Ever wondered how would one define stupid? What would be a test for stupidity? Is stupidity profitable?
Well Carlos M. Cipolla an economic historian and a professor at the University of California, Berkeley developed concepts on how we could identify ‘the stupid’.
Note: In my opinion, this definition of stupid is more related to economically stupid rather than what most people belive the conventional meaning of stupid is i.e. having a low IQ. regardless you could argue that people who fit this description would have a low IQ, but I do not think so. Again, this paragraph is just my opinion.
He came up with five main laws of stupidity
Cipolla’s basic Laws
1. Always and inevitably everyone underestimates the number of stupid individuals in circulation
Cipilla claims that no matter how much we estimate the number of stupid people among us, we will always be guaranteed to have underestimated it.
2. The probability that a certain person be stupid is independent of any other characteristic of that person
This means that irrespective of the position they hold, or they have 2 or 3 degrees of PhDs and so on, never correlate that to them not being stupid.
In other words, even this group of people that society conventionally assumes as intelligent due to their success in their profession or academics have equal chances of being stupid than any other person you know who do not have such qualifications.
By this concept someone working at the Federal bank or RBI, or UN or the supreme court has an equal chance of being stupid as the people next to you.
This is a pessimistic view of Cipilla and he says that there is no way to reduce the number of stupidity, but only to accept it and deal with it.
3. A stupid person is a person who causes losses to another person or to a group of persons while himself deriving no gain and even possibly incurring losses
This is the test that helps us understand who is stupid. You can use this test to understand if your job is stupid, if your company is stupid, if your friends or family are stupid, and most importantly, if you are stupid!
Cipilla makes 4 main quadrants. The more to the right you are on the horizontal axis, the more your actions benefit yourself, and the more to the left you are, the more you lose benefits to yourself. On the vertical axis, the higher you are, the more you benefit other people in society, and the lower you are, the more loss you cause to society.
The Intelligent
People, jobs and companies in this quadrant benefit both themselves while benefiting society, hence the name ‘intelligent’.
I would argue that if your job and company sits in the quadrant, then what you do could arguably be evergreen.
The Helpless
Those that are in this quadrant are beneficial to society but are not beneficial to themselves. They often lose out due to their behaviour while having others gain from it. The actions of this group create an advantage for others.
I believe that a certain number of helpless organisations would be beneficial to society, if my understanding is correct, NGOs and other charity organisations would fall under this quadrant, while however inefficient they might be, they usually have some positive impact.
The Bandits
In this quadrant, the people and companies seek to accumulate benefits for themselves without providing anything to society. These people, jobs, companies may be bad and ugly in character but are still rational. They have a ‘method to the madness’ and their behaviour can still be rationally explained even if it is a net loss to society.
The Stupid
This quadrant is filled with people who are not beneficial to themselves or to society. They are a net loss in almost all perspectives.
They behave in a way that causes loss to others and to themselves. And they take such actions usually with illogical reasoning. They are destructive to themselves and to society.
An example of this could be seen as Bernie Madoff’s Ponzi scheme or SBF’s FTX, both companies did something completely irrational which did not benefit themselves (ended up in jail, or about too) nor did it benefit society (loss of shareholder value and jobs).
4. Non-stupid people always underestimate the damaging power of stupid individuals. In particular non-stupid people constantly forget that at all times and places and under any circumstances to deal and/or associate with stupid people always turns out to be a costly mistake
Cipolla states that non-stupid people always forget that stupid people can be found everywhere and dealing with them can often end up as a costly mistake. Cipolla says that stupid people are ‘deadly dangreous’ and non-stupid people fail to understand and find it difficult to reason out with this people.
It is with the stupid behavior of people where the domains of Economics and Game Theory completely break down and are utterly useless. Both these areas study usually start with the basic assumption that the ‘consumer’ or ‘participant’ is rational, at least most of the time. But by Cipolla’s very definition, this would not be the case.
Most people are a mix of all four of these quadrants and from scenario to scenario would move to different positions from one quadrant to another. Cipolla says most people tend to move around in the non-stupid quadrants, and the stupid are consistent in one thing, and that they tend to be stupid.
5. A stupid person is the most dangerous type of person
As Bonhoeffer puts it, people with malicious and bad intent (bandit) can be reasoned out with or use force, but there is no defence against stupidity.
Bandits can be reasoned out with logic as they are rational and their logic could be fought with logic, but logic cannot be used against illogic.
The fact is that most intelligent people, irrespective how moral or immoral they may be, are still predictable, but stupid people are completely unpredictable as they are irrational.
How do I know if a job or a company is stupid?
The simple answer would be to jolt down all the points your job offers you, the company and the public. Then place each point in Cipolla’s quadrants, and you should have your answer.
I believe finding yourself in the Intelligent quadrant would feel rewarding for most people and most people would want to at least want to translate into the intelligent quadrant I hope.
But keeping Cipolla’s first law in mind, I am sure some people will find themselves or their jobs or their company on the stupid quadrant and still find a way to justify it positively.
To them I would like to say,
Stupidity can always be justified with more stupidity.
I believe this can help you understand your role in society and the companies as well and help you make better informed decision whether it be in seeking a new job opportunity, investing in a company by understanding the value it adds to society and its importance.