Can Psychology Explain How To Become A Billionaire?
A new psychology study suggests true path to billions is somewhat surprising
Posted September 22, 2015
by Raj Persaud and Adrian Furnham
The BBC News website reports Forbes Magazine annual list of world’s billionaires has declared Bill Gates is the richest man in the world.
It’s the 16th time he has topped these annual charts.
Bill Gates’ net worth is reported to be $79 billion, and the BBC News site comments that founders and chief executives of US technology firms dominate the list again, accounting for six of the top 20 richest men in the world.
The fact that billionaires like Bill Gates, Mark Zuckerberg and Steve Jobs dropped out of college is often touted as how mega bucks is not linked to being studious.
Plus other college ‘drop out’s’ like Mick Jagger, and other entertainment multi-millionaires, often create the impression that entertainment and the arts are the route to major money.
But a recent psychology study suggests the true path to billions is somewhat surprising.
To investigate who becomes a member of this kind of global elite, 1426 of the world’s billionaires, 231 of the world’s most powerful people (according to Forbes magazine), and 2624 of attendees at the World Economic Forum at Davos, were recently extensively studied by Jonathan Wai of the Duke University, Talent Identification Program, in the USA.
The study is entitled, ‘Investigating the world’s rich and powerful: Education, cognitive ability, and sex differences’, and found roughly 34% of billionaires, 31% of self-made billionaires, 71% of powerful males, 58% of powerful females, and 55% of Davos participants, attended elite schools worldwide.
The most common subjects specialised in at University by billionaires were business (including economics, accounting, or attending an MBA program), engineering, physics, mathematics, statistics and chemistry.
These are all disciplines requiring numeracy – so mathematical ability seems key.
Worldwide, there were 55.9% Billionaires in business, 22.8% in engineering, and 29.9% in one of either physics, mathematics, statistics, engineering and chemistry.
The study, published in the academic journal ‘Intelligence’, also found females were underrepresented among all groups, especially among self-made billionaires. However, as billionaires, females were consistently younger than their male counterparts.
Jonathan Wai speculates that perhaps this indicates the recent rise of females into the global elite.
Billionaires came from extreme wealth and poverty, but the majority fell somewhere in between: comfortable middle to upper class backgrounds. Many of the individuals in this study may have been granted head starts in wealth, but also in personal traits such as intelligence, energy, drive, looks, charm, discipline, and conscientiousness that all helped them accumulate further advantages throughout life.
So was their power and wealth entirely earned based on individual effort?
Jonathan Wai’s study quotes other research examining the 400 richest Americans across the last four decades, concluding that access to education has become more important in wealth generation.
Education provides skills, but it also provides access to networks.
The finding that the majority of billionaires and powerful people attended elite schools might not only be a reflection of their education and brain power, but also the network clout these exclusive institutions gave them access to, which includes many other people who had been highly selected on intelligence and motivation, among other psychological traits.
So is it brain power, or connections, which explains billionaire success?
The jury may still be out, but Jonathan Wai also conducted a series of analyses examining whether more educated and smarter people accumulated a higher net worth, even within the top 0.0000001% of wealth.
Amongst billionaires, those with greater wealth were significantly more likely to have attended an elite school. The average net worth of those who attended an elite school was significantly higher than the average net worth of those who did not.
This is a very important finding in terms of implications for the link between brain power and real world success. Previously it was a widely held view that more ability does not matter beyond a certain point in predicting real world success.
Yet even within the top 0.0000001% of wealth, there were differences in education and ability between those who earned more vs. less money
However China and Russia bucked this trend. In China and Russia those with greater wealth were not more likely to have attended an elite school, with the average net worth of those who attended an elite school not significantly higher than the average net worth of those who did not.
Jonathan Wai noted that Russian billionaires were sometimes connected to Vladimir Putin or the Russian government. For example, according to Forbes Magazine, Jonathan Wai reports that Boris and Arkady Rotenberg “were [Putin’s] childhood friends and former sparring partners”.
Within China, Jonathan Wai suggests some billionaires had connections to the Chinese government. For example, Zong Qinghou apparently relied on his high-level party membership to build his distribution network.
However, these are only anecdotes, and data was not systematically available.
But perhaps when the opportunity to rise as an entrepreneur is significantly tied to political connections, individual ability is more weakly linked with success.
Also given access to elite schools in the more democratic West generally appears largely dominated by students from financially secure backgrounds, this raises the issue of social mobility.
Yet Forbes Magazine confirms that there are now a record 1,826 billionaires in the world, an increase of 181 in the past 12 months.
But beyond those headline statistics, this new psychology research raises the intriguing question, is the billionaire club revealing the modern rise of the ‘alpha geek’ – basically those who have a facility with numbers and a background in Science, Technology, Engineering and Mathematics.
And what are the implications for the rest of us, and world culture if, of nearly 7.1 billion people on the planet, it in fact boils down to just a handful of the super powerful and rich, who matter the most?
Particularly if this handful display an increasingly narrow set of psychological traits?
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Raj Persaud and Peter Bruggen are joint podcast editors for the Royal College of Psychiatrists and also now have a free app on iTunes and google play store entitled ‘Raj Persaud in conversation’, which includes a lot of free information on the latest research findings in mental health, plus interviews with top experts from around the world. Download it free from these links
A version of this article appeared in The Huffington Post