By GENE HOWINGTON
Does wealth destroy empathy and compassion and create a sense of entitlement? Here’s what a research study involving a rigged game of Monopoly showed to social psychologist Paul Piff.
What do you think of Piff’s results?
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Nicole Plyler Fisk
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Flowers For Socrates 
“The top fifth of American families have seen their incomes rise by 45 percent since 1979, whereas the bottom fifth has seen a decline of almost 11 percent.” … “The top 20 percent of Americans own about 87 percent of the wealth; the bottom 80 percent splits the rest.” — the Grand Canyon to which Piff refers
These studies are indeed being conducted around the world. It’s only been for the last 10 years or so but results are conforming.
Here’s another article that was written before Piff released the results of his Monopoly study. It’s long but worth the read if one is interested in Social Psychology.
We might want to seriously consider some of these findings when looking at our “Millionaires Club” in Congress
As I said before on the professor’s blog, I think the coin flip applies far more to every one of us than most people realize.
Do we value people for intelligence? High Intelligence is evident by the fifth grade or so, in kids that are scoring As without “working hard” in the least. (Like Me!) Whatever combination of nature and nurture creates high intelligence, the kids didn’t choose it or choose to work for it, they just have it.
The same thing could be said for beauty. Yeah, we can do a lot with makeup and artistry, and muscularity and fitness are about 50% determination and 50% genetic, but in the end everybody has access to the same firepower for (non-surgical) enhancement, and the beauty contest is judged and won on born assets, of symmetry, proportions, and other elements of physicality outside the winner’s control. No matter how hard he works, Stephen Colbert’s ears won’t match.
How about talent and artistry? Much more of that is work, but we have all known people that strove mightily and never made the team. The same logic applies: There is one seat for your instrument in the orchestra, and if thirty people try out, they can all work their hearts out, for equal hours, and 97% lose. The final selection is fairly attributable to luck: Either the luck of a perfect audition, or the luck of being born with natural talent, dexterity and coordination so your 10,000 hours of practice makes you noticeably better than your 29 competitors with their 10,000 hours of practice. Those phenomenal child prodigies didn’t practice longer than fifty-year old professionals, their practice just aligned with a born talent in a way that seldom happens.
Inherited wealth is just another lottery ticket. So is being in the right place at the right time. So is “earning” wealth. Bill Gates happened to attend the ONE high school in the country, at the time, that had a computer he and Paul Allen could play with at will and use to teach themselves programming. How would the lives of Jobs and Wozniak have worked out if they had not been born in close proximity to each other? Neither sought the other out.
The same is true of many other collaborators; Lennon and McCartney met by accident (at 16 and 15, respectively). Neither was looking for a musical business partner at the time. They were both musical and their first meeting became a jam session that served as an accidental two-way audition for them, each was impressed by the other. But pure chance, nonetheless. They were thrown together by geography, age, and a mutual musicality that is also probably inherent, heavily dependent on genetics (hearing range and sensitivity, vocal range and control, coordination and dexterity all have genetic components) and nurture beyond their control (parental choices in musical and instrumental instruction, and music in the household, for example) in an environment beyond their control (1957 and the birth of rock and roll) that all came together by chance at a church fair in Woolton.
I think the majority of what we do, and the talents we have, are almost entirely determined by chance. Encounters with the ideal partner — or lack thereof. Nurture that reinforces a natural ability — or lack thereof. Wealth and resources and influence we didn’t do a damn thing to deserve — or lack thereof. An environment we did not choose that makes our born talent valuable — or lack thereof.
Even creativity and the ability to invent is something I do not think anybody works to have. I think creativity is a talent like being a pitch perfect soprano or bass profundo, or having a four octave vocal range: something that can be exercised and nurtured but requires a born component that few people possess.
This is one of the reasons I support a high tax on high earners. I honestly do not think that earning a lot is very strongly correlated to work and effort. Because I think that, I consider much of what high earners get just found money because they won some lottery they did not even choose to play. And because I think that, I have no problem asking them to split their found money with the people on the flip side of their bell curve, that through no choice of their own, were born with a deficit of any talents that could earn money.
How life works out is very much a roll of the dice. There, but for chance, go I.
P.S. I say “There, but for chance, go I” and lest one think I am being condescending, I apply that to BOTH ends of the spectrum, including those more talented, more intelligent, or more whatever than I may be. Although I certainly enjoy superior talent when it comes along, and I do think it fair for the rarity of a talent to command more in the market, what I admire in people is not their talent but the qualities that I think are truly their choice and under their control: their effort, their persistence, their willpower, their kindness, their altruism, their work effort, their courage and bravery when they could have chosen a safer path, their voluntary risks and sacrifices to aid others.
tony c:
How many hours did Lennon and McCartney practice prior to that chance meeting? How many other people had the same chance? Why did that chance work out for them and not for Joe Smith and Rob Lewis who had the same level of talent as Lennon and McCartney but who ended up driving a truck and playing guitar at the local pub?
When I talk with someone who is well to do, there usually is a reason. Hard work and planning and being prepared for the opportunity which propels them. All of us have stories about how we should have done this or that or taken that opportunity and we would be rich. I can count at least 6 such opportunities that I didnt take advantage of in my life for one reason or another, I am sure before I die, there will be 6 more, a 100 more. Why do some people cash in on them and others dont?
