Lower-Paid People New Study Shows
New research has shattered the myth that the ultra-wealthy are the smartest people around.
According to a recent study, being a billionaire doesn't necessarily equate to having a superior intellect. In fact, the study reveals that those in the top 1% of earners, aka billionaires, scored lower on cognitive ability tests than those who earned just slightly less than they do.
The comprehensive study, conducted by researchers from Linköping University in Sweden, the European University Institute in Italy and the University of Amsterdam in the Netherlands, analyzed data from 59,400 Swedish men who took a military conscription test when they were young adults. The researchers then meticulously tracked their career trajectories, earnings and job prestige for over a decade, from when they were 35 until they turned 45.
The results showed a strong relationship between intelligence and earning potential until the figure exceeded $64,000 a year. Beyond this point, the correlation became almost negligible. And at the highest pay scales, intelligence plateaued, suggesting that other factors, such as socioeconomic background, culture, personality traits and luck, became more significant.
To stay updated with top startup news & investments, sign up for Benzinga’s Startup Investing & Equity Crowdfunding Newsletter
The study also found that job prestige didn't increase with cognitive ability at higher pay scales. In professions such as medicine, law and academia, more prestige didn't seem directly related to more income.
The findings challenge the idea that success and higher levels of income are earned by superior intellect and talent. Instead, the researchers suggest that small initial success differences between individuals can grow into extreme inequalities over time.
The study has limitations. It focused only on men, limiting its generalizability to the wider population. But it still provides a relatively large sample across a variety of pay levels and occupations.
In a world where the ultra-rich continue to get richer and have more influence over global political, social and economic landscapes, the study's findings are significant. The argument that those taking home the most pay deserve it the most is one that needs to be challenged, the researchers point out — especially at the highest end of the scale.
Don’t Miss: Kevin O'Leary-Backed Startup Lets You Become a Venture Capitalist With $100
"Along an important dimension of merit — cognitive ability — we find no evidence that those with top jobs that pay extraordinary wages are more deserving than those who earn only half those wages," they wrote.
The research team wrote that "small initial success differences between individuals are not canceled out over time but instead grow into winner-take-all distributions characterized by extreme inequalities."
This concept is not new, as Malcolm Gladwell's bestseller “Outliers” explained how rare opportunities and sheer luck play a significant role in the success stories of the most accomplished people.
See more on startup investing from Benzinga.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.
