How to Become Smarter (55 page)

• genetic factors, such as innate health, both physical and mental; physical appearance (important in show business); various
  talents
  [
  530
  ,
  531
  ]; and intelligence;
  
• environmental factors, such as where and when you were born (e.g., a rich country or a poor country, a politically stable or unstable region); who your parents are and what kind of upbringing and education they will give you; your parents’ social status and net worth; the lifestyle that your parents will imprint on you—for example, various habits related to nutrition, exercise, smoking, and drinking—this lifestyle will have an impact on your physical and mental health;
  
• character or personality traits, such as conscientiousness; they are thought to be the result of both genetic factors (genes that affect brain function) and environmental factors (upbringing and social environment in childhood); two random people will not have identical character traits when they reach adolescence; there are no proven ways that can change character traits of a healthy person, without changing biological function of the brain (many self-help and get-rich-quick books assume that you can change your personality traits easily by a mental effort).
  ^Z
  

The combination of these factors will have a strong influence on future income and net worth of the person. Unfortunately, a person cannot “earn” those factors. They happen to people by chance, that is, these things are the result of luck. Therefore, if we are talking about the independent approach to wealth, we have one variable that the person has control over: hard work. We also have about a dozen factors that are random and not subject to free choice. These random factors will determine how competitive and productive the person will be in the marketplace compared to other people (competitors). Thus, hard work alone will not be sufficient in order to achieve great success. The success in the marketplace will depend on the aforementioned combination of variables that are beyond your control. In other words, luck is a necessary condition of wealth. The implication is that advice on how to get rich is always useless because there is nothing a human being can do that will guarantee wealth or great success. Luck is beyond anyone’s control. Therefore, it makes no sense to pay for useless advice. Another reason why it is best to ignore the advice on how to get rich is that this advice is often based on magical thinking. Examples of common fallacies include:

• If you think and behave as if you were rich, you will get rich.
  
• If you ask God (or “the universe,” “nature,” “the collective subconscious”) to give you wealth, it is guaranteed that you will get rich. According to some wealth gurus, now you can burn all bridges and undertake the riskiest business ventures—you can’t lose—because now “the universe is on your side.” [
  My comments: Studies of medical benefits of prayer show that it is not effective or at least not a reliable approach (reviewed in [
  932
  ]). Of course it is possible that the universe is unwilling to give you health, but will give you wealth if you ask for it, although I find it unlikely.
  ]
  
• If you visualize (dream about) something positive every day, such as fame and fortune, it is guaranteed that this positive thing will happen to you. [
  My comments: If this were true, then a placebo pill would be an effective medical treatment. Placebos don’t work [
  931
  ]. Bipolar patients often dream about wonderful things and do a lot of positive thinking during a manic episode. This does not lead to wealth; on the contrary, mania and hypomania promote excessive spending and reckless behavior, which often lead to financial ruin [
  340
  ].
  ]
  
• You are the only person in the world who prefers to buy cheap and sell dear. Other people are fools who do not want to be rich and who will be giving you their money in large amounts without a good reason. They will be buying stuff from you at prices well above the market price. They will also be selling their stuff to you at prices well below the market so that you can get rich.
  
• Wealth requires certain personality traits, such as confidence (you should believe in yourself!), courage, self-discipline, and persistence. Once you develop those, then there is nothing standing between you and untold riches. If you do not have these personal qualities, it is your own fault because people can change personality traits by a mental effort.
  ^Z
  
• There are no risks and no competition in the marketplace and you will be the only person who wants to get rich using the proposed approach.
  

Watch out for these fallacies and if you see a “guru” peddling this sort of material, it is likely that you are about to become a victim of a scam [
816
]. Going back to definitions, material wealth is always relative and we can only define it by how much stuff you have
compared to other people
. If everyone has a private jet, then you need to own ten private jets to be considered rich. If your net worth equals one million dollars, and the minimum wage is a million dollars per hour, then you are poor, not rich. It is useful to consider these three fundamental laws of economics [
925
]:

1. Human wants are unlimited.
   In simple terms this means that the vast majority of people would choose to be rich if they could; they would also avoid being poor, if they could. No matter how much material wealth a person has, he or she will want more, in most cases.
   
2. Resources are scarce
   , i.e. economic resources are always limited. For example, the amount of fossil fuels that people can extract in a given geographic area is limited; the budget of a local government is limited, and so on.
   
3. Most humans always try to maximize utility
   ; that is, they try to derive the most utility at the lowest possible price from every economic transaction. This means that the vast majority of people always prefers to pay less and to get paid more, all else being equal. If you see two refrigerators with identical technical specifications (and quality), you are likely to buy the one that has a lower price. Likewise, if you can choose between two identical jobs, you are likely to choose the one that pays a higher salary, all else being equal.
   

If we take these three laws into account—unlimited human wants, scarcity of resources, and maximization of utility—it becomes obvious that a person cannot get rich just because he has decided to do so. Other people are not going to give him their money in large quantities without a good reason because they want to get rich too. During any economic transaction between you and other people, other people will try to get as much money as they can from you if you are the buyer. They will also try to give you as little money as they can if you are the seller. Everyone cannot have more money than everybody else, hence only a minority of people can be rich. If someone is trying very hard, this does not guarantee that he will get rich. Previous paragraphs showed that how productive and competitive you are in the marketplace depends on many other variables besides hard work.

