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Do bright people earn more than others? If not, it would strengthen the view that intelligence tests are no more than meaningless scores on paper and pencil tests composed of arbitrary items which have no relevance to real life. So, it is with trepidation that I responded to a suggestion by a reader that I look at a paper appearing to show that there is no relationship between intellect and wealth, and furthermore that clever people are just as likely to experience financial difficulties as any other citizen.
Do you have to be smart to be rich? The impact of IQ on wealth, income and financial distress
Jay L. Zagorsky. Intelligence 35 (2007) 489–501
The abstract apparently bears out that interpretation:
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.
Happily, another reader, “res” had a closer look at the paper, and found that all was not as it seems in the abstract. That is to say, the results in the paper actually show a relationship between intelligence, earnings and wealth, as shown in the histogram below, which I have drawn based on the results from that very paper:
I think this shows that income gradually increases with intelligence, and wealth increases more strongly with intelligence, in a roughly linear trend. It is relevant to know that income at the lower levels of ability include welfare payments and that incomes at the very highest level have been capped for reasons of confidentiality which both reduce the real relationship between intelligence and earning power. However, the general picture is clear, and somewhat different from what the abstract suggests.
Introduction. How important is intelligence to success in life? Success is a multi-dimensional concept but one key component for many individuals is how well they do financially. It is still not well understood why some people are rich and others are poor. Previous research, discussed below, has investigated the relationship between intelligence and income and found individuals with higher IQ test scores have higher income. Income alone is not a complete measure of financial success. This research completes the picture by investigating if there is a relationship between IQ scores and wealth and if there is a relationship between IQ scores and financial difficulty. What are the differences between these three financial measures? Income is the amount of money earned each time period, such as a weekly pay check. It is the stream of money off which people live. Wealth is the difference between a person’s assets and liabilities. It is the reserve or cushion that people fall back upon to meet large expenditures, unexpected emergencies and periods when income is expected to be low. Financial difficulty is getting into a situation where a respondent’s credit is adversely impacted such as not paying bills or charging a credit card to the maximum limit. These situations prevent or reduce the ability of individuals to borrow money in the future. Financial success for most people is a combination of all three measures; having a steady income stream, a stock of wealth to buffer life’s storms, and not worrying about being close to or beyond their financial limits. Previous research has focused on intelligence’s impact on income and found a positive relationship.
The authors have given an interpretation in the abstract which does not fairly reflect what they actually found. The data plot above, taken from that paper, shows a strong relationship between intelligence, income and wealth.
Commentator “res” shows that the 2007 figures probably under-estimate the effects of intelligence. First, incomes at the lower level of intelligence are inflated by welfare payments, and those are not shown separately. That is a real problem, since it hides the lower wages actually paid to low ability workers. Second, the wages of the brightest 2% of workers have been truncated, apparently so as to protect their anonymity. Not sure how their anonymity was threatened, but it is a nuisance, since in the early years top income were artificially capped at $75,000 then later at $100,000 and finally shown as the average of that category. This is a real pity, because it obscures the incomes of the smart fraction. Though the sample size is perfectly adequate for most purposes, eminent minds are 1 in 10,000 so the sample will contain only 1 or 2 of them. It would be good to know how much they earn, and how much wealth they have.
As luck would have it, I had commented on the same dataset in 2015 and, despite a few cautionary statements, came to the conclusion that intelligence was strongly related to income, and to savings. I also established a rule-of-thumb, that when young adults are doing well financially, their savings equal 4 years of their normal annual earnings.
I should explain that the 2007 paper being referred to above was an early look at the data, and the later work a more up-to-date set of findings. Both give substantially the same pattern of results, though the actual numbers have changed somewhat, as one would expect as the subjects get older, earn more, and have more time in which to save.
https://www.unz.com/jthompson/the-wages-of-intellect/
Looking back, there is a lot to ponder in these posts by Steve Hsu. For example, it seems that for both white and black children in the NLSY dataset, progress is identical when children are considered in terms of their IQ.
Steve dryly notes:
This last figure is very problematic for the “Social Status/Wealth causes IQ” position. It seems to be the other way around: the kids escaping bottom quintile childhoods all experienced poverty, but the ones with higher cognitive ability were more likely to move up. (Recall that adopted children tend to resemble their biological parents much more than their adoptive ones; family environment has a limited effect on IQ, which is highly heritable.)
Pew: Individuals with higher test scores in adolescence are more likely to move out of the bottom quintile, and test scores can explain virtually the entire black-white mobility gap. Figure 13 plots the transition rates against percentiles of the AFQT test score distribution. The upward-sloping lines indicate that, as might be expected, individuals with higher test scores are much more likely to leave the bottom income quintile. For example, for whites, moving from the first percentile of the AFQT distribution to the median roughly doubles the likelihood from 42 percent to 81 percent. The comparable increase for blacks is even more dramatic, rising from 33 percent to 78 percent. Perhaps the most stunning finding is that once one accounts for the AFQT score, the entire racial gap in mobility is eliminated for a broad portion of the distribution. At the very bottom and in the top half of the distribution a small gap remains, but it is not statistically significant.
What other data are available?
Pumpkin Person looked at intelligence and income, and suggests that they correlate at 0.49 which is higher than most published estimates. This analysis looks at the rarity of high wealth and the stated scholastic attainment scores of some people in wealthy groups.
https://pumpkinperson.com/2016/02/11/the-incredible-correlation-between-iq-income/
Pumpkin Person notes that Dalliard in a very detailed analysis of average income over several years found that men’s average income and intelligence scores correlated at 0.48
http://humanvarieties.org/2016/01/31/iq-and-permanent-income-sizing-up-the-iq-paradox/
Dalliard argues that many of the low estimates for the correlation between intelligence and income are based on single year earning figures, and it is better to look at rolling averages over several years, and to note that very early in career and very late in career figures may be a poor reflection of overall career earnings. Better to calculate “permanent” earnings of the sort achieved between ages 25 and 55. He looks at NLSY79 data, wisely taking only earnings and wages (no welfare payments). Wages above the cutoff are set to the average of all wages above the cutoff. Using a log transform he shows that one additional IQ point predicts a 2.5% boost in income. The standardized effect size, or correlation, is 0.36 and the R squared is 13%.
