Last time I have shared a video about the Peter principle, which states that "in a hierarchy, every employee tends to rise to their level of incompetence." Actually, I have heard about this principle before in the scientific context. Prior to the video, I have heard about this principle from a group of Italian physicists, economists and mathematicians had working on a research project about benefits of random strategies [1]. On of their works was about the Peter principle. So, lets explore!

Can Lithuania catch up with and even overtake Western Europe? This question is provocative—but not without foundation. A recent study [1] showed that Lithuania's economic progress stands out among the countries of Central and Eastern Europe (CEE). Yet can this growth pace enable it to reach the level of Malta and other Western economies? Using the same data and methodology, we compared the development of Malta and Spain to identify which factors determine successful convergence.

Assoc. Prof. Lesya Kolinets, lecturer in international macroeconomics at VILNIUS TECH and professor at Ternopil National Economic University, and I prepared a scientific manuscript [1] on the economic development of Central and Eastern European (CEE) countries from 1995 to 2024. The results of this study may be of interest to a broad audience seeking to gain a deeper understanding of the reasons behind Lithuania’s economic success since regaining independence. Using relatively simple econometric tools, we identify the key macroeconomic and financial components of CEE economic growth, among which low private debt accumulation emerges as a particularly significant factor.

Although the article has not yet been published in any economics journal, we wish to share its findings with experts in Lithuania. Your thoughts, criticisms, and suggestions could help to improve the paper and extend the study in a broader context.

Comparing the economic development of countries is not as straightforward as it may seem to many. The most commonly used indicator—Gross Domestic Product (GDP) per capita or per employee—can vary significantly depending on the currency used and how inflation in goods, services, and money is accounted for. What complicates comparison most is that exchange rates between currencies do not reflect differences in purchasing power across the countries being compared.

Another interesting video by ritvikmath explains why workplace incompetence is so prevalent. In the 1960s dr. Laurence J. Peter had observed that "in a hierarchy, every employee tends to rise to their level of incompetence." Originally, the observation was intended as a satire, but since then it has become an object for scientific debate.

To me explanation sound overly simplistic, but do think that the principle still holds. I have met people who have worked hard for promotion (diploma, certification, etc.), just to "relax" right after obtaining it.

From scientific point of view debate surrounding this principle reminds be the discussions about the hot hand phenomenon. Although, the Peter principle seems to be more related to the game theory rather than statistics.