It isnt just random chance because opportunities bombard all of us on a daily basis. Some grab them and some dont. Most dont for whatever reason, illness at the time, no savings, a family situation, didnt understand it was an opportunity, or a host of other things. Or it could be as simple as some people are happy where they are and like there life as it is.
So why should someone who took advantage of the random chance, which is available to all of us, need to pay more of their income to those who didnt take advantage of the same chance?
On the down side, I have met formerly rich people who did stupid things and ended up broke. Was that chance as well? I knew one guy who made it big by the time he was 37 and was divorced and had lost a child by the time he was 48. In my opinion it was his philosophy which caused the problem and not it wasnt Objectivism, it was dyanetics.
It isnt a coincidence that Alexander the Great was taught by Aristotle, although it could have been chance. King Phillip must have been a sharp man and wanted the future king trained by the best minds he could find. The meeting of Aristotle and Alexander could be called chance but what Alexander did with the training was not. At some point chance no longer controls the equation and the actor is responsible for the outcome.
I am going to post NYTimes Opinion piece by David Brooks because I think he might have benefited from Piff’s work had he studied it before writing this particular opinion piece.
In his piece Brooks seems to forget that multinational corporations and many in academia wanted all the free trade deals that increased corporate profits by decreasing labor costs. He also fails to mention sending all those low skill jobs overseas which impacted heavily on driving down the wages for low skilled work here. And what about the middle class family? Brooks does not mention that a middle class family back in the early ’70’s could provide healthcare for the family, purchase a home for the family, send their kids to a state or community college, and enjoy a modest retirement all on a single salary. Check the stats, it’s a fact.
IMO Brooks is desperately grabbing at the pendulum, ignoring the history from the the mid and late 1800’s and the 1920’s, trying to stop the swing. I wouldn’t be at all surprised if his car was one of the ones that rolled right on through the pedestrian crosswalk simply because stopping for the pedestrian was, you know, coddling him.
Byron says: How many hours did Lennon and McCartney practice prior to that chance meeting? How many other people had the same chance? Why did that chance work out for them
Do you realize you are making my point for me? It was 1957, Lennon and McCartney were 16 and 15 years old and both attending high school full time. How many hours COULD they have had?
To your point, I believe they probably had far more hours than the average teens, they were both well versed with their teen music scene and McCartney, at least, said of all the teen musicians he knew, they faded away in his mind once he met Lennon. So Lennon was good, and Lennon was so impressed by the 15 year old McCartney he worried he would be outshone, so McCartney was good. So the question is, what made them so frikkin’ good and so much better than all the other teen musicians they both knew?
That goes to MY point, I think it was some accident of genetics and nurture that compelled them to music, and practice, not because they had any intention of selling more records than anybody in history but because, biologically and environmentally, they were born to love music and have a talent for making it.
The reason it didn’t work for Joe Blow is that, even if he did have the same rarefied level of talent, he did not have the luck to meet his perfect musical counterpart at 16. Lennon did, and after serious doubts about teaming up with somebody as good as himself that might even outshine him, put his ego in a drawer and proposed joining forces. THAT is what is admirable about Lennon, IMO. Everything that follows (IMO) is a mechanistic feedback loop that propels them to greatness, their billions of dollars were made by THAT decision by a 16 year old.
The trick is, if you have two one-percenters, Lennon and McCartney, and they are complementary, their collaboration can become the best of the best, more than either of them could accomplish alone. The feedback occurs between two musical geniuses. You don’t get twice as many good songs, you get some songs that are in a class by themselves and better than “good” songs that get played for a few years and fade out, they become nearly immortal songs. I would truly be surprised, in a free world, if “Hey Jude” is not being played any more fifty years after all the Beatles have passed.
Byron says: When I talk with someone who is well to do, there usually is a reason. Hard work and planning and being prepared for the opportunity which propels them.
That is precisely what Piff was talking about in the Monopoly game. The students that began with twice as much money and twice the payday at Go and twice the speed around the board all talked about their strategic decisions in playing the game, and completely ignored their FREE advantages. The truth is they are mistaken, given 8 times the advantages, anybody’s decisions can be mediocre or even stupid and they still win. If we start the game with me owning half the properties with hotels already on them, you almost certainly lose. My decisions to buy, sell, build, etc could be literally random, chances are you will still lose. The rich monopoly players weren’t smart, they were lucky, they won the coin flip.
The same thing is true for kids that grow up rich.
Byron says: Why do some people cash in on [get rich opportunities] and others dont?
For the opportunities you are talking about, that a middle class person could access, this is partially a numbers game. If you are worth a few million dollars that can plausibly earn about 250,000 per year. That is about $20K per month. So you can risk, say, $10K per month on ventures and striking it rich. Investing is easy. A middle class person wanting to start a business has to think long and hard, and risks a far greater percentage of his net worth, his home, his job, his future financial safety on a business. You say maybe 12 in a career? What is that, about one every three years? Even a mildly rich kid worth two million can drop $250K on such a venture on a whim. I happen to know of one that does exactly that, as an angel investor, with inherited money. He is successful, but that is because he was lucky enough to be born to wealthy parents.
