
IQ, Income and Wealth - yummyfajitas
http://super-economy.blogspot.com/2011/04/iq-income-and-wealth.html
======
simonsarris
> Unlike libertarians, Conservatives believe that those who were the
> recipients of good fortunate have a moral obligations towards the rest of
> society, in particular the people who do their best but just have less
> marketable skills.

(In the United States) I have _never_ heard this as a conservative viewpoint.

> In fact, earnings are strongly linked with intelligence, which indicates
> that they are linked to productivity, just as economic theory predicts.

I'm confused. What does productivity mean?

Are schoolteachers productive? Are CEOs productive? What metrics does one use
to compare the productivity between the two?

Even if you can measure the productivity of each, isn't their productivity
necessarily contingent on other things functioning? In other words, wouldn't a
coal CEO's productivity decline if all coal miners quit?

What about if the CEO quit, or died suddenly? What would happen to the coal
miner's productivity as the board searched for a new CEO? I imagine it would
change much less than the other way around.

If you assume that productivity at any given point is finite, and the CEO
suddenly dies, where does that productivity go? Does the president suddenly
gain all the productivity value the CEO had?

In a microcosm like a coal company, I'd question who really 'gets' the
productivity points. (Miners vs CEO vs board vs shareholders). I wouldn't
think those making the most money necessarily have the actual highest
productivity values. It would seem to be nearly the opposite, but maybe I have
this scheme of modeling things all wrong.

~~~
temphn
> I have never heard this as a conservative viewpoint.

Conservatives believe that charity is only charity if it isn't mandatory.
Taxes represent seizure of your assets at gunpoint (no one would pay if the
IRS didn't enforce). Forcible asset seizure + spending on purposes which you
may or may not agree with is many things, but it is not charity.

In terms of actual charity numbers, self-identified conservatives give a lot
more.

[http://philanthropy.com/blogs/prospecting/conservative-
voter...](http://philanthropy.com/blogs/prospecting/conservative-voters-are-
more-liberal-with-charity/19091)

Households that describe themselves as conservative tend to give more money to
charities than moderate and liberal households, according to a new survey.

In a survey of 3,300 households that donated money to charity in the past 12
months, the company Campbell Rinker, in Valencia, Calif., asked respondents
about their political ideology.

Of those surveyed, those who live in conservative households donated an
average of $3,255 to charities outside of places of worship during the past
year. By comparison, moderate households donated $2,926 and liberal households
donated $1,879.

[http://blog.beliefnet.com/castingstones/2008/04/conservative...](http://blog.beliefnet.com/castingstones/2008/04/conservatives-
give-more-to-cha.html)

In his book, Who Really Cares: The Surprising Truth About Compassionate
Conservativism (Basic Books, 2006), Brooks discovered that approximately equal
percentages of liberals and conservatives give to private charitable causes.
However, conservatives gave about 30 percent more money per year to private
charitable causes, even though his study found liberal families earned an
average of 6 percent more per year in income than did conservative families.
This greater generosity among conservative families proved to be true in
Brooks’ research for every income group, “from poor to middle class to rich.”

~~~
romey
Personally, I would certainly pay taxes, even if they weren't at gunpoint. I
find roads, police, etc far too convenient to give up.

I haven't read the book that you quote, but I'd be interested to know how much
of the conservative donations were related to religious causes.

~~~
temphn
(1) Roads and police are a relatively small portion of your taxes. So this
statement is a little bit of a bait and switch. Most of it goes towards
Medicaid, Medicare, Social Security, and the DoD.

(2) By aggregating everything into "taxes", individual services do not have
accountability. The more locally funded something is, the more accountable it
is -- and the more likely it will be discontinued if enough people decide it's
not worth the money.

(3) The amount matters. You can assent in the abstract, but 1% vs. 10% vs. 90%
vs. 100% taxation are very different. As you increase it, more want to opt
out. The guns of the IRS ensure that they can't.

------
joelangeway
The author takes care to point out that it is worth examining the extremes of
I.Q. but does not examine the extremes of wealth. I wouldn't begin to argue
that those earning even 100 times the median income are necessarily taking
advantage of the poor, but those earning 1000 times more are almost certainly
extracting some rent on the economy that is hurting us all and are only able
to do so because if the political power they have purchased.

Seventy-five year copyrights and drug patents on medications already in use
for millennial do not provide extra compensation to anyone who has been more
productive than anyone else. They just hurt everyone and funnel money up to
the top.

This is not an argument for some kind of intervention, just a plea for smart
people not to be fooled into thinking that society is fair.

------
nowarninglabel
Interesting, however, when we get to the argument concerning IQ and
productivity, the author conveniently ignores access to capital. You could
potentially have a high IQ but living in a particular locale (say a rural 3rd
world village) and due to lack of access to capital, you don't have the
ability to be productive. Unfortunately, don't have the time to come up with
the best example, but imagine a high IQ web developer working in rural Kansas
off a satellite internet connection. They are most likely not going to be as
productive as someone working off a fiber connection in a major city. They
don't have enough money to run fiber to their house, so this lack of capital
is a detriment to their productivity score.

