On this week’s episode of Forward Guidance, Alexander Green joins us by phone to discuss his recent FreedomFest debate with Michael Shermer of Skeptic magazine. The subject of the debate was American meritocracy - and whether or not it’s a myth.
Shermer argued (on behalf of New York Times columnist Robert Frank, who could not attend) that luck is the most significant influence on an individual’s economic life outcome. Alex argued that skill has a greater effect - though he concedes that circumstantial factors like upbringing and socioeconomic status play a role in individual success as well.
Alex notes that it was an Oxford-style debate, meaning that the audience was polled before and after to gauge any changes in their views.
Michael Shermer vs. Thomas Stanley
By this measure, Alex won the debate - he convinced the audience that skill has more of an influence on economic success than luck does. And he did so with the help of data-driven arguments drawn from the work of Dr. Thomas Stanley.
As Alex explains, Stanley (who wrote The Millionaire Next Door and several other best-selling books) spent his life studying the habits and characteristics of wealthy individuals.
According to Stanley’s research, the top income quintile works longer hours than any other economic group does. These millionaires also live well below their means, and they save and invest religiously. These statistics make it clear that skill and responsibility do play large roles in an individual’s economic success.
I then ask Alex whether his arguments changed any of Shermer’s views - and whether any of Shermer’s arguments changed his views.
According to Alex, Shermer’s arguments focused on the relationship between demographic factors and life outcomes. Alex agrees with Shermer that some groups, like white men, have statistical advantages in our society - and that others, like children of single mothers - face significant structural obstacles to success.
Nonetheless, Alex still does not think that luck is the best explanation for an individual’s economic success or failure. He feels that Stanley’s data on America’s millionaires thoroughly refutes that line of thinking.