4 ms·

What? Why? How is it not self evident that people with poor decision making skills will, on average, have low incomes?

by roel_v 6y ago

justatdotin 6y ago
because some people earning very high incomes do so by indulging poor decision making.
z3t4 6y ago
Its not about the choises - its about the available options to choose from.
mmmmmk 6y ago
Because that ignores the complexities of the labor market, the economy and life
hairofadog 6y ago
Anecdotally, I see many people with poor decision-making skills prosper because they were born into wealth, and conversely many who make the best decisions available to them yet fail to thrive because of situational challenges (or, for example, the decision to become a schoolteacher in the US). Bad decisions may (may) lead you to financial ruin, but financial ruin is not an indicator of bad decisions.
- sokoloff 6y ago
  I would expect the population-wide correlation between good decision-making and financial outcome to be positive. (Good decisions, all else equal, will tend towards better outcomes financially and I’d expect the converse would also hold.) How much influence that has I’m not as sure about, but I would be shocked if there were zero or negative correlation.
  - tchalla 6y ago
    > (Good decisions, all else equal, will tend towards better outcomes financially and I’d expect the converse would also hold.) There's a study that does hint the converse is true. > Childhood poverty: Experiencing or growing up in poverty affects people’s lifelong decision-making style. People living in poverty make decisions focused on coping with present stressful circumstances, often at the expense of future goals. https://www.lse.ac.uk/PBS/Research/Research-archive/How-poverty-affects-peoples-decision-making-processes https://www.lse.ac.uk/PBS/Research/Research-archive/How-pove...
TheOtherHobbes 6y ago
It's not just not self-evident it's completely wrong, as multiple studies have shown - because the causation works far more reliably the other way. For example: https://www.theatlantic.com/business/archive/2013/11/your-brain-on-poverty-why-poor-people-seem-to-make-bad-decisions/281780/ https://www.theatlantic.com/business/archive/2013/11/your-br... https://review.chicagobooth.edu/behavioral-science/2018/article/how-poverty-changes-your-mind-set https://review.chicagobooth.edu/behavioral-science/2018/arti...

What? Why? How is it not self evident that people with poor decision making skills will, on average, have low incomes?

by roel_v 6y ago

What? Why? How is it not self evident that people with poor decision making skills will, on average, have low incomes?

justatdotin 6y ago

because some people earning very high incomes do so by indulging poor decision making.

z3t4 6y ago

Its not about the choises - its about the available options to choose from.

mmmmmk 6y ago

Because that ignores the complexities of the labor market, the economy and life

hairofadog 6y ago

Anecdotally, I see many people with poor decision-making skills prosper because they were born into wealth, and conversely many who make the best decisions available to them yet fail to thrive because of situational challenges (or, for example, the decision to become a schoolteacher in the US). Bad decisions may (may) lead you to financial ruin, but financial ruin is not an indicator of bad decisions.

sokoloff 6y ago
I would expect the population-wide correlation between good decision-making and financial outcome to be positive. (Good decisions, all else equal, will tend towards better outcomes financially and I’d expect the converse would also hold.) How much influence that has I’m not as sure about, but I would be shocked if there were zero or negative correlation.
- tchalla 6y ago
  > (Good decisions, all else equal, will tend towards better outcomes financially and I’d expect the converse would also hold.) There's a study that does hint the converse is true. > Childhood poverty: Experiencing or growing up in poverty affects people’s lifelong decision-making style. People living in poverty make decisions focused on coping with present stressful circumstances, often at the expense of future goals. https://www.lse.ac.uk/PBS/Research/Research-archive/How-poverty-affects-peoples-decision-making-processes https://www.lse.ac.uk/PBS/Research/Research-archive/How-pove...

TheOtherHobbes 6y ago

It's not just not self-evident it's completely wrong, as multiple studies have shown - because the causation works far more reliably the other way. For example: https://www.theatlantic.com/business/archive/2013/11/your-brain-on-poverty-why-poor-people-seem-to-make-bad-decisions/281780/ https://www.theatlantic.com/business/archive/2013/11/your-br... https://review.chicagobooth.edu/behavioral-science/2018/article/how-poverty-changes-your-mind-set https://review.chicagobooth.edu/behavioral-science/2018/arti...