Byron says: It isnt just random chance because opportunities bombard all of us on a daily basis.
But the reason people do not grab them is because they do not want to risk everything, and those lucky enough to risk far less, the wealthy, end up being the ones that can exploit those opportunities.
Byron says: So why should someone who took advantage of the random chance, which is available to all of us, need to pay more of their income to those who didnt take advantage of the same chance?
Availability isn’t the issue, the issue is whether wealth provides the advantage that allows one to take the opportunity. Why should somebody get to profit from something that has absolutely nothing to do with their own work, their own thinking, or their own courage or bravery? Anybody here will probably risk, after some thought, 1% of their net worth on what seems like a very good business risk. But when the average net worth is $50K, and 1% is $500, THOSE $500 opportunities to start a very good business are extremely rare, and virtually non-existent. For somebody with a net worth of $50M, the 1% is $500K, and those $500K opportunities to start a very good business truly abound.
It is a matter of scale. It just isn’t true that the same opportunities are available to rich and poor alike.
Byron says: On the down side, I have met formerly rich people who did stupid things and ended up broke. Was that chance as well?
Yes. In the case you cite, it was the bad luck of falling for a con game. But in most cases, it is the bad luck of having more money than brains. That is also to my point, they didn’t earn the money they have, they got it by luck. And by mistaking their luck for skill, and trying to repeat the skill that doesn’t actually exist, they end up losing their shirt. And wife, and kid.
Byron says: It isnt a coincidence that Alexander the Great was taught by Aristotle, although it could have been chance.
Isn’t it chance? Isn’t it a coincidence that Aristotle even lived at the same time, and not 50 years earlier or later?
Byron says: The meeting of Aristotle and Alexander could be called chance
Not if Aristotle was sought out and solicited, it wasn’t. That was intentful, but not the intent of Alexander, which is also one of my points. Alexander did not choose his tutor, his tutor was imposed upon him, a part of his environment that was not his choice. Alexander deserves no credit for having been tutored by Aristotle, he was just lucky.
Byron says: but what Alexander did with the training was not. At some point chance no longer controls the equation and the actor is responsible for the outcome.
On the contrary. Alexander would have done nothing with that training if he had not been given the resources and authority of a King. What he was able to do was a function of luck. I give him credit for the specific choices and decisions he made, but Alexander did not rise to power, he was just lucky to born there, and then increased it.
Lennon and McCartney also made good decisions, Lennon a particularly fateful one at 16, and they did practice relentlessly and work long hours. But work isn’t enough, many teen bands try it and work till their fingers bleed, but just don’t have the right magic, they aren’t lucky enough to be discovered, they aren’t lucky enough to find a rock steady drummer like Ringo Starr, they aren’t lucky enough to have formed a perfect team, they just weren’t lucky.
The wealthy aren’t wealthy because they worked hard. I’ve been a dishwasher, barback, janitor and farm hand. I unloaded trucks for stores. That is hard work, that is burning calories. The wealthy don’t do that. The wealthy own and manage resources that produce more wealth, and quite often, those resources are themselves just a matter of luck. A rich dad (like Trump), a lucky bet on a long shot (like Chick-Fil-A), or even a born talent — They were lucky to not be born without it, as most of us are, for any given talent.
Why do you think everyone who becomes rich is wealthy to begin with? They arent.
http://www.forbes.com/sites/kathryndill/2013/09/18/by-their-bootstraps-billionaires-who-started-from-scratch/
“Of the billionaires on the 2013 Forbes 400 list, 273 qualify as “self-made.” “
Tony C:
not all the sons of kings do what Alexander did. Some are miserable failures, some get executed, etc.
” income is a result of something. In a free society, for the most part, income is a result of one’s capacity to serve his fellow man and the value his fellow man places on that service. ”
http://jewishworldreview.com/cols/williamns011514.php3#.UtaZ47Q4xGM
There are plenty of people who start rich and die broke. I have seen many people who excel at one thing fail at others. They are as you say, success doesnt necessarily transfer to other lines of endeavor.
Why does it matter if one person has a 3 room apartment and another has a 30 room mansion? Life is full of unequal outcomes. How do you control random chance? If that is what it is.
If everybody started from the same point at birth with no money and equal educational opportunities, would the cream still rise to the top? Or would society just descend into mediocrity because of the equality of beginning?
Byron says: not all the sons of kings do what Alexander did. Some are miserable failures, some get executed, etc.
Right. Oftentimes because they were lucky enough to be born the son of a king, and mistook that luck for merit or inherent worthiness, and that fundamental error made the miserable failures. Or their inherent sense of self-worth and selfishness angered people enough to get them overthrown and executed.
It is the same reason some people win the lottery or inherit millions and die broke, because they think being rich makes them better people, superior people, and they aren’t. They were just lucky, and too stupid to realize how much luck plays a part in it.
Byron says: Why does it matter if one person has a 3 room apartment and another has a 30 room mansion? Life is full of unequal outcomes.
Just because it is doesn’t mean it is fair or equitable, does it? Do you think anything natural is inherently fair? It isn’t.
