IQ COMPLEXITIES

There is a press report here which says rather gleefully that higher IQ is linked to higher earnings but not to higher wealth. The actual journal abstract from which the press report is derived is much more interesting, however so here it is:

"How important is intelligence to financial success? Using the NLSY79, which tracks a large group of young U.S. baby boomers, this research shows that each point increase in IQ test scores raises income by between $234 and $616 per year after holding a variety of factors constant. Regression results suggest no statistically distinguishable relationship between IQ scores and wealth. Financial distress, such as problems paying bills, going bankrupt or reaching credit card limits, is related to IQ scores not linearly but instead in a quadratic relationship. This means higher IQ scores sometimes increase the probability of being in financial difficulty.

So high IQ people spend their extra loot rather than saving it and risk it rather than protect it. Maybe that is smart. It could mean that people who are both smart and well-off are an important source of those risk-taking entrepreneurs we all need to create new businesses and new jobs.

I have had a quick look at the full journal article (kindly sent to me by Prof. Zagorsky) and the data do appear to be of unusually high quality so I think these findings can be relied on. It may be worth noting that the relationship between IQ and income has often been found previously.

(For more postings from me, see TONGUE-TIED, EDUCATION WATCH, GREENIE WATCH, POLITICAL CORRECTNESS WATCH, FOOD & HEALTH SKEPTIC, GUN WATCH, SOCIALIZED MEDICINE, AUSTRALIAN POLITICS, DISSECTING LEFTISM, IMMIGRATION WATCH and EYE ON BRITAIN. My Home Pages are here or here or here. Email me (John Ray) here.)