High returns on IQ between countries, but low returns within country

If we control for academic qualification, there is zero or negative return on IQ within a country.  That is to say, of two people of different IQ but same country and the same academic qualification, the smarter one will have similar or lower socioeconomic success.

If we do not control for academic qualification, IQ still does not make a very large difference.  Of two people of very different IQ, but the same country, and academic qualifications typical for their IQ, the much smarter one will not be much richer

I think it likely that this is a manifestation of the observed fact that high IQ people tend to be nerds, socially low status, tend to get in trouble socially.

However, if we compare between countries, countries where people have slightly higher average IQ tend to be much more prosperous than similar countries with slightly lower average IQ.

A two standard deviation difference in an individual person’s IQ predicts only about a 30% difference in his wage.  But half a standard deviation difference in a country’s average IQ score predicts a 200% difference in the average wage in that country.

Why do high IQ people do so badly?

Suppose you have a bunch of people together.  And the crowd makes a mistake about X, or, which comes to much the same thing, a high status person in the crowd makes a mistake about X.  The high IQ kid is going to say “X is wrong”.  But no one else in the crowd can tell whether X is right or wrong.  They will think it is a matter of opinion, like what flavor of icecream is better, or a matter of authority, an arbitrary rule decreed by someone, and this kid is wrongfully claiming authority to decree that rule.

And will conclude that the smart kid is inappropriately throwing his weight around, is acting inappropriately for his status, they will be insulted, offended, and angered at what they incorrectly perceive as a claim of status and authority. And so will attempt to correct his swelled head, will tell him his status is low, and his status claim inappropriately high.

So the smart kid in the group, like the stupid kid in the group, is going to wind up at the bottom – and very likely with an income to match.  The high IQ kid is going to be a social failure in a group where the majority is stupid.

In the kingdom of the blind, the one eyed man is at the bottom.

So if you want society to be run by smart people, that society has to stream the kids, group smart kids with smart kids, and dumb kids with dumb kids, and get its leadership from the leadership that emerges from leading the smart group.

If, on the other hand, society thinks that everyone should go to university, and the elite universities select their students primarily on political correctness and cultural similarity to the existing elite rather than smarts, then your society is going to wind up being run by people who are not much brighter than average, and most of the wealth and power is going to be in the hands of people who are not much brighter than average for that country.

The smart group will do well, but the smart individual will do badly.  Thus a smarter country is much richer, but a smarter individual is little richer, and may well be be poorer.

It follows that the way for the smart kid to succeed is to get in with a smart group of about his own intelligence that is in charge of its own destiny, get in on the right track early, and the way for a country to succeed is to make the formation of such groups easy and natural.

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15 Responses to “High returns on IQ between countries, but low returns within country”

  1. Magnus says:

    So your ideal society would be run by the liberal elite? 😉

    More seriously, what this statistic proves was already common knowledge – smart people are interested in other things in life than piling up the biggest pile of money and there is great difference between IQ and smarts.

    Your example – the person who is incapable of keeping his mouth shut regardless of consequences – is not someone who should be called smart, regardless how well he can rearrange squares and triangles in IQ test. Neither is he a person that could or should be leader of anything.

    • jim says:

      “So your ideal society would be run by the liberal elite? ;-)”

      The Ivy league admits people first on the basis of political affiliation, secondly on the basis of cultural similarity, thirdly on the basis of race, and fourthly on the basis of ability – see my posts Hyperinflation coming, but not soon and “Diversity” If the elite recruited on the basis of ability, it would not be the “liberal elite”.

      “smart people are interested in other things in life than piling up the biggest pile of money and there is great difference between IQ and smarts.”

      If this was true, we would not see the extreme correlation between national wealth and national average IQ.

      “Your example – the person who is incapable of keeping his mouth shut regardless of consequences – is not someone who should be called smart”

      In interacting with others, he mistakenly expects them to understand what he is saying. It is difficult to put oneself in the shoes of those stupider than oneself.