And it is also not as simple as some people being genetically blue-eyed or brown-eyed, blond or brunette, beautiful or ugly. We cannot demand nature treat us fairly, nature is mechanistic and does what it does. When we talk about taxes and income, we are talking about explicit choices made by people. In THAT realm we can demand fairness and a recognition of reality, we do not have to tolerate people making unfair choices or treating others unfairly. That isn’t blind nature, that is humans making conscious decisions on what is deserved and what is blind luck.
Byron says: would the cream still rise to the top? Or would society just descend into mediocrity because of the equality of beginning?
Jesus, dude, can’t you read? What you call the “cream” would rise to the top, because some people experience luck. Not because of anything they did, but because nature is random, environments are random, important life encounters are random, and that produces statistical distributions on all characteristics, with two ends and a big middle. People that got screwed, people that are passable, and people that won the lottery on that characteristic. Tim Storm is the bassest base in the world; he holds the world’s record for lowest note sung by a human, and the world’s record for greatest male vocal range (10 full octaves). That’s a born talent. And guess what! He sings for a living! He hit the lottery, and he will never have to clean toilets for a living.
I hit my own genetic lottery, and live off it.
Given 240 million adults, randomly assigned genetics, they can be sorted, at least into percentiles. Some 1% are the least mentally capable, some 1% are the most. Some 1% are the least inventive, some 1% are the most. And the same for ugly and beautiful, tall and short, disabled and fit. There is a 1% most suited to be actors, another 1% most suited to be singers, another 1% most genetically suited to play guitar, or write poetry, or play chess, or do mathematics, or paint or sculpt or cook or invent recipes people love, or invent jokes, or tell jokes, or write novels or screenplays.
They are the “cream” but not by their choice, by the luck of genetic predisposition and the luck of their environmental circumstance exposing them to the profession for which they are best suited. Michael Phelps is genetically gifted, he has near perfect body proportions for swimming. Not from practice, he was born with them. If he had not been exposed as a youngster to a professional swimming instructor that recognized that perfection, he might well have spent his life enjoying swimming, because he was good at it, and doing something else entirely for a living.
So yes, the cream will rise to the top because some people will be luckier than others. Not necessarily because they work harder or are more dedicated. Because they are luckier, so any dedication and hard work pays off, while for the unlucky, it turns out to be wasted effort. If people really could become billionaires just by working hard, don’t you think most people would be at least millionaires? Don’t you think there would be more than 273, which is about one in one million? Those self-made billionaires may indeed have worked hard, but that is not what made them billionaires. What made them billionaires was a confluence of lucky breaks they could not have controlled if they tried, while they were working hard. But what made their other 999,999 cohorts non-billionaires was, whether they worked hard or were lazy do-nothings, they got no lucky breaks.
Billionaires are not self-made. They hit the lottery, a confluence of chances that they did not plan, and turned into a river of cash.
Byron: Why do you think everyone who becomes rich is wealthy to begin with?
I don’t. I think all wealth is primarily due to good luck, even “self-made” billionaires. I am an inventor, but what exactly gives me the ability to invent? It isn’t hard work. It is something I am born with, an ability to (sometimes) see solutions others do not. I deny that I am “working” at all, sometimes I listen to problems and my brain leaps to solutions. I am not even sure it is voluntary.
I think you are mistaking finding money for earning money. I think you are mistaking having a beautiful face for “work.”
What Warren Buffet calls “members of the lucky sperm club.”
Blouise: Right. But if we rationally extend that concept, even Buffett may be a member, with instead of being born to wealth, being born to acquire it: a unique genetic predisposition that makes him the best investment analyst on the planet.
Buffett claims “The Intelligent Investor,” written by Benjamin Graham in 1949, is his investment Bible: “Chapters 8 and 20 have been the bedrock of my investing activities for more than 60 years,” he says. “I suggest that all investors read those chapters and reread them every time the market has been especially strong or weak.” Rest assured, we do, and study everything Buffett says with microscopic scrutiny and clarity.
Graham details the “value investing” strategy. But Graham never won a billion dollars in the stock market. Buffett is happy to tell everybody how he did what he did, from his perspective at least. So why hasn’t that produced many more financial clones of Buffett, billionaires that won by “looking for unappreciated value?”, or Buffett’s famous “moats”?
Every time he makes a move, Buffett is happy to explain why he did what he did to his shareholders in Berkshire Hathaway; his investment company. And sure enough, his reasons fit, it is value investing 101. He says look at their debt, look at their earnings, look at their moat (whatever uniquely protects them from new competitive attacks; like Coca Cola’s brand recognition, or the natural monopoly of owning a railroad). He says look at this ratio, and that one. Right where they should be. Their market is great! Their uncommitted free cash flow is a joy to behold! This is a great company!
But all of that explanation doesn’t explain his success. First, Buffett frequently misses the mark. So why is that, if his analysis works? He says if you aren’t losing some bets, you are being too cautious, and missing out on the big wins. That’s true, and his losses are covered by spectacular wins, too be sure. That is why he is a billionaire!
Second, Buffett’s picks are not consistent. There are other stocks he turns down, despite their ratios being right. There are stocks he buys where one or more of his criteria are not met, yet they still win. And if we take ALL of Buffett’s investing advice, including the Graham-inspired chapter and verse he quotes, and apply that consistently to all 8000 some-odd companies in the stock market, we do not even end up millionaires, much less billionaires.