Men’s income is more strongly related to intelligence:
For example, the expected permanent annual income of a man with an IQ of 100 is e^(8.004 + 0.027 * 100), or $44,530. The expected permanent annual income of a woman with the same IQ is e^(8.004 + 0.021 * 100), or $24,440.
Below, income by racial group, which should be compared with group differences in intelligence, with which there are close parallels.
Looking at how to predict the effect of intelligence on each racial group, and interesting finding emerges:
Black men have a significantly lower intercept and a significantly higher slope coefficient: each additional IQ point predicts 3.6% (95% CI: 2.6%-4.5%) more income for black men.
This suggests that employers value intelligence, and pay higher wages for all brighter employees, an effect which is bigger in a group with a lower average ability level.
The OECD studied the intelligence and income link in a roundabout way, because these researchers appear not to believe in intelligence and intelligence testing.
https://www.unz.com/jthompson/how-illiterate-is-oecd/
You will see that I was irritated that they would not mention the fact that some people are brighter than others.
The median hourly wage of workers who can make complex inferences and evaluate subtle truth claims or arguments in written texts is more than 60% higher than for workers who can, at best, read relatively short texts to locate a single piece of information. Those with low literacy skills are also more than twice as likely to be unemployed.
“Across the countries involved in the study, between 4.9% and 27.7% of adults are proficient at the lowest levels in literacy and 8.1% to 31.7% are proficient at the lowest levels in numeracy. At these levels, adults can regularly complete tasks that involve very few steps, limited amounts of information presented in familiar contexts with little distracting information present, and that involve basic cognitive operations, such as locating a single piece of information in a text or performing basic arithmetic operations, but have difficulty with more complex tasks.”
The report contains descriptions of skill levels, and that is a good thing. Skills make sense, and if you say that someone has the skill to drive a car, but not the skill to service a car, (another Gottfredson quip) that immediately makes sense to most people. We can distinguish between a driver and a mechanic. We can also understand that someone who can only handle one concept at a time should not be given the task of integrating disparate conceptual inputs. That cuts out being in the control room of most industrial processes. In does not preclude employment as a university teacher, where to manage one concept may lead to a successful career.
Another approach to the relationship between intelligence and life outcomes is to do a birth cohort study and starting examining children at age 3.
The Dunedin study has calculated the cost to society of the most demanding section of the population. 20% of the population account for 80% of the social costs. Low intelligence is an important aspect of this needy section of the population.
https://www.unz.com/jthompson/are-you-nuisance/
Here is a more up to date paper on their work
https://www.ncbi.nlm.nih.gov/pmc/articles/PMC5505663/
A segment comprising one-fifth [20%] of the cohort accounted for 36% of the cohort’s injury insurance-claims; 40% of excess obese-kilograms; 54% of cigarettes smoked; 57% of hospital nights; 66% of welfare benefits; 77% of fatherless childrearing; 78% of prescription fills; and 81% of criminal convictions.
Childhood risks, including poor age-three brain health, predicted this segment with large effect sizes.
IQ is a strong factor, as is low self control.
You can also look at this from a States level (in the United States), and you will know roughly how wealthy those states are.
https://www.unz.com/jthompson/your-google-iq/
There are other studies which could be added, and more detail which can be explained in each of these sources, but I have picked a selection of studies to make a general point: I think it is pretty clear that intelligence has real-world implications.
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Capping “top income” to $100k is (as you note) a ridiculous truncation of the data set. Anyone who actually uses a 120-plus IQ in their occupation sails massively higher than this (for example, engineers or computer scientists easily start their careers not that far from this, and if they’re remotely capable surpass it long before they turn 30.)
By cutting off the data there, any study basically removes the effect of IQ’s much above the median for college grads. It washes out the “benefit” of an occupation in medicine, law, engineering, comp. sci., or even success in business (e.g., a sales career in science, medicine or similar industry.) Even doing so, this still shows a marked effect of rising intelligence on wealth and income.
I so tire of those who enjoy the fruits given them by those who are brighter, yet they resent their capability and seek every opportunity to rationalize their envy by claiming wealth and income are somehow just a game of chance.
PS: The greater payoff for blacks with higher/rising IQ’s simply reflects Diversity, Inc’s higher demand curve for the smart fraction. Affirmative Action and de facto quotas make a black with a 115 IQ probably ten times more “valuable” to a major corporation than a white (especially a straight white male) with similar intelligence. To say there’s a perpetual bidding war among the Fortune 500 for the few capable blacks is a profound understatement. Derbyshire was correct, to be an intelligent, well-socialized black today is height of felicity; you’re in demand by all “right thinking people.”
PPS: I wish there were good data on the benefit of IQ’s above 140. My anecdotal experience suggests that success among the very highly intelligent is bimodal. https://polymatharchives.blogspot.com/2015/01/the-inappropriately-excluded.html
I thought Charles Murray went over this subject quite exhaustively in “The Bell Curve”. When I read it I thought that his observations made statistical sense and tied in well with what is commonly seen in day to day life.
Zagorsky’s claim that
has me scratching my head. What is he alluding to? Possibly the Trump phenomenon where a rich person can go spectacularly broke and then get spectacularly rich again.
Looking for a link between intelligence and wealth, as if it’s absence would indicate the invalidity of the idea of intelligence?
Now, that’s just stupid.
He just means the curve is U shaped. Higher rates of distress for the lowest and highest IQs and lower in the middle. I criticized those results in the other thread because the paper used a cubic fit (i.e. likely to go to +/- infinity at the extremes) for the variables and then evaluated the equations at IQ 140+ while the actual data appears only to go up to IQ 125.
Definitely an issue, but recall that the dollar value truncations were happening in the 80s and early 90s (IIRC) when those salaries were a bit less common.
Indeed.
At the same time, the game of chance component is important at the individual level. Despite the strong group (IQ cohort) trends shown, IQ explains surprisingly little variance in the data.
