The Basic Laws of Human Stupidity

Amar Pandit , CFA , CFP

The headline of this post is actually the title of a brilliant 86-page book by Carlo M. Cipolla (1922-2000), an economic historian and a professor at University of California Berkeley.

This book is short but outstanding. I could not stop laughing when I first read it, but I am reminded to think about these powerful laws on a regular basis simply because of the nature of my profession and industry. Beyond the funny part, the book captures some of what we are exposed to in our daily lives.

The book has 5 basic laws, but I will focus on the first, the third (and golden) and the fifth law.

Before I get into the laws, the author tells us that human beings fall into 4 basic categories: the helpless, the intelligent, the bandit and the stupid.

Though these categories are self-explanatory, let me set the context for the stupid by defining what the helpless, intelligent and the bandit mean.

When an intelligent person does something, he benefits, and others benefit too. When a bandit does something, only he benefits while causing others a loss.

When a helpless person does something, it results in his loss and the gain of others.

Now let us begin with Third (and golden) Law. I have reserved the first law for the end of this post.

The Third (and golden) Law explicitly clarifies “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.

The author says “When confronted with the third Basic Law, rational people instinctively react with feelings of scepticism and incredulousness. 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.

Think about this in the context of your daily life and take some time to reflect.

While we might think that bandits are the most dangerous species, the fifth basic law states that “A stupid person is the most dangerous type of person.

The corollary of this law according to Mr. Cipolla is that “A stupid person is more dangerous than a bandit.” I could not agree more with this law, and it is my favourite along with the first one.

Mr. Cipolla’s reasoning is as follows: “The reason for the action of a perfect bandit is purely and simply a transfer of wealth and/or welfare. If all members of a society are perfect bandits, the society would remain stagnant but there would be no major disaster. The whole business would amount to massive transfers of wealth and welfare in favour of those who would take action. If all members took action in regular turns, not only the society as a whole but also individuals would find themselves in a steady state of no change.

When stupid people are at work, the story is totally different. Stupid people cause losses to other people with no counterpart of gains on their own account. Thus, the society is impoverished.

There is always a distribution of people from these 4 basic categories. There are some bandits, some intelligent people, and many helpless people. Additionally, the helpless have overtones of intelligence and so do the bandits have overtones of intelligence. The cake however goes to the stupid and it is captured by the first basic law: “Always and inevitably everyone underestimates the number of stupid individuals in circulation.

The author states that “At first, the statement sounds trivial, vague and horribly ungenerous. Closer scrutiny will however reveal its realistic veracity. No matter how high are one’s estimates of human stupidity, one is repeatedly and recurrently startled by the fact that: a) people whom one had once judged rational and intelligent turn out to be unashamedly stupid; b) day after day, with unceasing monotony, one is harassed in one’s activities by stupid individuals who appear suddenly and unexpectedly in the most inconvenient places and at the most improbable moments.

The First Basic Law prevents me from attributing a specific numerical value to the fraction of stupid people within the total population: any numerical estimate would turn out to be an underestimate.

I will not quote any specific example here but let you use your imagination to think about events, situations, regulations, and people who keep these laws alive.

I could have given plenty of examples here but thought it best for you to reflect on this one.

This is one place where I can use the word guarantee. I know you will have many stories to share.

I would love to hear your stories or experiences.