And because of that there is a new question: Why these particular winners? Buffett’s specific picks are not explained by his philosophy. In analysis, this suggests hidden variables or forces at work. After all the rules of thumb are parsed literally, some rare quality in Buffett we don’t know about (and he may not consciously know about) is still sorting “too many candidates” into winners and losers.
His rules do not create billionaires like him. He can tell us all day how to pick a beautiful investment, but of the dozens of companies that pass that filter at any given time, Buffet ultimately likes one over all others for reasons unexplained, and it usually performs better than all others. Or even likes one that doesn’t pass his filter, but performs well anyway.
What that means is Buffett’s rules of investment form an imperfect approximation of what is really going on in his head; like we know our rules of physics form an imperfect approximation of what is going on in reality, because they don’t explain everything we see happening. The same thing could be said of George Soros; who loves to talk about his rules of fallibility and reflexivity. Soros has good reasoning, but when it comes to the specifics of making particular investments, Soros is the only one that applies his reasoning to make billions.
It is like Michael Jordan trying to compose a rational checklist of exactly when to take a shot at the basket. It might help, but it isn’t going to turn all high-school players into Michael Jordan quality players, even if religiously followed.
I think of this as nearly a law of nature: If people’s explanations of the rules they followed to achieve success were true and complete, then we should see many people following in their footsteps. If it were just a matter of following rules, about 90% of the population would gladly do so to be rich, to be famous, to be a singer, to be an actress, to be a celebrated musician, chef or model. To be a wealthy, successful and secure investor or entrepreneur.
But 90% of the population labors in obscurity, because the explanations fall short. A grueling practice schedule, like Kobe Bryant’s, might improve your game, but will not make you as good as Kobe Bryant.
Our brains are not accustomed (well, mine is, for whatever reason) to reversals of logic. I think Kobe’s practice is a result of his inherent affinity for the game, not the cause of it. I think Soros and Buffett have rules that are the result of their inherent affinity for investment analysis. I don’t think their rules are the cause of their success.
For Kobe, the fitness and stamina built give his instincts free reign to execute. The instinct makes him a good player, the practice enables his body to do what his instinct demands.
For Buffett and Soros, they instinctively pick the winners. Their rules are the result of their success, not the cause of it, an attempt to codify and explain whatever is inside them that has been proven to be a success.
True, some of the rules rationally filter out circumstances they have learned can trick their instincts. And many of the rules can improve our success. But ultimately, for the ultra-successful, their rules are about serving their personal, extreme outlier subconsciously learned models and perhaps born affinity, and do not create ultra-success for people that don’t have extreme outlier models and born affinity.
Tony C:
“I think you are mistaking having a beautiful face for “work.””
Not at all. That is a gift from nature, having the ability to turn it into Ava Gardner or Jennifer Anniston is a combination of hard work and savvy. I know many beautiful women, some more attractive than Gardner and Anniston who are housewives.
Very little success in life is chance, a good mind is luck, a good body is luck, what you do with them is up to you. Like I tell my children, being smart, attractive and $1.50 will get you a ride on any public bus in any town which has a bus system which charges $1.50 to go from here to there.
Anyone with an average IQ and some hard work can make a decent living cutting lawns or selling hot dogs and hamburgers from a cart or from a small building.
By your logic at all levels the person below that level has a right to the output of the person above him in financial wealth. The person making $15,000 per year has a claim on the person making $20,000 per year who has a claim on the person making $25,000 per year and so on. That doesnt make much sense to me since those people are having a hard time making ends meet. Why should they have to pay for the person who is slightly less “lucky” than they are?
So why does the person making $25,000 per year have a claim on the earnings of a person making over $250,000 per year? Just because that person is 10 times “luckier”? You are never going to change the distribution of talent because it is an act of nature. Hard work is an action taken by an individual which is multiplied by talent. Talent alone will never lead to a Ben Carson or a Michael Jordon, personal, self directed effort is always required. Why is anyone entitled to the individual effort of others?
Nature endows all of us, who have consciousness, with the ability to think or not think. Some of us think better than others and some of us choose to think and others choose not to think. I wasnt born a dog, should I thank my good fortune and pay for all dogs to exist because random chance favored me to be born human? Or does the dog owe a living to the moth because he was born a dog?
You equate wealth/success with chance which is really nothing more than saying “you didnt build that.” So you dont have any right to your money or your accomplishments. Everything you did in your life was random chance and you dont deserve one red cent of the money you made or anything you built. Society owns your effort so pay up motherfuker or die. And while we [society] are it, we will determine how much you get to keep.
“What do you think of Piff’s results?” – Gene
I am not sure what you mean.
His team did various experiments in many places with various settings.
These were social experiments in a particular social setting, in a particular culture.
I would venture a guess that the experiments would be more valid, from a species stand point, if many different nations were involved.
It would be difficult to do in some primitive societies.
I consider the results to be representative of cultural dynamics in one particular society rather than universal principles of one species’ behavior.
His ending remarks support that notion where he explains that the statistical behavior the study and observations focus on then statistically describe will change with some form of stimulus (encouragement, exhortation, etc.).