  2. Great article. Very well done.

    I’m surprised tho, I thought the Bell Curve stuff found strong correlation between IQ and income.

    • jim says:

      There is strong correlation, but the income effect is not all that large.

      What is interesting is that correlation goes away if you control for education – thus high IQ gets you into a more elite group which tends to earn more money, but within the group, no correlation.

      • Anonymous says:

        Conscientousness probably explains a sizeable part of it. AFAIK c is mostly not correlated to g, but may be of similar importantance for achievement.

        • jim says:

          It is easier to be conscientious in political correctness, if one is not overly bright. The elite universities select strongly for political correctness, strongly for conscientiousness, and strongly for ability. If you can pass the political correctness tests with pro-forma piety, then they will tend to select for rather smart people. If, however, they probe a little deeper to make sure you have truly internalized political correctness, they will tend to select for rather stupid people.

  3. ThePenileFamily says:

    Good insights. You say:

    “So if you want society to be run by smart people, that society has to stream the kids, group smart kids with smart kids, and dumb kids with dumb kids, and get its leadership from the leadership that emerges from leading the smart group.”

    Which would require means to find out who the dumb kids are and who the smart kids are. We both know such means will never come to pass and if they should come to pass then those means would be deemed a blasphemy of the highest order.

    If I have more time later, I think I have a more accurate explanation of the smart kids error in expectation from a dumber audience.

    (no time for quote codes)

  4. Bill says:

    This is a really interesting post.

    I think it gets the facts wrong, at least for the US, though. The people at Harvard, Princeton, and Yale are really, really smart on average—average IQ there is 2-3 standard deviations above mean. And they are IQ-stratified from birth. They live with their high-IQ parents in high-IQ neighborhoods and go to high-IQ schools. At those high-IQ schools, they are further tracked into gifted programs in elementary school and then advanced placement tracks in middle and high school. It’s all sub-rosa and dishonest, but that’s what happens. Smart children born to dumb parents are fucked, of course, but America is a big country, so Harvard’s mean IQ does not much suffer for this. In places like Boston and Manhattan, things are not really even sub-rosa—the competition for slots in high-IQ schools is open.

    It’s true that the SAT is not relied upon as much as it was in university admissions, but it is still relied upon. Also, the other things relied upon like lying on your application in ways appealing to admissions officers, writing suitably leftist essays, and etc are also IQ-loaded activities.

    Larry Summers is smart. Paul Krugman is smart. Everyone around President Obama is smart (except the first lady, of course). Even President Obama is pretty smart. They are wicked, corrupt, hypocritical, self-righteous, and possessed of an insane hatred for Christendom and its history, but they are smart. It isn’t that they don’t get what they are doing, it is that they don’t care.

    Throwing away the common culture of the US, the West, and Christendom has not resulted in our elites seeking the common good of mankind. Rather, it has resulted in our elites seeking the good of themselves, their children, and nobody else. Freeing our elites from the strictures of bourgeois and Christian morality has not just got rid of their “hang ups,” it has freed them to lie, cheat, and steal publicly with utter impunity. Timothy Geithner was confirmed, after all.

    It would not surprise me in the least to learn that Robert Mugabe is extremely intelligent and rational. Zimbabwe is not badly governed if what you want, as president of Zimbabwe, is to be fantastically rich and inconceivably powerful.

    • jim says:

      “the people at Harvard, Princeton, and Yale are really, really smart on average—average IQ there is 2-3 standard deviations above mean.”

      The postgrads from engineering and science are typically two or three standard deviations above the mean, the guys that are tracked to not be part of the ruling elite. The guys tracked to be part of the ruling elite, not. Possibly they face sterner requirements for political correctness, that only the not-too-bright can pass.

      “Larry Summers is smart.”

      Larry Summers is smart, and regularly gets into the sort of trouble that the smartest kid in a circle of dumb kids gets into – indicating that his circle, the elite, is not so smart. This is particularly a problem for him with younger members of the ruling elite, indicating that the ruling elite is getting dumber.