There is. The SMPY (aka “Lubinski and Benbow”). Searching for SMPY at Steve Hsu’s blog infoproc.blogspot.com gives a good introduction to the voluminous literature https://www.gwern.net/SMPY
I read your post years ago and found it very interesting. It seems to have picked up more comments since then. Reconciling the two sets of observations (SMPY and your/Grady Towers/etc.) is an interesting problem. Many analyses forget exactly how rare those high IQ people are (since IQ is not the only important success trait and luck matters, proportion in the population is key). Your analysis gets that more right than most, but I am not sure how important the ideality (Gaussian) assumptions in “By dividing the distribution function of the elite professions’ IQ by that of the general population, we can calculate the relative probability that a person of any given IQ will enter and remain in an intellectually elite profession” are.
I think Simonton’s 20 point observation is a big part of what we see (as you rightly discuss). Along with high IQ individuals having traits that cause issues at a rate not that different from the rest of the population. How many IQ 115 people fail to achieve their potential? Are the 140+ failures that much more common, or just more noticeable because of the additional potential squandered?
Thanks for the thorough post, Dr. Thompson. I need to spend some more time on it, but one thing caught my eye on the initial read.
If I understand correctly, the final table has a mix of discrete and continuous variables. From the paper figure caption.
This indicates to me that, despite the smaller coefficient in the multivariate model, low self-control is more important than maltreatment. This is because maltreatment only varies from 0-2 giving a maximum RR of 1.31^2 = 1.72 while self-control varies (conservatively, this is the 95% interval) from -2 to +2 giving a maximum RR of 1.24^4 = 2.36
It is interesting to observe how the self-control multivariate model coefficients vary across the outcomes. It is highest for crime at 1.26 (which seems intuitive), but lowest for obesity at 1.04 (which seems non-intuitive to me).
In 2014 I was told, by either Terrie Moffitt or more probably Avshalom Caspi, in answer to a conference question, that the informal assessment of self-control at age 3 was one of the best, possibly the quicket and best predictor of later life outcomes. That is to say there was a formal “neuro-psychological” assessment with tests and observations, and then a short additional piece about what the child was like to test. Some item like “could not concentrate” or “impossible to test properly” turned out to be an excellent indicator.
In child psychiatry we had a similar concept, officially “uncooperative with testing” but informally “impossible to get settled”. Usually this could be diagnosed on entering the waiting room: the Mum would be exhausted, and the child would be bouncing about, repeatedly playing with the door handles, and knocking to doors to and fro.
Do you have any sense of the relationship of self-control to time preference? The marshmallow test conflates the two to some degree, but I think there is a useful distinction to be made. I wonder how the quadrants would populate for:
1. Binary question would you prefer one marshmallow now or two in fifteen minutes?
2. Binary can child wait fifteen minutes for n (chosen so child thinks it is worth it to wait, intellectually) marshmallows with one sitting in front of them?
How relevant is numerical waiting time vs. binary able to wait?
Any thoughts on children who were “hyper” but could focus when confronted with something interesting? Any resemblance to me is strictly coincidental, of course ; )
P.S. I also need to spend some time looking at the Supplemental Material for Caspi et al. 2016.
claiming wealth and income are somehow just a game of chance.
They are in part a game of chance – what aspect of life is not?
It’s the just that’s wrong. It would be as daft as claiming that wealth and income are just a matter of IQ.
That cuts out being in the control room of most industrial processes. In does not preclude employment as a university teacher, where to manage one concept may lead to a successful career.
I once knew a chap whose successful career seemed to be based entirely on the happy fluke of having had two extremely good research students in his early years. I never did work out how those two lads had managed to put up with him. Benign neglect, perhaps.
I was irritated that they would not mention the fact that some people are brighter than others.
Such people are much more irritating even than the lummoxes who persuade themselves that only IQ matters in life. More irritating, I suppose, because everything in their actions in life says that they are lying rather than being “wilfully blind”.
The mashmallow test must be wrong. A castaway on a raft has a bottle of water: Should he drink it all now or ration it? A prisioner in the gulag chances to posess a whole piece of bread: Divide it up so it lasts a week or is it better to wolf it down now? As all hunting animals in the savannah, the most rational strategy is to eat all one can now. Ergo, the evolutionarily correct behavior is to eat it now and not to take chances with some psychologist’s promises. Mas vale pajaro en mano que cien volando, as we say in the ghetto.
At least 1/3 of the rich inherit their money. Not discussed here. Invalidates your whole tranche of damned lies. I mean statistics. And I don’t think counting the higher salaries of autistic idiot savants who bean-count well on behalf of real actual rich people is really playing fair either.
Anecdotally this is a description of the difference between two of my kids. At 3 one was all over, the other quiet and studious. Both are unusually successful, working for major corporations (STEM occupations.) While neither has formal IQ test results, the studious one only once received less than an “A” all the way K through college and the “restless” one finished college at 20, so they’re fairly rare.
Is it possible that “difficult to assess” could put the restless-due-to-boredom and the restless-due-to-inability in the same bucket? The latter would surely be an early indicator of future hard times.
Lots of 140-plus IQ people enjoy but modest income and wealth. Must we repeat the obvious?
The debate over hard work vs luck is a very dangerous one; I see lots of low-aptitude (or lazy) people emphasize luck as a means of justifying robbing the successful of the fruits of their labor (also known as taxing the hell out of the 20% of the population that already accounts for most of today’s tax payments.) I’m not a fan of this; those who over-emphasize the “luck” component as a rationalization for their parasitism are no better than tapeworms.
Prof Thompson:
A Question. Is Zagosky’s wrongheadedness due to his being a fool or a knave?
You seem to reject the importance of luck not any grounds of evidence but on the grounds that you disapprove of the uses to which the observation might be put. That’s an interesting strain of anti-science: it’s much the same argument used by anti-HBDers.
