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Studies of lottery winners show regression to the mean over generations. Self-earners do not. What do you think the discrepancy's cause is, given your hypothesi

by daxorid 10y ago

Studies of lottery winners show regression to the mean over generations. Self-earners do not. What do you think the discrepancy's cause is, given your hypothesis?

danharaj 10y ago
A lump sum of money and an estate built around extracting wealth from economic processes are two different things. The typical lottery winner doesn't have the social connections or technical skills necessary to create such an estate themself. Having money quite obviously is different from having investments. If the lottery winning family does not focus on wealth accumulation, then their wealth will regress towards the mean for their lifestyle. If the lottery winner puts all their winnings in an index fund, that would be a good start to creating such an intergenerational estate. However, surprising perhaps to many people, not everyone is interested in turning money into more money. People who try to make money, surprise, have the skills, connections, and desire to do so. Of course, wanting to be such a "self-earner" doesn't mean one has the means or the luck to become one. The key point is this: if your estate is currently extracting wealth from investments, odds are that you inherited that estate. Your family having money in the past is a precondition of such a state, but it is not sufficient to sustain it. Wanting to be the first generation of your family with wealth extraction privileges does not mean you'll succeed and most such aspirants fail.
Retric 10y ago
Maintaining weath is something weather family's teach their kids. Avoiding losing the fortune is not that hard, but requires a focus on doing so. Further, family's tend to spread weath between members. If you have wealthy friends and hit bad times then plenty of people may help you get a leg up. But, if you are the only person is a circle with weath you end up helping a large group which can't help you back. As an example, a weathly family friend may help with tuition. Or funding a business venture, which is how people may go broke and then become rich again.

by daxorid 10y ago

Studies of lottery winners show regression to the mean over generations. Self-earners do not. What do you think the discrepancy's cause is, given your hypothesis?

danharaj 10y ago

A lump sum of money and an estate built around extracting wealth from economic processes are two different things. The typical lottery winner doesn't have the social connections or technical skills necessary to create such an estate themself. Having money quite obviously is different from having investments. If the lottery winning family does not focus on wealth accumulation, then their wealth will regress towards the mean for their lifestyle. If the lottery winner puts all their winnings in an index fund, that would be a good start to creating such an intergenerational estate. However, surprising perhaps to many people, not everyone is interested in turning money into more money. People who try to make money, surprise, have the skills, connections, and desire to do so. Of course, wanting to be such a "self-earner" doesn't mean one has the means or the luck to become one. The key point is this: if your estate is currently extracting wealth from investments, odds are that you inherited that estate. Your family having money in the past is a precondition of such a state, but it is not sufficient to sustain it. Wanting to be the first generation of your family with wealth extraction privileges does not mean you'll succeed and most such aspirants fail.

Retric 10y ago

Maintaining weath is something weather family's teach their kids. Avoiding losing the fortune is not that hard, but requires a focus on doing so. Further, family's tend to spread weath between members. If you have wealthy friends and hit bad times then plenty of people may help you get a leg up. But, if you are the only person is a circle with weath you end up helping a large group which can't help you back. As an example, a weathly family friend may help with tuition. Or funding a business venture, which is how people may go broke and then become rich again.