I think the key phrase is "on average". If everyone invested in index funds instead researching and investing in individual companies, there would be no market

I think the key phrase is "on average". If everyone invested in index funds instead researching and investing in individual companies, there would be no market to index. Likewise if everyone did the "average" thing with college - perhaps skipping it and banking the funds (in an index fund), there would be no higher education, and no new companies to bring to market. The only thing worse than anecdotes when making a decision is averages.