~~~
notahacker
If you add in an international dimension, the argument that wealth is a
product more of IQ than economic systems is laughable[1]. Measures of
productivity are subject to debate, but it's beyond dispute that median IQ
American's ability to earn more than most Chinese people on the smart side of
the bell curve has less to do with intelligence than _chance, connections or
"power"_

[1]Even Richard Lynn would agree with me there, if only to explain away the
gaps...

~~~
yummyfajitas
You are arguing against a straw man.

The author did not claim that inter-country wealth/income is a product of IQ
rather than economic systems. In fact, he has already disputed this claim - in
another post, he shows that Swedish Americans are considerably richer than
Swedes, and attributes this to the economic system:

[http://super-economy.blogspot.com/2010/03/super-economy-
in-o...](http://super-economy.blogspot.com/2010/03/super-economy-in-one-
picture.html)

He is merely disputing a claim made by David Brooks and Malcolm Gladwell of
"no correlation between accumulating large wealth and high IQ."

~~~
notahacker
I was arguing against the author's quite explicit and unequivocal statement
the left is wrong about the market allocating income mainly based on chance,
connections or "power". In fact, earnings are strongly linked with
intelligence.

Unless he wishes to extend his argument to demonstrate how Swedish Americans
have significantly higher IQs than native Swedes, I'm going to have to insist
that "the left" is right and he is wrong about the role of chance, connections
and power versus innate intelligence when it comes to distribution of incomes
on a macro scale. Economic systems don't exist in isolation.

~~~
yummyfajitas
Again: he is referring to intra-country variation, you are referring to inter-
country variation.

From his post: "Denying the link between productivity and earnings is very
important for the modern left, as their entire source of outrage is based on
the view that the capitalist system "exploits" the poor. More likely, because
of the modern welfare state and because of the growing importance of human
capital, more resources are transferred from the productive rich to the poor
than vice-versa."

If he were making international comparisons, these two sentences would make
absolutely no sense. The modern welfare state does not redistributed from
richer Americans to poorer Swedish. He is clearly describing only intra-
country variation.

~~~
notahacker
(Old debate, but still) I would argue that claiming to refute left wing
"exploitation" arguments by focusing purely on intra-country variation, as if
the US economy lived in a bubble isolated from the rest of the world, is
attacking a straw man. The "modern left" is far more concerned that American
capitalists are "exploiting" highly productive cheap foreign labour, to the
detriment of US-based jobs in many sectors. After all It's the people that
don't have jobs that are the major welfare beneficiaries and don't have any
capital to invest in China.

Regardless of whether this is ultimately a good thing (even those without
access to capital to invest in multinational ventures get cheaper consumer
goods...), the fact that on a macro scale cost of labour is related at least
as much to geography than productivity is pretty fundamental to left wing
arguments that the rich are having it too easy and many US citizens without
access to capital wouldn't be able to afford to eat without welfare and some
protectionism.

~~~
yummyfajitas
_...the fact that on a macro scale cost of labour is related at least as much
to geography than productivity is pretty fundamental to left wing arguments
that the rich are having it too easy and many US citizens without access to
capital wouldn't be able to afford to eat without welfare and some
protectionism._

If only Tino (the author of the blog post) thought of that. Then he might have
written this:

 _"There is so little demand in the labor market for unskilled people that the
poor in industrialized countries increasingly don't even work full time.

The fact that the rich don't exploit the [same country] poor doesn't mean the
rich shouldn't help the poor. But it's one thing to claim you are rich because
you are stealing from poor people, and another to believe you have an
obligation to help all members of society due to randomly having being granted
more valued skills."_

Oh wait, he did think of it and wrote exactly that (minus the words in
brackets, which I added).

The point he is making is that if you want to argue for intra-country welfare,
the argument that the rich owe the (same country) poor because they exploit
them is fallacious. And implicitly, I believe he is assuming "same western
country, particularly the US", since all his data is from the US.

As you note, it's the people without jobs who need welfare and it's hard to
exploit someone who isn't working (only 15% of poor adults work, or even seek
work). So clearly, the US poor are not being exploited.

~~~
notahacker
Sure, I don't think we disagree that smart people [deservedly] earn more or
that the unemployed section of society isn't offering them very much in return
for their welfare checks.

But to put it bluntly, that top quartile (or decile, or however you prefer to
slice it) would be a lot less rich (and the poorer Americans would be better
of at least in relative terms; those not unemployable would have more job
opportunities) if they were stuck hiring people on American level wages. Smart
business owners outsourcing to those willing to work for a pittance achieve
outsized returns far in excess of their ability to improve labour
productivity[1]. Being unable to find work commensurate with their abilities
as an averagely productive semi-skilled labourer reduces others' productivity
below their natural capabilities. Irrespective of whether you think that's
insufficient justification for wealth redistribution, it certainly means that
the rich are benefiting disproportionately from chance, connections and
"power" in addition to their innate abilities.