Having founded a quant hedge fund and worked and known with some very smart people -2 gold mathematics Olympiads, a few math prodigies and an army of at least 135 IQ guys based on APM-
And also having the opportunity to have known and interacted with some very rich people and billionaires either through work or hobbies ( clients and being a top 100 ferrari client)
I am in the unique position to observe that the relationship between income, wealth and IQ breaks down at the top 0.1% percentile. I pay and get paid by these people so I know…
The very rich would be around 120-130 IQ. I have not seen anyone who have strike me as brilliant.
It’s really a sad state that the high IQ are only interested in using their IQ to pursue wealth. The #1 career for MIT physics majors is probably as a Wall Street quant. What a waste of talent. How about doing theoretical physics and other scientific research to help understand the universe, explore space, build solar powered flying cars, etc. etc.?
How many geniuses died broke?
A black with 115 would be 10 times more valuable than an East Asian and 6.6 times more than a white person.
The limit of this line of reasoning is that he would be 15 to 20 times more valuable than a Jew (depending if their average IQ is 110 or 115) and it doesn’t look that way to me ….
The cap is a problem no doubt about it. However, the entire system has too much “noise” in the data. First of all how did the people in these so called studies obtain their money and net worth? The rich and super rich inherit their bucks…is that part of the data field. How is the wealth determined? This is like those who try to match IQ with GDP etc. of countries of the world. Countries like Italy have an underground economy that is probably upwards of 40%.
I know people who are basically middle class farmers but own an enormous amount of land next to their farms. This is mountain land but what will it be worth in the future? Many of the rich in this country make their money on the borders of legality or illegality depending upon which side of the fence you are on. Jews use a massive network for their wealth. Does that count?
Plumbers today can make more money than most college professors. Plumbers are pretty smart but I doubt they could do heavy scientific work. Are we to determine that IQ of the professors don’t help them because they have chosen a life in academia and like that life style?
Some people don’t care to chase the crowd in terms of money….no matter how smart they are. The higher IQ obviously gives people more opportunity to make money but it doesn’t guarantee it. As I have said…there’s a lot of noise in any data about this type of stuff and it won’t be settled by regression analysis or any other mathematical paper because anyone could take a specific subset of any of the data and run something on it and get exactly what they want. In fact, Taleb pulls stuff like this all of the time in his magic papers by controlling the context by playing with averages and subsets.
Buffett has allegedly a 155 IQ. Gates is probably above 150. Same for Google founders. D Shaw, the hedge fund founder is probably above 160.
Thoss people are far above the 0.1% in income (600k) and wealth and IQ (148).
1% household income : 386k
0.1% : 600k
0.01%: 1600k
0,001% : 7500k
https://review.chicagobooth.edu/economics/2017/article/never-mind-1-percent-lets-talk-about-001-percent
So in terms of revenue, there is a big acceleration around 1 in 1000k . Not 1 in 1k. If correlation were 0,5 with intelligence the threshold would be 130 or Mensa level to get that high. Meaning only 1 in 2500 people that intelligent would make it that high in revenue. It doesn’t look irrealistic.
There is no logical reason to think the correlation breaks up anywhere except the « feel good » necessity of clever people who doesn’t succeed as much as they wanted to and find convenient psychological excuses for that …. when they could just think they have a higher purpose and interest, thinking tall like some public characters
Household income level
IQ average IQ threshold for a correlation of 0,5
Probability to get there is you have just the threshold IQ needed
10% : 150k. 110 40%
1% : 386k. 118. 8%
0.1% : 600k. 124. 2%
0.01%: 1600k. 127. 0,3%
0,001% : 7500k. 130. 0,075%
So with a linear correlation between IQ and income of 0,5, you would still have this feeling that intelligence doesn’t bring you were you « belong » ….
No need to invent a break-up to feel good . A correlation of 0,5 means intelligence explains only 25% of the variation in success ….
And at the next level, it looks like the 1 in 1000k in income (100 richest household) is above 150M a year. Average threshold would be 136. And there, the 115 people who inherits or’marry their wealth would cancel out the 150+ people who created it.
0,5 seems a reasonable correlation . But then intelligence explains only 25% of income variation. And it’s prettt straightforward to reach 150k of household income but above that, even if the correlation stays the same, the subjective relational becomes very loose.
If you are in the 10% more intelligent, you have 10 times more chances to belong to the top 1% in income than the average guys. But the odds are still 10 to 1 against you. Some would be satisfied only if their chances were close to 10%. But with reasoning,, IQ fanatics would like your chances of being 0% 🙂
A lot of these studies are dated and irrelevant to the current generation. When you figure in things like grievance-mongering feminists, affirmative action, and very deliberate anti-white and anti-male propaganda so obviously intended to sabotage white males into NEET porn-addicts and incel losers, then I doubt that correlation still holds. Universities today do not reward or value intelligence, creativity, or initiative. What they value and reward is rote learning, obedience, towing the liberal party line and actively and passively discriminating agaist white males at every possible opportunity. The white males who make it through to the end are the most cucked and effeminate specimens you could possibly imagine. It is horrific to see. Now the bizarre society we live in makes sense. As above so below. No wonder white girls love black cock so much: it’s not a pathology, but a natural and healthy reaction to being surrounded by such weak and utterly cowardly “men”. And these results are by (((design))).
I read this to my wife who is a child therapist and she agreed right away.
It figures, does it not, that thresholds are important, whether for IQ type intelligence, conscientiousness or ability (physically and by organisation of one’s life) to give concentrated time to the job and that when you consider how many of the very rich have made their wealth or kept and grown it in real estate an IQ of 120 to 130 should usually suffice. (I can remember many meetings during years at one occupation where I would look at some figures or words and come up quickly with the errors no one else had seen but apart from people being happy for me to chair some committees or give a private report to the top banana it was by no means critically beneficial. That I am prosperous enough to risk little by playing unproductively in the UR sandpit has something to do with the ability to assess opportunities and avoid mistakes using an independent mind but much more to do with the good fortune to be Australian while huge mineral resources are developed, Japan’s then China’s demand for our exports has soared and our big cities have grown fast. Yes, I haven’t yet cashed in on the farmland I bought with a realistic – intelligent? – view that I didn’t trust myself to be a farm manager so the land had better be close to a major city where the odds were on it increasing rather than declining in real estate value….)