      “Paul Krugman is smart”

      Paul Krugman is not smart. I read his essays. Either he is stupid, or they are ghost written by his stupid wife and he neglects to fix them up. When he makes a false argument to a false conclusion, it is not the sort of elaborate too-clever-by-half-rationalization that the intellectual elite used to generate. It is just stupidity, just Orwellian crimestop. Paul Krugman, or whoever writes his stuff, is precisely average for the ruling elite, precisely average for his circle, which is precisely what you need to be to get places.

      I remember when the elite tried to rationalize an untruth, they used elaborate and ingenious flim flam that you had to be clever to follow, and even more clever to spot the flaw. Krugman or his ghost writer just bullshits like a slightly drunk guy in a pub, simply jumping to the politically correct conclusion without bothering to provide any very good rationale as to how he got there.

      If that is the real Krugman, he is not very bright. If that his ghost writer, his ghost writer is writing for the ruling elite, and so is precisely calibrated for the average intellect of the ruling elite, in which case the average member of the ruling elite is indeed rather average.

      “President Obama is pretty smart.”

      President Obama is smarter than the average white, maybe as smart as the average white guy in middle management – but no smarter than that. As soon as he came under hostile questioning from the normally worshipful press core, he fell apart, and like any other affirmative action hire, had to call the white guy back to do the affirmative action hire’s job.

      “It would not surprise me in the least to learn that Robert Mugabe is extremely intelligent and rational. Zimbabwe is not badly governed if what you want, as president of Zimbabwe, is to be fantastically rich and inconceivably powerful.”

      Robert Mugabe’s primary sources of income were foreign aid and seigniorage – printing money. He was printing more money than would generate the optimum level of seigniorage, therefore not smart. His primary source of income is now foreign aid. He sings the tune his western paymasters want, which dependency must irritate him no end.

      In a typical African shithole, members of the elite are not fantastically wealthy and powerful. If you are a member of the elite, and you want to eat a chicken, you send out some goons to beat people up until someone produces a chicken. There is a lot of delay, your goons may come back with chickenfeed instead of a chicken, the chicken when finally produced is scrawny and diseased, and your cook’s cooking utensils are covered with a thin layer of human shit. You are fantastically powerful in that you can have people and things destroyed, not so powerful in getting things you want produced and delivered.

      • Bill says:

        The postgrads [at HPY] from engineering and science are typically two or three standard deviations above the mean, [but] the guys that are tracked to . . . be part of the ruling elite, not.

        Bullcrap. The undergrads are 2-3 stddev above mean. And this is dragged down by the NAMs. The non-ed-school graduate students are even higher.

        Paul Krugman is not smart.

        BA, Yale, 1974. PhD, MIT, 1977. Infer top 5% on SAT, top 5% on GRE, smart enough to get a PhD in Economics at MIT in 3 years at a time when that program was hard. Invented modern trade theory. Invented modern regional economics. He is very smart.

        He chooses to be a hack columnist. I don’t know why. For whatever reason, he has chosen to be the Democratic Party’s pet Nobel Laureate. There is clearly something wrong with him, but it isn’t stupidity.

        [Robert Mugabe] fantastically powerful in that you can have people and things destroyed, not so powerful in getting things you want produced and delivered.

        He has really nice suits, bank accounts with billions of dollars, and can have people killed on a whim. He is livin’ large.

        Our elite is conspicuously intelligent. More intelligent than the WASP elite which preceded them. They just hate the people they rule over (again, conspicuously), and they have dramatically impaired ethics (again, conspicuously).

        • jim says:

          BA, Yale, 1974. PhD, MIT, 1977. Infer top 5% on SAT, top 5% on GRE, smart enough to get a PhD in Economics at MIT in 3 years at a time when that program was hard. Invented modern trade theory. Invented modern regional economics. [Paul Krugman] is very smart.

          If Paul Krugman is smart, someone else is writing his column.

