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Ugh, I wish the author had made the point without the computer simulation. I think there might be merit to the argument people make more money than their intel
by omarhaneef 7y ago
Ugh, I wish the author had made the point without the computer simulation.
I think there might be merit to the argument people make more money than their intelligence, or effort, seems to indicate. And the author lays out some basic arguments here:
"But there is a problem with this idea: while wealth distribution follows a power law, the distribution of human skills generally follows a normal distribution that is symmetric about an average value. For example, intelligence, as measured by IQ tests, follows this pattern. Average IQ is 100, but nobody has an IQ of 1,000 or 10,000.
The same is true of effort, as measured by hours worked. Some people work more hours than average and some work less, but nobody works a billion times more hours than anybody else."
However, you don't need the simulation to add to this argument. If anything, the simulation undercuts it because now you point out small errors and end up doubting the whole argument.
- hnhg 7y agoCan you clarify this? 'However, you don't need the simulation to add to this argument. If anything, the simulation undercuts it because now you point out small errors and end up doubting the whole argument.' I would say that if the author is making an argument based on probability distributions, then that's a fundamentally mathematical one, and they should see it through instead of hand-waving via rhetoric. Am I missing something? [Edit: I read the paper when it came out (2018) and it seemed mathematically sound. Was I mistaken?]
- omarhaneef 7y agoI don't know I can say it more clearly. I can sort of repeat what I said. Instead of two factors (intelligence, and effort), let's just take one factor (effort). One person works 12 hours a day. We know people can only work 2x as hard as this person. Yet, there are many people who are more than 2x as rich. Hence, effort alone doesn't fully explain the difference. That is it. You can get that argument right there. Do you need me to do a computer simulation? Will that make the argument stronger? Even if the argument is mathematical? Or will you look at my simulation and say, "ah, I think you made an error here by not accounting for sleep efficiency fully, so I think this theory is wrong."
- hnhg 7y agoMy point is that the mathematical simulation is more precise because you've exactly stated the model and ran it. While doing it verbally allows for all kinds of interpretation and is therefore much harder to interpret. I apologise but I also really sincerely don't understand your verbal reasoning in the context of this particular paper. They took two underlying distributions and managed to produce something that looks like a real world one. I'm not sure what you're trying to say that's equivalent to that?
- omarhaneef 7y agoI reread our back and forth, and I think my clearest explanation is in the original post where I quote from the author. So I think we might be at the limits of my ability to communicate in this medium. But even in the instance you are talking about -- let's just abstract away everything else -- we know that the output of a gaussian process over time will be a very wide dispersion. If you assume stock prices follow some kind of gaussian distribution (yes, I know they don't), and just follow them in time you get this crazy wide distribution. Its a "stylized fact". And running it as a metaphor for some other process doesn't give me more insight. But I fear this explanation is even more confusing, and not less.
- hnhg 7y agoI won't dismiss what you're saying but tbh it's very opaque - do you have a link to something that explains what you're trying to say? Something mathematical would help (for the reasons I outlined in my earlier reply!)
- omarhaneef 7y agoLet's take a function that produces normally distributed random variables. Let's run this function at every moment in time starting at t=0, and then sum it with the prior sum. You can use a function that sort of looks like that to simulate a lot of different processes (a random walk, brownian motion etc). Here is a more mathematical write up of the properties: https://en.wikipedia.org/wiki/Wiener_process https://en.wikipedia.org/wiki/Wiener_process Now I can run this "simulation" -- even though the inputs and outputs are well understood -- many times and say it represents: 1. A stock price 2. The random motion of a particle given the kinetic energy of the particle 3. The wealth of an individual given intelligence and hard work
- __s 7y agoIQ tests are also a bad example because they have a normal distribution by design. It's like saying grades fall into a normal distribution when you're graded on a normal distribution curve
- omarhaneef 7y agoI did not know that. However, from what I can tell -- and these studies are always controversial and not convincing -- IQ is only tangentially related to financial success. If I recall, a little helps but a lot doesn't help more.
- mywittyname 7y agoIt's a good example because most human traits are normally distributed. There aren't any 1000IQ humans, just like there are no 18ft tall humans, or ones that could run a marathon in under an hour.
- __s 7y agoDid you read what I said? Comparing IQ as a measurement to measuring height would require we create a non linear unit of measurement so that humans fit into a normal distribution of "Height Quotient" where most humans are 100 units tall. Then every few years we adjust these units so that most humans are always 100 units tall 100 IQ fifty years ago wasn't the same as 100 IQ today
- duaoebg 7y agoIQ numbers are normalized which should make it no surprise that histogram of IQ numbers form a normal distribution. It's in the definition. IQ numbers only indicate a relative position to the rest of the population. Basically (110IQ-100IQ) != (120IQ-110IQ).
- GuB-42 7y agoThe simulation is useful in the sense that they managed to obtain a wealth distribution similar to the real world based on that argument. That's how science works in general. Build a model and make it match the observations. That model is what will be used to test the hypothesis. Without a model, it is just speculation with little value.
- username90 7y agoThis isn't how science works! I can make a model giving similar results as real world data which shows that wealth is 100% determined by talent, or 100% determined by luck, or any number in between, doesn't prove anything at all.
- harryh 7y agoIt seems fairly obvious that wealth distribution would not perfectly mirror the underlying talent distribution. In a competitive environment small difference have large impacts on results. Usain Bolt was only a tiny bit faster than other sprinters, but in this prime he won basically all the races he competed in. It wasn't luck that had him winning them all despite such a small advantage. It was the nature of competition.
- mch82 7y agoSometimes it is (unfortunately) necessary to do the computer simulation in order to get people to read/value the article.
- Udik 7y agoThe whole argument seems naively flawed to me: given a certain individual, with some defined IQ and personality, there are problems that they won't ever solve, no matter how much time they live. I'll never write a single novel, Georges Simenon wrote 200 of them. The average person wouldn't discover relativity, or write Mozart's music, in any amount of time. It's not true that abilities scale linearly. Not even the difference in the amount if work people can perform is linear: there are people that can start successful companies in the time it takes me to set up an appointment with the dentist (weeks of procrastination). Frankly it doesn't surprise me at all that this research comes from my country: a country that is deeply suspicious of success and, especially in the public sector, of any form of reward based on results. In fact the study finds exactly what most Italian public employees (such as university researchers) ask for: indistinct financing for everyone without the need to show anything for it.