This week's video was made in partnership with the daily upside, a free business and finance newsletter sign up using the link in the description. Dumb people make more money than smart people, and it took a study conducted by really smart people to prove it. A study out of sweden found that the top earners have lower intelligence than the people and income levels directly below them.
The plateauing of cognitive ability, among top earners drew on data from 59 000 men, who had to take a compulsory military conscription aptitude test. It then tracks their earnings over their professional careers to find the relationship between intelligence and income wait. This is interesting and before tai lopez gets any ideas for more shitty youtube commercials or the hustle bros learn how to read journal articles and use this to encourage people to drop out of college I. Want you to know how this data really works. The relationship between intelligence and income was strong, smarter people earned more money, but only up to 670 000, swedish krona or sixty four thousand dollars per year. After that, intelligence didn't mean much anymore and at the very top end of income earners, the one percent dumber people actually did better. We made all that today. Well, it was twice as much but I had a bailout. Cinnamon's kit thanks mr peter, this guy's the best. Yes, so is this a sign that watching tick tock in reality, tv is actually better for your career than going to college? Well, maybe actually for two important reasons, but there are also two reasons why you should probably ignore this and keep studying hard. If you want to get ahead financially reason number one why dumb people are doing better than smart people is that smart people fill in high prestige jobs that don't have high salaries, academics and research.
Scientists are some of the smartest people in the world, but they don't get paid well guys, like yourself yeah how come I can be successful, though okay. Well, you could be a lot more successful. We had 30 points less iq doctors, lawyers and elite financiers also need to be very smart to get through demanding schooling and emissions exams, and these professionals are typically compensated very competitively, but most of them don't make it all the way to the one percent in the usa to be in the top one percent of income earners, an individual needs to make at least 597 000 before tax and that's just the minimum to join the one percent club. The average member of the one percent earns 1.4 million dollars before tax. Some senior executives certain doctors, lawyers and even bankers can earn this much money, but they are in the minority. Most people making this much money are business owners and there is less of an intelligence barrier to becoming a business owner compared to the genius level. Intellect a person needs to become a top surgeon business owners earning over half a million dollars a year in income still need to be smart, but they don't need to be as smart as the very few types of workers that an employer would be willing to pay. That much you do not have to be smart to make money. People that are highly intelligent and have a desire for high income are also at a slight disadvantage to people that are only moderately intelligent and equally have a desire for high income. Highly intelligent people that follow well-compensated career paths are less likely to make the transition to business ownership because they will reach a level of income that they are satisfied with and won't want to take the risky step of giving up their well-paid job to start a business that might not even succeed.
Moderately intelligent people with desire for high incomes, on the other hand, won't have as many opportunities to make incomes in the top percentiles unless they go into business for themselves. So they are on average, more willing to take the risk because they won't be giving up a career that was difficult to get into and equally difficult to get back into. No I am not going anywhere until you or one of your butlers or bimbos. Writes me. A check so by looking at the data, if you want to be wealthy, the best thing you can do is to be moderately intelligent with a lot of ambition right.
Well, as the great mark twain said, there are three types of lies: normal lies, damn lies and statistics. So it's time to learn how money works to find out why dumb people are earning more than smart people and why this trend is completely meaningless for your own career planning? This week's lesson was made possible by the daily upside most financial. Media businesses are built with one singular goal, convert financial insecurity and fear into clicks, and so the headlines do just that nine percent, plus inflation is eating away at your savings. Soaring interest rates have wiped four trillion dollars from equity markets. None of it designed to make you a smarter investor or sharper business person in if you're struggling to find crisp, unbiased financial news. The daily upside may be the solution to your problem. It was founded by a team of financial professionals with the intention of providing clarity and context on the event shaping the world of business.
Every weekday they deliver a morning brief, followed by more detailed stories that are shaping the business world. It's becoming something I read every morning as it is informative, witty and not dumbed down. They go beyond the headlines and provide real analysis on the most important news of the day, whether you are a financial, professional or just looking to get a jump start on the news moving the markets, the daily upside is the perfect solution, it's totally free to sign up and they send you one information filled email every morning. As someone who looks to stay on top of the news to create videos like this I can't recommend it enough, be a daily upside reader sign up using the link in the description below. Let's say all you care about is making as much money as possible and you are trying to pick what person you want to be to give you the highest chance of achieving that goal.
The first problem that you will have, if you try to plan your career around replicating the success of people in the top one percent, is all of the statistical complications that come with inferring outcomes. Based on data like this, the ceiling effect is what happens towards the extremities of data sets that are drawn on a scale like percentiles of wealth. If a class of 10 students got given a 100 question, surprise quiz and three students in a class got perfect scores and the seven other students got a random mix of scores. A statistician could conclude that a perfect score was the easiest result to get because it's the result that happened the most often no matter how smart the students taking this quiz are. They can't get more than a perfect score, no matter how high someone's income is, the top one percent is the top of the scale. If two of the three students with perfect scores were the smartest people in the class and the third student was average but just cheated on the quiz by copying the top student in the class, the average intelligence of the students with perfect scores would be lower than the intelligence of the student who got 99 questions right most people earning in the top one percent are very smart, but their average is brought down by the people like the kardashians dude I am so disillusioned right.