          Your argument is circular: I argue the universities are helicoptering politically correct dim bulbs into the elite, and as evidence that the elite is smart, you point to their brilliant academic history, Nobel prizes, and so on and so forth. My argument is that with curious frequency, people with such wonderful academic qualifications appear to be suspiciously dim. Your argument is that their wonderful academic qualifications show they are not dim.

          Paul Krugman zoomed through elite university, and Ward Churchill zoomed through elite university even faster – yet it is apparent that Ward Churchill is a dimwitted homicidal thug with an IQ well below 100. If Ward Churchill had written, rather than plagiarized, stuff it would have been apparent he is far too stupid to attend university. Paul Krugman is smart enough to benefit from university, so, smarter than Ward Churchill – but he writes, when Ward Churchill did not write, and what he writes is less than impressive.

          Academia treated Ward Churchill as a dirty embarrassing secret, like a crazed aunt locked in the attic, while they waved Paul Krugman before the world, so we may suppose that academia had noticed that Ward Churchill was as thick as two planks glued together and could not stand much scrutiny, and correctly figured that Paul Krugman could survive scrutiny better – but that they chose to wave Paul Krugman before the world, suggests that they do not like smart people, so Paul Krugman was the best of bad lot.

          To non circularly argue that our elite is smart, you have to produce evidence of smartness from outside Academia. Are, for example, our elite successful in businesses that do not depend on political and regulatory favor? Obviously not.

          I suggest that these days, Nobel prizes and suchlike are more indications of groupthink than intelligence, and that it is easier to get along in groupthink if you are not overly bright.

          I have not read Krugman’s “Geography and Trade”, but I have read some similarly praised academic books, and can assure you that the kind of praise that “Geography and Trade” received is more commonly an indication of political correctness, crimestop and self induced stupidity, than it is of the ability of the writer or the significance of the work. The highest praise is reserved for academic works that deny unwanted facts, without bothering to present any coherent rationale to explain away unwanted evidence for these facts. Then all other academics who want to deny the unwanted facts point to the book, instead of explaining away the evidence. The explanation is supposedly to be found in the book, and if you read this very famous book, and find no such explanation, then who are you to disagree with all of academia?

          Perhaps “Geography and Trade” proves Paul Krugman is a smart guy, but you should not take academia’s word for that, and I am not likely to.

          On what I have read of Paul Krugman’s work, he is a fool. I do not think he is a fool because he proposes positions that disagree with mine. I think him a fool because he proposes positions that disagree with mine and makes stupid arguments for them. I have read clever arguments for positions that disagree with mine, and I have read stupid arguments for positions that disagree with mine, and I can tell the difference.

          [Robert Mugabe] fantastically powerful in that you can have people and things destroyed, not so powerful in getting things you want produced and delivered.

          He has really nice suits, bank accounts with billions of dollars, and can have people killed on a whim. He is livin’ large.

          Mugabe can buy a better suit than I can, but I can buy a better pizza than he can. I can say what I think, and Mugabe cannot. Mugabe can kill unimportant people on a whim, but I can disagree with powerful people, and he cannot.

          Supposedly the elite is smart, and evidence that the elite is smart is that they zoomed through elite university. But, given that the universities are corrupt, zooming through an elite university is not necessarily an indication that one has half a brain.

          Our elite is conspicuously intelligent. More intelligent than the WASP elite which preceded them.

          Our elite is conspicuously academic. More academic than the WASP elite which preceded them.

  5. Jean-Baptiste says:

    It is a real delight to read this!! Thank you, this article enriches my thoughts and make them mutch clearer. It is a relief to see that some people understand those kind of things.
    Cheers

  6. Jean-Baptiste says:

    I have a high IQ without being a genius (around 120) it is difficult to carry because I am smart enough to understand lots of things that the majority of people don’t understand, but you are not smart enough to deliver outstanding performance at school or in some other mind’s fields to shut everybody’s mouth and to make it claer that I am smart. So I have carried my high IQ as a burden during all my chilhood and teenage. I’m now starting to understand how to deal with it: acting. Just keep things very simple, be a nice guy and keep my intelligence for myself.

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