The Hard to Identify Stupid Person

Amar Pandit , CFA , CFP

Amar Pandit

A respected entrepreneur with 25+ years of Experience, Amar Pandit is the Founder of several companies that are making a Happy difference in the lives of people. He is currently the Founder of Happyness Factory, a world-class online investment & goal-based financial planning platform through which he aims to help every Indian family save and invest wisely. He is very passionate about spreading financial literacy and is the author of 4 bestselling books (+ 2 more to release in 2020), 8 Sketch Books, Board Game and 700 + columns.

The headline of this post has been derived from a brilliant book “The Basic Laws of Human Stupidity” by Carlo M Cipolla (1922-2000), an economic historian and a professor at University of California Berkeley. The book is a very short one (all of 86 pages) but outstanding. Needless to say, you will have a hearty laugh recalling some of the stupid people you have come across. You might even discover some stupid people who you thought of as intelligent, intellectual, or wise earlier. I might not even be surprised to receive a mail or two calling me stupid. Without wasting any further words, let’s dive in.

Law #1:

Always and inevitably, everyone underestimates the number of stupid individuals in circulation. There will always be more stupid people than you think. The author remarks “The First Basic Law prevents me from attributing a specific numerical value to the fraction of stupid people within our population: any numerical estimate would turn out to be an underestimate.

Needless to say, there will be many in our industry and profession too (more than we think).

Law #2:

The probability that a certain person be stupid is independent of any other characteristic of that person. Author Nassim Nicholas Taleb writes the following words – “The proportion of stupid people is invariant to intellectual, social, or geographic segmentation. The ratio will be the same among Nobel Prize winners as it will be among a selection of tax accountants (except I am sure that there must be a higher prevalence among laureates of the pseudo-Nobel in economics).”

The ratio I am sure will be no different for our industry/profession.

While I have shared the first 2 Laws, I have not yet defined a stupid person.

According to Mr Cipolla, human beings fall into 4 basic categories: the helpless, the intelligent, the bandit and the stupid.

Helpless – this person acts, and this results in a loss for him while others gain.

Intelligent – this person acts, and this results in a gain for him as well as others.

Bandit – this person acts, and this results in a gain for him but a loss for others.

StupidA stupid person is a person who causes losses to another person or to a group of people while himself deriving no gain and even possibly incurring losses. (This is also the Third and Golden Law of Human Stupidity)

The author says “The fact is reasonable people have difficulty in understanding unreasonable behaviour. Think about your daily life. We all recollect occasions in which a fellow took action which resulted in his gain and in our loss: we had to deal with a bandit. We also recollect cases in which a fellow took an action which resulted in his loss and in our gain: we had to deal with a helpless person. We also recollect cases in which a fellow took an action by which both parties gained: he was intelligent. Such cases do occur. But upon thoughtful reflection you must admit that these are not the events which punctuate most frequently in our daily life.

He further writes “Our daily life is mostly made of cases in which we lose money and/or time and/or energy and/or appetite, cheerfulness, and good health because of the improbable action of some preposterous creature who has nothing to gain and indeed gains nothing from causing us embarrassment, difficulties, or harm. Nobody knows, understands, or can possibly explain why that preposterous creature does what he does. In fact, there is no explanation – or better there is only one explanation: the person in question is stupid.

While all of this is simply brilliant, I felt something was missing.

And that brings me to the 5th Category (The Hard to Identify Stupid Person)

I don’t know what to name this person yet and was thinking of crowdsourcing this together with you after I explain the context.

This person acts and it appears that you are gaining in the short run, and this person too believes he is gaining in the short run, thereby coming across as intelligent. In reality, though you and others are losing (you don’t realize this yet). In the medium or long term, this person will/might also face a loss.

Thus, in the end, everyone faces a loss, and he is unlikely to gain himself and in fact is likely to make a loss. So, what does that make this person?

A Stupid Person. But within the Stupid Category, there are many levels of Stupid People. Most are very easy to identify. However, this one is the most difficult types of stupid people to identify. This is because they come across as intelligent, well connected and influential on the profession, but are the stupidest of all.

Avoiding this category of stupid people will be key to your success. This is because according to the Fifth Law, A Stupid Person is the most dangerous type of person.

But do you know who they are?