Apologies if my question is way off beam but your last paragraph made me think of some fairly convincing stuff I have seen or heard recently about the obesity epidemic. Apparently its all about fructose since the beginning in the late 60s of the use of cheap corn syrup. (I haven’t got quite clear in my mind where sucrose comes in because the YouTube presentation by Dr Jason Fung that I gave some attention to, did seem to indict sugar too. My attention was mostly directed to getting support for my prejudice in favour of intermittent fasting and finding out which régime would be best for my perpetual life program. Further to digress: I am pleased to believe that cutting down one’s calorie intake by fasting makes double sense because it not only defends against the metabolic syndrome but does not diminish one’s rate of metabolism). I’m not sure why obesity wouldn’t still correlate highly with the feckless lower orders who want their sugar fix and want it cheap but maybe that’s because the higher quintiles haven’t yet had enough time (or hadn’t by the time the stats were compiled) to work out how to deal with the craving for sweetness.
Assume I am very tired from conscientious activity, or hyperactively distracted if you must, but don’t make me work out what those figures just above the word “DIFFERENCE” are in your third graph. Excuse, my eyes are tired from workingvwith very small screen. Further elucidation please.
Viewing intelligence in relation to income/wealth reveals just the utter view, that some think “money”, in reality a debt, would constitute something natural. Its a greedy system, and the most ruthless and unethical earn the most in the system.
Income is basically an arbitrarily assigned number of debt for a job, if you put it all in relation to the debt system that is being run, the FED, ECB, BoE etc.
All the statistics that put intelligence in relation to income say nothing at all about intelligence. I may say something about those who collect the data and compile the statistics, the circus must go on, right?
The most unethical earn millions, but the most intelligent try to not be part of the system.
I don’t see Soros, Adelson as overly intelligent, rather than criminal, which requires a special type of “intelligence”.
Example,the inventors of some tool usually die poor, while those who market the invention or stole it, die rich.
You really think Zuckerberg can write even one line of code? Think again, he can’t, he is unable to do so, he has proved it.
PS The boyfriend of a close female relation kindly arranged a special presentation for me of a computerised trading system since I had been otherwise detained. It was a father and son outfit with the son the actual mathematician. His father gave the slide show presentation. At one point, being the only person there who wasn’t part of the sales effort, I said “would you mind going back to the last slide and tell if the numerator and denominator haven’t been switched in that formula at the end of the middle paragraph”. I was right. And apparently no one amongst the hundreds who’d seen the presentation had drawn attentiin to the error.
Now that’s not an idle boasting war story because it prompts a worthwhile question in my mind about what the psycho-social preconditions are for someone behaving as I did. I did not come from a Confucian excessive-respect-for-one’s-seniors background. I was the only child of a very bright though not educated mother and never told to pull my head in. My school contemporaries included future full professors, university presidents and senior judges who, sometimes I get evidence remember me as the quickest to get a translation right or solve a problem, as well as being the youngest. But, but…. supposing I had been like Puzhong Yao whose story Godfree Roberts recently introduced UR readers to? Clever enough to get First Class Honours in Mathematics at Trinity College, Cambridge, but not confident that he would go on being a star if he stayed the Chinese course towards Beijing University with hundreds of brilliant contemporaries. It makes one wonder how many great developments in science and technology there have been from the diversion of clever conscientious original minds away from the Ivies, MIT, Caltech and Stanford to humbler universities and institutes where they blossom with never a nagging thought that they are really not smart enough.
Are self-control and conscientiousness the same for the purpose of determimg whether someone has, when IQ is also assessed, the makings of great achievement? Can you point to – and a big ask: summarise – the literature on their measurement and significance? Also on their heritability and what is known about the relevant genes?
Clearly some “short sleepers” have a valuable characteristic for becoming high achievers too. I have only just, at long last, found the ABC’ Radio National’s Health Report state the obvious, viz. that requirement for sleep is a function of many genes and normally distributed. Can you add flesh to that? Is there a better combination of genetically influenced factors to exolain success in life than IQ + conscientiousness/self-control + need for sleep?
Amazing what fun taking the abacus into sandpit isn’t it? 🙂
😎
The way I see it, intelligence has nothing to do with making money!
Well, it’s certainly an inconvenient one (for you).
Since you’re already on record as claiming that your wealth is largely a result of your high IQ, it’s worth pausing to ask just what you did to “earn” that high IQ. Because as far as I can tell, it was just a matter of chance.
As for inheritance, that is clearly the ultimate in unearned wealth.
I believe that generally more equal societies are more pleasant societies, so you can rest assured that I will support redistributing some of the rewards from those who largely earned them by virtue of dumb luck, to those who found themselves in no position to ever earn much, again largely by virtue of dumb luck. (It would be prudent, of course, to restrict the genetic proliferation of the latter group.)
One way would simply be to tax inheritance at 100%. Since that would run into serious compliance issues, a simpler method is to simply tax people as we go. Fortunately, such a system is already in place.
This must be perplexing to hear, but you can always comfort yourself with the reminder that at least the howling mobs are coming for your wallet rather than your neck.
Sorry, I had some trouble with the images, since sorted out. Here is the explanation which I ommitted so that the actual graph would be bigger, and in better focus.
Superior cognitive ability is strongly indicative of upward mobility from the lowest quintile. This is true for both blacks and whites. Individuals who are cognitively at the median in the overall population have an 80% chance of moving up and out of the bottom quintile. What does that say about those that remain in the bottom quintile?
About the Dunedin sample results?
Interesting how White people are all tied up in the idea of IQ when the only thing that really matters to White people is race and how good a marksman they are.
Thanks. What I was seeking to understand was what the figures were along the horizontal axis above the word “DIFFERENCE”. What do they measire/signify, and how?
Have you ever tried to think of inheritance taxes as defeating the aims of those who save and invest and start new business with a view to having certain effects in future, even beyond their lifetimes**, rather than as taking unearned wealth from inheritors? Therefore as a tax on the present generation of savers?
**to forestall half-baked expostulations about the iniquity of those who seek to affect the world after their deaths let me just invite thought, in the short term to supporting the widows and children of those who die young and, in the longer term, to work to preserve endangered species, heritage buildings and the like.
