes well beyond just statistics.

To begin with the study was conducted on men only, men have different career earnings and work in different vocations than women so the results could be very different if the other half of the population was included does that make sense.

You see the difference measuring intelligence is very difficult in a military entrance exam is more likely to be focused on the type of intelligence that would make people good at following orders like comprehension rather than free thinking and creative intelligence that would provide a competitive advantage in the boardroom but not on the battlefield the study was also done in Sweden and I know thanks to the invasive power of Google’s data collection that only 0.9 percent of you watching are Swedish.

Personal finance and careers in Sweden are different from here because they have stronger welfare and worker protections, they also pay lower salaries on average to top employees, Sweden is also surprisingly more entrepreneurial.

It has 20 startups per 1000 people while America only has five so what does this mean basically this means to get into the top one percent where the study was done you need to be a successful business owner but in most other places there is a high chance that you will get there with one of the extremely well paid jobs that go to extremely intelligent people it’s starting to look bad for the Dropout of college hustle Bros and that’s before even considering other things that can give people a high income

Some people get a high income not because of luck intelligence or hard work they get it because they’re a nepo baby and have family connections which can land them a job that pays well as unfair as it may be to someone without these advantages giving rich kids with connections jobs can be worth it if they keep using their connections to bring in more business some of these privileged individuals will be smart.

Some of them not so smart but they won’t need to be as intelligent as a top doctor to earn their money so they will bring down the average of the percentile they land in so before that you think that this whole investigation was just a big waste of time and that it doesn’t reveal the secret to becoming a member of the one percent.

You should know that it actually does show you how there are some factors that can put dumb people into one percent that you can’t control, you don’t get to choose if you are born to a wealthy family that can get you a fancy job by calling in a few favors like a little 100 Million here a little hundred million there. To control whether your business is highly successful just breaking even or a complete failure a lot of it is just luck but here is something else you can 100% control.

How intelligent you are either you can practice certain skills learn new things but some people will be able to absorb and apply knowledge better than others you can’t copy traits and expect a similar outcome you have to be able to critically assess your strengths and weaknesses and choose a career path that suits you best.

Rich people eat a lot of caviar and fly first class but flying first class and eating caviar won’t make you rich just like being of average intelligence won’t make you a member of the one percent by itself the first real step is to work out what you are good at and what you are bad at

This may involve admitting to yourself that you are not as smart as you think you are it might hurt your ego but being honest with yourself about your weaknesses will bring you much further than believing you’re good at things that you’re not highly competitive Industries reward High performers but they are also equally punishing underperformers.

Becoming a doctor will almost guarantee an upper middle class or upper class income for the rest of your working life but feeling out of med school will leave you with hundreds of thousands of dollars of student loans that will put you far behind people who were more realistic with their career Ambitions, an electrician that does the best work in their area and has a good reputation with Builders and businesses will make more money than a lawyer that is average or below average.

That doesn’t mean drop out of college, it means be honest with yourself about what marketable field you could excel in and do that instead of trying to chase career paths that just have a reputation for earning a lot of money because if you do you might end up like the people that rushed into tech jobs to chase big paychecks just before the biggest companies in the space announce record layoffs.

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You can watch the original Video on topic at below link

Why Dumb People Earn More Than Smart People

 

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