Don’t fall for the
give-me-a-little-money-and-I-will-show-you-how-to-get-rich
scam, which is one of the oldest fraudulent schemes in the history of mankind. Numerous authors have repackaged this scam in a multitude of formats (late-night TV infomercials, books, website subscriptions, videos, software, audiotapes, seminars, and so on) and sold it to tens of millions of people. Think about it: suppose someone knows how to make a million dollars easily with 100% guarantee and is willing to give you this information for a small fee, say $30. This is equivalent to their giving you one million dollars
out of their own pocket
in exchange for thirty bucks! This is an illogical and unfair exchange for the seller of “easy wealth,” unless the seller is a charlatan and selling useless, untested, or false information. No wonder the advice in “how to get rich” books is almost always vague, lacking details, and heavy on motivation, New Age theories, or popular psychology instead of practical steps. If there were a concrete and reliable step-by-step approach to making a fortune, then the first person who learned about this method would milk it dry. This person would try to leave nothing to everybody else. (Economic resources are always limited, whereas human wants are unlimited.) A sane and honest person who knows how to make a million dollars easily will make that money without telling you anything. She will not try to sell you the million bucks for thirty dollars. This person may offer you a job, without telling you all the details of the business. Ask yourself why the vast majority of rich people do not write books on how to get rich. In rare cases, some rich people do not understand the role of luck in their good fortune and try to sell useless “how to get rich” tips to the masses. You can ignore this sort of information regardless of its source because there is no earthly reason that you can benefit from it, except through pure coincidence. (For example, you get lucky and, prior to that, you read a motivational book on how to get rich. This will create the illusion that the book caused your success.)

If you wish to get rich, you can try doing it slowly, for example, by getting a college degree, then an MBA degree, and then working your way up the corporate ladder. Since wealth requires great luck (see the example below), it will be unwise to take big risks or to make big sacrifices in order to get rich. To summarize, it makes no sense to pay for advice on how to get rich for several reasons:

1. This advice is rarely new and you can find it for free on the Internet. You don’t need to buy a book or a promotional video if you can describe the whole system in two or three sentences. Read the reviews, negative ones first, and you will realize that it is senseless to pay for that trite advice.
   
2. The advice in get-rich-quick books is based on magical thinking and will be unhelpful at best or will lead to financial ruin at worst.
   
3. If someone had a fantastic business idea, it would be more profitable for the inventor to hire you as a part-time or full-time employee than to reveal you the details of the idea for a hundred bucks.
   
4. Wealth requires luck and it is impossible to learn how to become lucky.
   

Please note that I am not saying that you will not become wealthy and will not achieve big success. My point is that the probability that any given person will become wealthy is miniscule. It is true that anyone can win a lottery, but the probability of winning is too small for any given person. An example will illustrate this point. Let’s assume that wealth means being in the top 1% of net worth in the population. In this case there is an approximately one in a hundred chance that any one person will end up in the top 1%. (To be precise, the last sentence should contain the phrase “in that person’s age group.” On average, net worth increases with age. For simplicity’s sake we will ignore the significant age-related differences in net worth.) What will happen if 50% of the population starts doing everything in their power to increase their net worth (which is the case in modern society)? Can 50% of the population be in the top 1% of net worth? No, they cannot. Only 1% of the population can be in the top 1% by definition. Therefore, whatever a person does, the chance that he or she will end up in the top 1% is small. The chance that any given person will get into the top 0.1% is smaller still.

Although this book aims to help readers improve some mental abilities, the fact remains that people have unequal opportunities from birth, including genetic differences in intelligence [
987
]. This book also proposes some techniques that may change certain character traits, such as impulsivity. Nonetheless, any two random people do not have identical character traits to begin with. Therefore, application of the proposed techniques will not provide everyone with identical high-quality character traits and equally high intelligence. The differences in intelligence and character traits among different people will remain substantial, regardless of whether the proposed methods are effective or not. How competitive you are in the marketplace depends on how your personal characteristics compare to those of other people. For example, if everyone increases their IQ by 10 points, then your competitiveness relative to other people will not change. Put another way, publicly available information on how to become smarter can increase your income [
24
], but it will not change your economic status relative to other people. This is because other people will also take advantage of this information. This kind of knowledge will not help a person to get into the top 1%. Therefore, the financial future of any one person depends on random factors, many of which are not subject to free choice.

The probability that a mentally retarded child born into a family of farmers in a third-world country will become rich is zero. This probability is higher for a healthy person with a high IQ who was born into an upper middle class family in a developed country. Note that the latter person did not “earn” the more fortunate circumstances, they happened by chance. In this case, the probability of achieving wealth is still negligible. This person will have to end up in the right place at the right time with the right set of skills in order to make a product or service that will hit it big in the marketplace. These circumstances are a lottery. (How many PC manufacturers had failed before the market was ready for this product?)

From the discussion above, it follows that people do not have complete control over their financial destiny. I do believe in the existence of free will,
^Q
but the evidence presented above suggests that the role of free will in shaping a person’s life is small. In particular, your mind cannot choose your thoughts, needs, desires, interests, emotions, talents, and personality traits because they are the brain’s doing. It is the brain that controls the mind, not the other way around.
^Z
You are free to pursue your desires, but you are not free to choose which desires you will have. It is likely that fewer than 10% of choices a person faces in life are free choices. The rest are the choices forced or limited by biological and environmental factors.