Where is Part 1 of The Wages of Intellect?
The probability of moving out of the bottom, poorest, quintile
Astonished, non-expert and supportive reader of Prof. Thompson’s good contributions here.
I read Michael W. Ferguson’s “The Inappropriately Excluded” at the polymatharchives to which you linked. I suggest this provocative and outright troubling article to anyone reading here.
I agree with the comments here that contend there’s a lot more connected with income and net worth than IQ. But, as I’ve said before, we’re going to judge “brightness” or “cleverness”, “dullness” and “obtuseness” anyway, so I’m in favor of scientific inquiry to sharpen our perceptions.
How about doing theoretical physics … to help understand the universe?
Fundamental physics has been stuck since the seventies. The top exciting science nowadays is genetics and its kindred subjects.
Macadamia nutteries! Those were fashionable investments when we first lived in Oz. How did it all turn out for the doctors, dentists, and so on who ventured their capital?
What’s with the net worth dip at 110 IQ?
Are there any tests at age 1 or 2 which are predictive? I’ve looked to see if there is anything predictive about early milestones – crawling, walking, talking – and the data is a bit too messy to be useful.
https://www.unz.com/jthompson/the-wages-of-intellect/
https://www.unz.com/jthompson/the-wages-of-intellect/
It was in the text above.
Thing is, what should be done to take care of the problem?
Loads. Tesla springs to mind.
It’s not a discussion I’m interested in. Progressive taxation is here and it’s not going anywhere, nor should it.
Have you read or even heard of Helmut Schoek’s fascinating book on Envy? Very much worth reading.
Let me guess. You have never made much money?
Thank you. You will obviously forgive me the fact that it didn’t spring to mind as in your text 🙂
It is odd that I coildn’t find it by clicking on your name to see all your UR articles.
Agree increased dietary fructose is probably important, but I doubt it is the sole issue. Intermittent fasting seems like a useful idea. I don’t do it much, but find it useful when I feel myself getting a little sick. Seems to work as a bit of a body reset.
One of my pet theories about the obesity epidemic is it is partly caused by the body trying to satisfy micronutrient deficiencies caused by poor food quality and/or choices.
In Table 1 there are small (not or barely significant) multivariate correlations for obesity with childhood low SES and IQ, but the self-control RR was essentially 1. I found that surprising given that one would expect it to correlate with ability to adhere to a diet or exercise program.
My guess is statistical noise. Disproportionate number of wealthy outliers in the 105 group. If I ever get around to downloading the data for myself I plan on taking a look at that.
Thanks for the recommendation.
Great reply Anon[617] ! 😂
“Austrians” who think von Mises or Rothbard said the last word on economic matters are in enough trouble. People who pick up some garbled nonsense from the Austrians which they allow to completely confuse them haven’t a hope of making sense. And your reference to the money paid as income being debt shows you really stuck in an intellectual mire when it is actually very simple.
The only way you could justify what you say about income being an arbitrarily asdigned “number of debt” for a job is to make something out of the fact that some currencies, even on the bank notes, are ore used to be expressed as promises to pay on demand. (Yes, you may yearn for the day when the holder of $35 in US bank notes was owed an ounce of gold). Even so your “arbitrarily is ridiculous because, however arbitrary a pegged gold or gold exchange standard may be, the amount of the currency promised and paid to the worker or shareholder is not arbitrary but a matter of agreement (or arbitral award or law) and contract.
Very small point: ability to adhere to an exercise program would be correlated but not directly relevant because exercise burns far too few calories for weight control. (I guess its greatest effect might be in suppressing appetite when done very hard just before meal time – and maybe improving morale)..
Unless you propose to quite literally burn a person’s wealth when they’re cremated, someone is going to get whatever is “left over.”
Are you so much the sophist that you think electing a ruler who will put that wealth into service to you (generally rationalized by genuflection to some vague notion of “society” as a real entity) makes it “earned” to you? That you think you (personally, or in some high-sounding Newspeak) are more entitled to wealth I produce than are my kids is…interesting. I suppose you’d like to prevent me from raising my kids better than you would yours, because…it’s unfair to you?
I don’t worry much about all this. If I had to transfer title of my property to my heirs before my death in order to “cheat” clowns like you, I’d happily do so. In fact, I’d personally burn it before I’d imagine you benefiting from anything you didn’t BUY from me.
Leftist loons like you are a dime a dozen in this age where people have no notion whatsoever of from where our Jetson’s lifestyles come.
I don’t reject the importance of luck. I do object to it being used as a rationalization for society-wide theft.
Your view is common, as is the cognitive process by which you arrived at it.
While we’re at it, let me just note that those who somehow “object” to a man’s “luck” in his parentage bother me on an existential level. My aptitudes are mine, they are not extricable, taxable, and I cannot be robbed of them without killing me. The same applies to the “luck” my kids had at being born quite talented. Should they have to carry louts like you as well as raise their own families? Or should others have been placed ahead of my “lucky-in-DNA” kids, affirmative-action like, to do a This Perfect Day handicap on them?
What do you think I think about those whose comments sound like they believe the outcome of that “luck” should somehow be undone? Do you realize just how parallel this sounds to those who, under Lenin and then Stalin, piled human corpses by the millions?
Yes, that’s the basket into which I place comments like yours.
No one questions that the acquisition of wealth in large amounts generally depends on the ability to acquire and use information, i.e., on intelligence as the dictionary defines that term.
What has been questioned is (a) how closely intelligence is related to income and wealth, and (b) how useful IQ test measurements are as a measure of intelligence. The data suggest that the answer to both questions is “not much.”
Looking again at Zagorsky’s figure we see, in answer to the first question, that whatever relation exists between income and wealth, the variance is enormous, and indeed over the range of data shown in the figure only two or three percent of the variation in wealth is attributable to variation in IQ.