Most people in the top two percent are also very smart, but they don't have outliers stuck to the ceiling bringing down their average. Less intelligent people earning the most money out of a population also have a problem with survivorship bias. A person of average intelligence starting a business for themselves is statistically very likely to fail and end up in the lower end of the income range at that point, they can either train start another business or go back to a regular job. If they are successful, though, a business doesn't need to get that large before it can generate enough profit to put the owner in the top one percent of earners a highly intelligent person starting a business will have slightly better odds of being successful, but statistically, it's still likely to fail, because there are less highly intelligent people than there are people of average intelligence.
There are going to be more successful. Businesses run by average people than run by intelligent people, and, if you remember, highly intelligent people already earning good money in a position as an employee are less likely to start a business of their own in the first place, they're even less likely to end up as a successful or unsuccessful business owner there will also be many more business failures owned by people of average intelligence, but because only the businesses that survive get counted in the one percent of income earners. It changes the expectation that the best way to get rich is to be a business owner of average intelligence. The second problem with interpreting this study, and all of the other studies you hear about, is that the traits of wealthy people goes well beyond just statistics. To begin with, the study was conducted on men. Only men have different career earnings and work in different vocations than women, so the results could be very different if the other half of the population was included. Does that make sense you see you see the difference. Measuring intelligence is very difficult in a military entrance. Exam is more likely to be focused on the type of intelligence that would make people good at following orders like comprehension, rather than free thinking and creative intelligence. That would provide a competitive advantage in the boardroom, but not on the battlefield. The study was also done in sweden and I know, thanks to the invasive power of google's data collection, that only 0.9 percent of you watching are swedish. Personal finance and careers in sweden are different from here in the states because they have stronger welfare and worker protections.
They also pay lower salaries on average to top employees. Sweden is also surprisingly, more entrepreneurial than the states. It has 20 startups per 1 000 people, while america only has five. So what does this mean? Basically, this means to get into the top one percent where the study was done. You need to be a successful business owner, but in most other places there is a high chance that you will get there with one of the extremely well paid jobs that go to extremely intelligent people. It's starting to look bad for the dropout of college, hustle, bros and that's before even considering other things that can give people a high income. Some people get a high income, not because of luck, intelligence or hard work. They get it because they're a nepo baby and have family connections which can land them a job that pays well as unfair as it may be to someone without these advantages, giving rich kids with connections. Jobs can be worth it if they keep using their connections to bring in more business. Some of these privileged individuals will be smart, some of them not so smart, but they won't need to be as intelligent as a top doctor to earn their money, so they will bring down the average of the percentile they land in so before that, you think that this whole investigation was just a big waste of time and that it doesn't reveal the secret to becoming a member of the one percent. You should know that it actually does. Let me show you how there are some factors that can put dumb people into one percent that you can't control.
You don't get to choose if you are born to a wealthy family that can get you a fancy job by calling in a few favors like a little 100 mil. A little hundred mil I also only do so much to control whether your business is highly successful. Just breaking even or a complete failure, a lot of it is just luck, but here is something else. You can't 100 control how intelligent you are either you can practice certain skills learn new things, but some people will be able to absorb and apply knowledge better than others. You can't copy traits and expect a similar outcome. You have to be able to critically assess your strengths and weaknesses and choose a career path that suits you best. Rich people eat a lot of caviar and fly first class, but flying first class and eating caviar won't make you rich, just like being of average intelligence, won't make you a member of the one percent by itself.
The first real step is to work out what you are good at and what you are bad at. This may involve admitting to yourself that you are not as smart as you think you are, it might hurt your ego, but being honest with yourself about your weaknesses. Will bring you much further than believing you're good at things that you're not highly competitive industries reward high performers, but they are also equally punishing underperformers becoming a doctor, will almost guarantee an upper middle class or upper class income for the rest of your working life, but feeling out of med school will leave you with hundreds of thousands of dollars of student loans. That will put you far behind people who were more realistic with their career ambitions, an electrician that does the best work in their area and has a good reputation with builders and businesses will make more money than a lawyer that is average or below average. That doesn't mean drop out of college. It means be honest with yourself about what marketable field you could excel in and do that, instead of trying to chase career paths that just have a reputation for earning a lot of money.
Because if you do, you might end up like the people that rushed into tech jobs to chase big paychecks just before the biggest companies in the space, announce record layoffs to find out why tech companies that are only running a website need so many employees to begin with go and watch my video on why tech companies hire in fire so much a special thanks again to the daily upside for making it possible for everybody to keep on learning how money works?
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