Do self-made millionaires have different personality traits compared to the rest of us? The self-help literature would have you believe so. And a recent paper in Humanities and Social Sciences Communications shows that they do. But there's more to creating wealth than personality.
Methodology
Participants were 23, 721 adult individuals living in Germany taken from the German Socio-Economic Panel (SOEP). "The SOEP measures not only personality but also wealth at the individual level." "Of these, 1125 individuals had individual net wealth of at least 1 million euros." These were defined as being "rich".
Individuals with a net worth of between 800,000 euros and 1 million euros were labelled non-rich. Of the 1125 rich population, " 517 were classed as rich self-mades (millionaires for whom entrepreneurship and self-employment had the prime influence on their wealth), and 136 were classed as rich inheritors (millionaires for whom gifts, inheritances, or marriage had the prime influence on their wealth)." The remaining 472 rich individuals could not be assigned to either the self-made or rich inheritors groups and were classed as "mixed/unspecified."
"The Big Five personality traits were derived from SOEP’s short Big Five inventory (BFI-S), measuring each of the five traits with three items." The researchers also included risk-taking as an additional personality trait because it is an important factor in wealth creation.
Results
"Result 1: The rich are more risk tolerant, open, extraverted, and conscientious, but less neurotic than the general population."
"Result 2: Self-made and inherited millionaires differ in their personality profiles. Self-mades have a more pronounced personality profile of high risk tolerance, low neuroticism, and high openness, extraversion, and conscientiousness." Non-rich self-mades display a similarly shaped profile, but to a lesser extent. The researchers also found that "the more individuals had a self-made, risk-tolerant personality, the higher their wealth. "Inheritors showed the lowest values for risk-tolerance, openness, extraversion, and conscientiousness and the highest for neuroticism."
Implications
Self-made men and women are largely a myth. The best candidate only wins in a small number of cases. In a hyper-competitive economy, chance determines who wins more often than not, and more so than in the past.
The researchers suggest that "personality may be a driving force in the accumulation of wealth rather than a consequence thereof." Their reasoning is that "rich inheritors, in contrast, do not conform to the prototypical rich personality profile: They are far less willing to take risks and are more neurotic." However, this was a cross-sectional study, so correlational. The study did not identify if the personality traits of the self-mades "caused" them to become rich.
"The personality traits of the rich and their influence on rich individuals’ decision-making have direct impacts on the general population in the areas of work and politics as well as culture and society." "This does not mean that such a trait constellation is necessarily also beneficial in other, more communal areas of social life. For instance, when an important decision-maker with a high Risk tolerance implements plans that may be beneficial but are very risky, this risk-prone decision making may end up being to the detriment of the more risk-averse rest of the population."
A highly skilled participant with similar traits to the rich individuals and experiencing a little bit of bad luck will lose to a slightly less skilled participant who is luckier.
There is more to creating wealth than personality traits. I think we can all agree that success is the sum of talent, hard work, and luck. When many talented, hardworking people have to compete for success, the difference in quality between the best of the best is only minimal and a highly skilled participant with similar traits to the rich individuals and experiencing a little bit of bad luck will lose to a slightly less skilled participant who is luckier. In 2016, economist Robert H. Frank computed a person’s chance of NOT winning using different numbers of competitors in the pool: If 90% of the result is due to talent and hard work and 10% is due to luck, "in a pool of 1,000/10,000/100,000 participants, the best candidate will NOT win 69%/83.1%/92.3% of the time respectively." These are staggering odds against success!
Success is partly determined by chance, and once you are successful, you will get opportunities to become more successful.
Self-made men and women are largely a myth. Michiel de Hogg writes about Dr. Frank’s research in The Correspondent: “The best candidate only wins in a small number of cases. In a hyper-competitive economy, chance determines who wins more often than not, and more so than in the past … at the same time, the awareness of the role of chance or luck decreases. In other words: the belief in one’s own ability, in the self-made nature of achievement, that one owes success to oneself, increases.” “Success is partly determined by chance, and once you are successful, you will get opportunities to become more successful.” Chance could be being born into privilege, a chance meeting with an important person, or having your work seen by an influencer.
Reference:
Leckelt, M., König, J., Richter, D. et al. The personality traits of self-made and inherited millionaires. Humanit Soc Sci Commun 9, 94 (2022). https://doi.org/10.1057/s41599-022-01099-3