That, however, is true only of the population investigated. One would expect an entirely different relationship in, say, a future crowded world where a Global Government imposed an existence charge that would increase with age such that, over a certain age, only billionaires could afford to pay. In that case, assuming euthanasia was the penalty for non-payment, there would surely be a very much tighter relationship than under present conditions in the West between the ability to acquire and use information on the one hand and the getting of money on the other hand.
As it is, at least in the Western world, where a universal basic income is already provided in some jurisdictions, there is hardly any necessity for anyone to apply any thought at all to the acquisition of wealth. Since intelligent people often have much better things to think about, it is inevitable therefore that many of them finish up in relatively low paying professions such as teaching, nursing, and raising kids.
As for whether IQ is a good measure of intelligence, the Flynn effect, the billionaire athlete and the idiot savant all testify to its limitations.
I think people seek answers to questions, hoping for a cookbook recipe by which to understand infinite reality.
The world, sadly, is full of questions that cannot be answered. Most of the easy stuff was already elucidated, and what’s left ends up being an endless argument about premises and controls.
As to the linked essay, I’d retitle it The Unfortunately Excluded. But success in business/finance is a lot like success with the opposite sex (i.e., finding a good mate/partner.) Neither can be reduced to a number.
Ah, but just HOW progressive?
I laugh at this. The world today is unstable, and seems likely to head into a period of rapid change and/or turnover. Given that relatively few people in the USA pay income taxes any more, but all citizens are entitled to vote, suggests that we’re already on track to eventually collapse the system.
Everything that has a beginning has an end.
From Table 1 in Zagorski
IQ correlation with Income 0.30. (also see Fig. 1 )
IQ correlation with Net Worth 0.16. (also see Fig. 1 for scatter)
Note that correlations with Education (0.32 and 0.17) are virtually identical to correlations with IQ.
Note that results correlate similarly (0.28 and 0.16) with dollars spent on food.
Sample size: N=7403
https://www.gwern.net/docs/iq/2007-zagorsky.pdf
So – DaSmartest people must be government employees – just by comparing their pensions to DaDeplorables, eh!🐺
My son with a 160+ IQ is only interested in physics, philosophy and classical music, though he aces every subject in school, seemingly without breaking a sweat. He disdains dishonesty and money worshipping, and is wary of the direction technology is headed — he thinks AI will be used more and more for sinister purposes. As a high schooler, he is culturally and economically conservative because he is highly logical; leftism which runs on emotions does not make much logical sense to him. It makes him rare among his peers, esp. since we live in the uber liberal left coast. He is often the only kid who stands up and recites the pledge of allegiance in class.
People of exceptionally high intelligence tend to have an acute sense of fairness and morality. Most of them end up becoming STEM academics or researchers, not particularly wealthy. Those who became incredibly wealthy usually are in the IQ 120-136 range, that’s why IQ 125 is often called the “optimal” level of IQ, because we live in a society where money trumps all.
IQ 125 = optimal: smart enough to rip people off, not smart enough to feel guilty about it.
More true today than, say, before the passage of the Civil Rights Act of ’64 and the executive order authorizing AA.
I would have to say that I did not feel intellectually intimidated by a single supervisor who I answered to in the 30+ years I worked for the federal government, and they were all paid considerably more than me.
When the government mandates that a member of a minority or a woman be given unnaturally higher priority in advancement to managerial positions or higher grade positions, outcomes are always going to be skewed.
In terms of Darwinian fitness, the optimum value for any organismal trait tends to be around the mean. I suspect, therefore, that for humans, at least until recently, an IQ of 100 or less was optimal.
High analytical intelligence is a fascinating trait, but it can be a cause of difficulty in social adaptation. I wish your son every success in finding a rewarding social and economic niche.
And morality may have more to do with income and wealth accumulation than intelligence:
How Money Affects Morality
Today’s obsession with wealth accumulation is a fad, nothing more.
We exist in a cesspool of fads so long-lived that they appear permanent.
When the credit bubble eventually pops we’ll see just how important to a man’s life is his beloved Harley Hog, his bass boat or his 90′ yacht. They won’t be worth even scrapping.
Human history is cyclical. We have climbed this part of the cycle higher and longer than any prior iteration, but it’s like a carnival ride: the plunge ahead (in speed and depth) is dictated by the climb we apparently have not yet completed.
FWIW, lots of people retire when they “have enough.” It’s sample selection bias to look at the people with their yachts, fast cars, celebrity, etc., and assume that all the rats are running in the same direction.
I intend to ask my grandkids, at about 12 years of age, “What life do you wish to live, the Common Life (marriage, family, work, grandkids, etc.) or the Uncommon Life (CEO, fame, celebrity, transcendent wealth, etc.?”) It’s perhaps a more-important question to answer that early than is “what do you want to be when you grow up?”
It occurs to me to ask:
Dearieme and Silviosilver, just why are you so envious?
I don’t much care about the people who have “more” than I do. I respect those who are smarter, or more entrepreneurial, or harder-working. I don’t see what they have as coming at my expense.
What about you?
[It] does not preclude employment as a university teacher, where to manage one concept may lead to a successful career.
Gold
People of high intelligence suffer the same pitfalls as everyone else. Paraphrasing Kahneman (Thinking Fast and Slow) we ALL tend to fall in love with our ideas, and bright people tend to be even worse at this.
Another: We tend to be very poor judges of our own cognition. (I think the first part of his book is very worthwhile, especially for bright people.)
The limits of intelligence and of knowledge are important. I wish I had understood that about 40 years before I learned it.
One warning: High IQ does not correlate, in my experience, with “better logic” WRT politics, economics, etc. Association with a so-called High IQ society (140 or higher, which is ten times more selective as MENSA) was like a bucket of cold water on my head. The group was full of hard left loons. One of the most active members was a Kleinfelters Syndrome zealot of transgenderism’s insanity. Talk about a non sequitur that supposedly bright people could not see.
IQ is normally distributed as you have demonstrated.
Wealth and income distributions, However, are leptokurtic and fat tailed.
I think it is fair to question whether some of the assumptions underlying correlations like normality and linearity are violated at the tails given the effects of compounding and inheritance on wealth and income.