Thus, this is descriptive of manufactured behavior … manufactured by a culture’s impact on individuals within it … an example of what I call the cultureal amygdala.
Thus, Piff’s results are descriptive of a slice of one culture in a given timeframe.
What would be interesting would be to do the same experiments on the same people, or those fairly representative of them, following the collapse of that culture.
Byron says: By your logic at all levels the person below that level has a right to the output of the person above him in financial wealth.
That is not my logic at all, my logic is that the “output” of the person above him is not a result of any effort by the person above him! And therefore is found money, not a result of their effort or “hard work.” You begin with the assumption that 100% of their value is somehow earned by them, and then circularly argue that because they earned 100% they should get to keep 100%. But they didn’t earn 100% of it, a very large percentage of what they get is the result of blind luck over which they had zero influence.
You want to dismiss the role of luck entirely; you give it lip service, and then attempt to make it rhetorically vanish so all that is left is “hard work.” That isn’t true. If I had the bad luck to be born and abandoned in Somalia instead of being lucky enough to be born and kept and raised in the USA, I would probably be dead by now and almost certainly far less wealthy than my poorest relative. The talent that has made me money would not have been recognized or cultivated in Somalia.
As it was, I was lucky to attend one of the top 10 high schools in the country, but it was an accident of fate that landed me in that school district in the ninth grade, with a math teacher that bothered to recognize I had a talent in the first place.
Byron says: You are never going to change the distribution of talent because it is an act of nature.
Nor do I want to.
Byron says: Talent alone will never lead to a Ben Carson or a Michael Jordon.
Yes, it will, because it is the raw talent and being good at something that rewards people for being good at something and causes the work. Work is done for reward. A singer sings, sometimes from the age of 1, and raw talent is praised and admired and more singing is requested, and that emotional feedback is what causes work to be done on their singing. When the praise stops, or strangers do not appreciate it, or they hear professionals they know they cannot match, the work stops. If they are equals, the work continues.
There is a genetic mutation that gives people sharper peripheral vision that can produce better hand-eye coordination in the peripheral field. Something like 1 in 500 people have it. But about HALF of professional short-stops have it; and before being tested, did not know it. Why? Because that mutation makes them awesome short-stops, and somehow growing up they discovered they were really good at short-stop, and that mutation changed their life and put them on the path to professional sports. Work was done, to be sure, but the work was done because the talent was there, not vice versa.
Byron says: Why is anyone entitled to the individual effort of others?
They aren’t, but why is anybody entitled to rewards for something handed to them? That they did not work for, that just happened, that was completely accidental? The vast majority of wealth discrepancy is not due to work at all, it is due to chance, which you at first acknowledge as an act of nature and then blithely dismiss as having nothing to do with anything. You are incoherent.
Byron says: Everything you did in your life was random chance and you dont deserve one red cent of the money you made or anything you built.
To the contrary. I am not a binary thinker like you, it does not have to be all or nothing. Much of what I did in my life truly was my choice, and my choice to work or not, to sacrifice or not, to negotiate or cave, to take a risk or not. But all great wealth is a matter of luck, it is found money, not earned money.
And as a result, I am not opposed to high taxes on high earners, because I do not believe they earned it, I do not believe it is a result of hard work or effort. I have seen exactly the opposite far too many times, rubbing elbows with the wealthy, the “self-made” and those born swimming in it. I believe they lucked into it, and splitting it (50% is fine) with the unlucky is fair. And would create more opportunities for not having to pass on good luck amongst those that got a low roll with fate’s dice.
Dredd,
It seems like of obvious that all observational sociology applies within the the society which is being examined. You cannot measure the effects of greed the same way in a culture that has no concept of money and expect the same results. If you want to run in circles playing with the scenario in other cultures? Okay. But Piff’s results exist within the context of our culture.
Also within the context of our culture and taking Piff’s and others work into a slightly different area while still recognizing the circumstances that led them to ask some of the questions they ask and recognizing that I am moving from psychology to sociology as to why Piff’s work resonates with many:
“Two out of three Americans are dissatisfied with the way income and wealth are currently distributed in the U.S. This includes three-fourths of Democrats and 54% of Republicans.”
http://www.gallup.com/poll/166904/dissatisfied-income-wealth-distribution.aspx
http://www.nytimes.com/2014/01/20/opinion/krugman-the-undeserving-rich.html?hp&rref=opinion&_r=0 The reality of rising American inequality is stark. Since the late 1970s real wages for the bottom half of the work force have stagnated or fallen, while the incomes of the top 1 percent have nearly quadrupled (and the incomes of the top 0.1 percent have risen even more). While we can and should have a serious debate about what to do about this situation, the simple fact — American capitalism as currently constituted is undermining the foundations of middle-class society — shouldn’t be up for argument.
Tony C:
Being born smart or with superior vision is only a small part of the equation. If 1 in 500 people have the vision mutation to make them superior shortstops, then how come there are so few shortstops in major league baseball? And only a few great ones?
Most people are born with some sort of talent, not all maximize it or even recognize their particular talent. Why dont they? Is it luck? Some people are hard headed and dont listen or maybe they love something else besides what comes naturally. Like the guy with good vision who loves basketball but is only 6′, he would have made an excellent shortstop but is a mediocre guard.