[1]Obviously this works better in manufacturing consumer goods than
programming...

------
masterzora
I stopped reading as soon as it complained about controlling for education.
Yes, achieving a level of education is often correlated with IQ, but if IQs
vary within an education level then we can obviously isolate it separately,
and we should.

~~~
unculture
Me too (or rather I wanted to stop reading, and should have...) - it was clear
from that point that he was all set to make some sort of partisan political
point. Surprise surprise, down the page he gets all polemic about the left and
right.

What he's really itching to say is that poor people are poor because they're
stupid. He won't say that because it's offensive and untrue, but it's what he
feels.

------
tomlin
Personally, I have a hard time understanding why IQ is held at such high
esteem. It certainly is relevant as it provides a baseline idea of ones
intelligence. But when a cup of coffee or a bad sleep can warp a metric like
IQ, I have to wonder why we're so insulted or dependent of it. I realize that
IQ is the best we have, but you can't ignore the variances and still _label_
people knowing that it's not really an exact science.

------
romey
It seems to me that the author here is drawing the conclusions that he wants
from this data. While there does seem to be a correlation between intelligence
and income, this correlation has nothing at all to do with whether or not
these smart, wealthy people are indeed exploitative of the poor or not. It is
in many cases advantageous for CEOs of large companies to use their wealth and
political influence in ways that are detrimental to their workers, the
environment, and/or our economy.

Second, "productivity" in this article seems to be a vague metric (this is
probably because I'm not well versed in economics). As someone asked above,
does productivity increase as you move up an organization's hierarchy? The CEO
of Nike has likely never sewn a shoe together, yet he pays the welders on the
assembly line; is he more productive? If the amount shoes created is a
function of the amount of workers hired, and the amount of workers is a
function of how much each worker is paid, doesn't it stand to reason that
productivity for those at the top of the hierarchy correlates directly to how
exploitative their wages are?

------
markstansbury
Interesting discussion. I like it because it's sure to piss off everyone.

~~~
simonsarris
I'm afraid I don't understand why people say things like this. Why would
pissing everyone off ever be a plus to a discussion?

~~~
nowarninglabel
Well, it is usually in the sense that people are more likely to discuss issues
they are pissed off about (proof is available of such if needed, but just
think of how much more likely you are to contact a company if they pissed you
off, as opposed to just marginally satisfied you). Thus, controversial issues
such as this might go left undiscussed if they didn't rile a certain crowd.

That said, I'd agree that it would be better to refer to it as being 'roused'
to discussion.

~~~
markstansbury
I meant that it's likely to challenge some presumption held by nearly every
reader. I enjoy honest analysis when it says: Side A is wrong and Side B is
wrong, the answer lies elsewhere.

Everyone is angry at first because their sacred cow has been tossed on the
grill, but in the end we reconcile and have a great cookout.

------
mixmax
_Brooks further cites a study claiming that there is "no correlation between
accumulating large wealth and high IQ."

Both claims are wrong. The result Brooks cites is after "controlling" for
education and income. _

Excuse me, but finding no correlation between wealth and IQ after
"controlling" for income isn't exactly a surprising finding. As a matter of
fact I'd say that usually accumulating large wealth is a direct function of
income.

------
dabent
A psychology professor talked about this by giving himself a backhanded
compliment. He said that IQ and income do have a positive, but not perfect
correlation. He said this was due to many factors, but often because people
with higher IQs, sometimes pursue professions that are intellectually
challenging, such as a career as a professor.

------
adient
Does the data this author provides contradict his assertions? From NLSY79
data, the gap for wealth between low to high IQ is very large compared to the
gap in the Terman data where the difference is much smaller. To me, this
agrees with Gladwell's conclusion that IQ above a certain point stops being
very relevant in predicting wealth.

------
lifeisstillgood
Is it just me, or if you are studying the "extreamly-intelligent" as in the
image halfway down, its best to learn how to spell extremely. And the rules on
hypenation.

------
naner
In an article that is ostensibly about the correlation between IQ and wealth,
he kind of loses the plot when he goes off into political la-la land.

------
rorrr
> _Unlike libertarians, Conservatives believe that those who were the
> recipients of good fortunate have a moral obligations towards the rest of
> society, in particular the people who do their best but just have less
> marketable skills._

Wow, complete disconnect with reality. Conservatives are the ones who cut
social programs repeatedly.

~~~
vaksel
probably speaking about Europe

conservatives in Europe would be considered commies in USA

and for the liberals in Europe, they'd have to come up with another term
completely...super commies perhaps?

~~~
sandstrom
The word liberal have very different meanings in the US compared to Europe.
The word in its classic sense is nowhere near the meaning it connotes in the
US.

<http://en.wikipedia.org/wiki/Liberalism>
<http://www.economist.com/node/3353324>

------
J3L2404
This is a partisan political post, and not that well written. Judging by the
tone of this and his other pieces the author probably believes that
conservatives ended slavery.