You leave little to the individual, no free will, no hard work [a result of nature], just a lump of clay molded by others at the mercy of random chance and mother nature. I reject that view of life. At some point, the good or the bad in your life is a result, a direct result of actions you take based on how you think. How you think is up to you unless of course you were taught by professors who told you that you were just a lump of clay who had no free will and was at the whim of any random potter to form you into whatever shape he desired.
“Dans les champs de l’observation le hasard ne favorise que les esprits préparés.”
In the fields of observation chance favors only the prepared mind.
Louis Pasteur
Lecture, University of Lille (7 December 1854)
I am pretty sure in all fields of endeavor chance favors those who are prepared. Since preparation is only possible through individual action, no one can force you to learn or throw a football through a tire 100 times/day, the majority of success is earned and is the result of individual effort.
Saying success is the result of luck and random chance is to give individuals an excuse to give up.
there is income inequality, the federdal government and state and local governments take too much money from the people.
Byron says: You leave little to the individual, no free will, no hard work
On the contrary, that is all I admire in an individual. I do NOT say success is exclusively the result of luck and random chance, I say extreme wealth is predominately the result of luck and random chance. If free will and a decade of hard work was all it took to make a million dollars a year, at least half of us would be earning that, the half that use their free will to choose to work hard for a decade. But we aren’t swimming in people that earn a million a year, or have ever done. Instead we are swimming in people that choose to work hard and earn about $30K a year, that despite making choices they thought would make them successful will never become millionaires because they haven’t been lucky.
I leave plenty of room for free will and hard work and sacrifice, in fact it is all I admire in people. But those things do not make one extremely rich. Only good luck does that; whether that is good luck in being in the top 1% of some valuable skill or mental capability or just the good luck of being born to wealth or stumbling upon it. A good middle class living can be the product of hard work. Extreme wealth is always the product of extreme luck.
Tony C.,
When you get some time could you read the following article and tell me what you think. The author is David Barber, University of Tennessee at Martin. It’s a short read, simply put in layman’s terms and basically says:
“The Crash (2008), in short, was not an episode of mass hysteria or panic; it represented a structural crisis in part rooted in the grossly unequal distribution of wealth in this society. When millions of Americans could no longer buy goods, industry had to stomp on the brakes.”
oops … forgot to paste
http://hnn.us/article/127085
SwM,
You might also want to give it a quick read
Blouise: His stats are right, but I disagree with his conclusions. He says, “And so debt has had to sustain our market economy:”
That is an assertion I disagree with; consumers were not compelled to borrow for any reason. I know at least a few families (in my extended family) with typical jobs that have not bought anything on extended credit since even before 2000. (Although some have taken advantage of the current situation to refinance their houses). Most are like my wife and I, we use credit cards online or in stores for convenience, but pay in full and carry zero card debt.
I don’t think income inequality caused either the dotcom bubble or the real estate bubble. I agree with George Soros; the problem is what he calls reflexivity, which is essentially a form of feedback or runaway resonance. People are part of the system they are trying to anticipate and manipulate. So yes, they can create self-fulfilling prophecies (the idea of confidence).
But the Soros core of reflexivity is in misplaced confidence. Circa 1990s, everybody thinks Internet commerce is going to be great (they are right). But nobody really knows what will work and what will not; so investments are made in everything. Not just Amazon and Google, but basically anything with a website. Confidence is misplaced; the Internet is not FM (Fucking Magic), it is a tool (the advantages of which we mostly understand in hindsight). But the investing confidence of people that believe in FM create a self-fullfilling prophecy by over-confidence, and it seems like it is working. They are doubling and tripling their money, the proof others need to jump in and also believe in FM, and it works for THEM too. But eventually the valuations on companies are so far beyond any rational pricing, they run out of suckers. A natural distribution of people have different levels of skepticism, tolerance to risk, and greed. When the party slows down, some of the people decided they have done well enough, and start to sell, and then we have fire in the theater: Everybody rushes for the exit! Declines in the market occur about 20 times faster than rises. We have a crash (and often the people are right to sell as fast as they can, many stocks will never come back anywhere near their bubble-levels.)
The same thing happened in the real-estate market. Credit Default Swaps and splitting up mortgages into interest, principle, and other esoteric securities created the impression of bulletproof profits. False confidence, which led to a bubble, until the difference between reality and valuations grew so large the bubble collapsed.
At the bottom, you could hardly blame people. Yes, they were borrowing half a million with no money down, but it really was true their houses were increasing in value faster than their payments, not just on paper but the mortgage companies agreed. Sure, you had a $5K payment, but if your house increased $7K in value, the lender was happy to add the $7K to your loan (which created a new revenue stream they could dice up, repackage and resell) so you make no payment and actually get paid $2K to live in the house.
That sounds crazy, but don’t worry, as long as the value of your house increases 1.5% a month like clockwork for the rest of your natural life, you have nothing to worry about. 🙂
I don’t think consumer confidence will fix the problem. Another round of False Confidence could create a new bubble, but even that cannot go on forever. Sooner or later people are broke.
I think Barber is suffering from a case of mistaking effect for cause. The effect of the bubbles and chicanery in the stock market has been an increase in the wealth gap, it is essentially the rich have been robbing the middle class.
The cause is not income inequality. The cause is the bubbles, which are basically caused by false confidence. It is tricky, because initial confidence is often in something very real. The Internet really was going to (and has) revolutionized business and the way we buy things. Home mortgage bundles really were a good steady investment when that bubble started.
Blouise: Upon reflection, I would say that wage stagnation, an effect of increasing income inequality, contributes to a atmosphere of desperation amongst the middle class that makes them more likely to gamble and try to win some modicum of retirement security. There are no savings accounts left, they currently return about 1/4 of the inflation rate. Everybody has been forced into the market, and once there, it is easy to make serious mistakes.
Tony C.,
I asked you to look at it because his explanation was new to me and I needed some guidance.
I suppose I was one of those lucky sperm people born with an identifiable talent that could be honed and trained to provide a reasonable income. My father insisted I get an MBA as I was my own small business and he thought I had an additional talent for business. He was right as I found almost all the business theories presented in class to be, “huh, I knew that”. Luckily I didn’t get the greed gene thus money has always been nothing more than a tool for me. You know, handle it well but don’t put it in the middle of your living room and worship it. Also I’m not a gambler. Gambling, except the occasional poker game with friends, bores me to death. So I guess it stands to reason that I don’t enjoy and don’t play the stock market. Also, I don’t like being at the mercy of others if I can help it and I have no control over anything like bubbles if I’m in the stock market.
At any rate, I asked for your opinion on Prof Barber’s article because there was something off but I couldn’t put my finger on it. You pointed to it. Thanx.
As to the internet … this might make you smile. When my youngest daughter graduated from university in the 90’s I steered her towards e-commerce. No one was in it around here, no one was buying off the internet, and when she told people what she was doing, helping to run an e-commerce site which a retailer was trying as an experiment, no one knew what she was talking about. The local retailer soon went national and she worked her way through and then out of that site and has created quite a niche for herself making a very good income. Let me put it this way. She’s not the guy who discovered gold, she’s the guy who opened the store that sells all the equipment to the gold seekers. Business!
The plutocracy that runs the US, but the world:
(LA Times).
typo:
“The plutocracy that runs the US also runs the world”
Tony C., (upon reflection)
“Everybody has been forced into the market, and once there, it is easy to make serious mistakes.”
Not me. I invest in others businesses on my own. Been doing so since the 80’s. I also try very hard not to pay anybody interest so credit cards are for convenience only. Did have to pay interest on a mortgage but soon worked that into a line of credit/equity which could be used for large purchases, such as vehicles, and thus the interest can be deducted. If I have to pay interest then I try to make it work for me to some degree.
As to real-estate and that mortgage fiasco. Once again, my youngest daughter and her husband were getting ready to buy their first house in the early 2000’s. She was coming to me with all this pure shit that, and get this, her main banker, not some mortgage broker, her main banker, was handing her about how much house they could afford. I told her straight out that this was her first of many houses and as the first she needed to be smart about it. Buy with resale in mind and never, never accept a mortgage payment that is more per month than 1/4 of her monthly income … including property taxes. They settled for less and are now on their second and much bigger house. They didn’t make very much on the first one thanks to the Crash but they didn’t lose either. Damn banks would have had those two in a deep hole first time around. Greedy b astards.
Blouise: Well, certainly fortunes were made with the Internet, I’m glad your daughter found part of it. She was lucky to have a parent that recognized the potential of something new!
I think a critical component of most bubbles is that when they first start there is an element of truth to them. It wasn’t a lie about the e-commerce revolution, it happened and is still growing. It also wasn’t a lie about the stability of mortgage bundles as an investment.
I am definitely in the lucky category, too. Lucky genes, lucky geography, lucky meetings. I’m glad you found your talent and could put it to use; I think the talents of many people are wasted, through bad luck and a lack of opportunity to develop them.
It is a strange exercise to try and sort out what was luck and what was actually our own choices and decisions. Work really is a necessary component of success, but work without luck just pays the rent and keeps the wolves at bay for one more day.
Blouise, Blouise, Blouise,
The mortgage mess wasn’t the fault of greedy bankers. It was all those minorities who wanted to be home owners that caused the problem.
😉
Elaine,
I always laugh when I read that excuse the greedy ones use. I was appalled at the mortgage this particular banker was trying to sell to my daughter. He wanted her to gamble thousands of dollars she did not have on pure speculation all the while telling her what a “safe” investment it was.
I see the man occasionally at social functions. His bank survived the crash and he kept his job but his own kid lost his house during the crash and dad didn’t have enough ready cash to help the kid buy out the second mortgage that sunk him.
Tony C.,
Since the talent I was born with was music and the vocation I chose followed that talent I can attest to the fact that there are a great many variables that come into play along the way and luck is certainly one of them.
http://talkingpointsmemo.com/livewire/two-thirds-americans-not-satisfied-wealth-distribution Another poll that confirms the gallup poll.
SwM,
That’s what’s driving this research by social psychologists and it’s an interesting field. I prefer sociology to psychology but this relatively new field of study (at least new to me) gets my attention.
http://www.huffingtonpost.com/2014/01/21/85-richest-people_n_4641021.html One percent of the global population controls half the world’s wealth.