IQ decline rapidly with age after 50 ( or is it 60?) . Warren buffet and Bill gates’s IQ now will likely be less than 130 when normed against a 25 year old cohort, yet, they had made most of their money when they at their dumbest in their life.
Just the lottery winners will totally screw up the correlation at the tails.
We are both relying on anecdotes with no empirical data so I think it will be hard to come to a conclusion. I am not a mathematician or statistician so may be I am out of my depth here.
I can assure you there is no “feel good” confounders since I myself is an outliner given my relatively low IQ. My own experience is that the amount of financial leverage a person use, compounding and his personal network have the most impact on wealth above 3 standard deviation, may explain more than 50% of variance.
Your view is common, as is the cognitive process by which you arrived at it.
Which view do you refer to? And which cognitive process?
Dearieme … just why are you so envious?
I’m not envious. Indeed, if Dr T doesn’t object, let me expand on that. I’m not envious, you cretin.
There are certainly a lot of highly intelligent people who are exceedingly arrogant — esp. among Jews. It is usually when high intelligence is coupled with narcissism, which is a common trait among Jews. Gentiles of high intelligence tend to look outward, curious at all things out there, while Jews of all intelligence levels tend to look inward, obsessed with their own intelligence and feelings. The higher IQ they are, the more narcissistic they become. I don’t know if it’s a cultural thing or a certain Jewish gene. Christianity prizes modesty and humility, Judaism embraces “chutzpah”, which is the opposite of humility.
When my son was younger, I enrolled him in Mensa as a member for a few years and received lots of their literature. Eventually he quit as we both came to the same conclusion: the members don’t seem to do much other than obsess over their “giftedness” and whine about how hard it is to live among people of low or average IQ. I guess it shouldn’t be a surprise, it was founded by a Jew, Isaac Asimov. My son finds it incredibly repulsive when people think themselves gifted or highly intelligent. He eschews the gifted label.
Something tells me the transgenderism zealot in your high IQ society is a Jew.
There are two types of intelligence – fluid intelligence and crystalized intelligence. Fluid intelligence, often known as g or general intelligence, is the intelligence associated with learning math and science. Crystalized intelligence is associated with experience. Fluid intelligence peaks in your mid 20’s, while crystalized intelligence continues to grow as one ages. Hence the saying, wisdom grows with age.
Mathematician Terence Tao once said that if you don’t solve the hardest math problems by 25, chances are you’ll never solve them. Tao studied calculus at age 9, received a gold medal at the International Math Olympiad at age 13 (youngest ever) and got his PhD from Princeton at 21. He is currently teaching at UCLA. When he received the Fields medal, he was incredibly humbled by it and said he did not do enough to deserve it. When a group of Silicon Valley billionaires gave him one of their annual $3M awards for being a distinguished mathematician/scientist, he was too embarrassed to receive it and said he hadn’t done anything to deserve such an award.
Exceptionally intelligent people tend to be very humble about their intelligence — unless they are Jewish.
Hi James,
In his book on Jewish intelligence, Richard Lynn mentions in passing that the average IQ in Glasgow is about 92. My question to you is this: has there been more work done on the breakdown of average IQ in the UK by region or major city? It struck me as quite significant. I guess the other question would be this: What about average IQ over time? For example, what was the average IQ of the original Pilgrims, the guys who settled America and built Harvard College, who I believe were from the southeast region of England?
Wrong when it comes to most people in the USA with a $1 Million net worth.
Statistics?
I have never seen you as an envious person, and I was bemused to see you so accused. A misapprehension of astonishing proportions.
Exercise can burn meaningful calories without going overboard.
And since muscle burns more calories than fat does, building muscle can help reduce fat even after the exercise is done, when sedentary.
Good Points. Except as to very high-earning athletes. There are so extremely few, compared to the general population of workforce,!that their number makes no difference and does not undermine the intelligence-income/wealth correlation in modern society.
At the end of the Milky Way you’d be ca. 200 ooo lightyears from home. And that’d be “very lonely” (Jagger/Richards – Two Thousand Light Years From Home), wouldn’t it? – So – – – what about this stuff is so hard to grasp that one would want to study theoretical physics to be able to “git” (M. Jagger) it?
Yes. And she said she made the same waiting room-observations.
As for the tests, the child psychiatrist would use a “fitting” test with 3-d objects and a cube with matching holes. – Big difference was: Kids who don’t get what’s up or are so impatient, that they don’t really try to find matching objects – and the others.
She just told me that she found your post ab so interesting, that she discussed it with her colleagues today in a short break at noon.
What do you make of the part of the preamble to the US Constitution that says the government is being formed to “promote the general welfare of the people?” In your estimation should the US government do nothing to help the welfare of its citizens?
Re:
How IQ of this or that variety changes with age is something about which I know nothing. However, it has frequently been proved the case that the elderly are highly effective leaders. Domenico Michiel, for example, the blind, 94-year-old Venetian Doge who personally led the Fourth Crusade to a brilliant victory over Byzantium. Then there was the Russian, Prince Kutuzov who, in the last year of his life, destroyed Napoleon’s army of invasion. And, and and and so many others.
You seem to think that Darwinian fitness, having children and all that, is somehow better than being a super high IQ investor driving a Tesla, owning a yacht, and living like a Sultan in a ten thousand square yard mansion. What an outlandish view.
Actually, my point about high-earning athletes is that they have a very high capacity for acquiring and using relevant information, such as where the other guys are on the football field and how to develop a productive movement. Their financial success thus conforms with the idea that intelligence, in this case, visual/spatial and kinaesthetic intelligence, can underlie success in gaining income and wealth.
How bright do you have to be to save X amount monthly and stipulate that the interest/dividend generated be reinvested? The power of compounding will make you comfortable in 20 years. Only discipline required is to live on what you earn and not touch the stock or bond fund or whatever.
When Taleb decided to expose the fraud of IQ, and especially the supposed correlation between IQ and income, he was backed up by fellow mathematicians. People like Stefan Molyneux (humanities major?) and other social science types tried taking on Taleb and defend the pseudoscience of psychology and “race realism”. It quickly turned to a mopping operation by Taleb. The IQ fetishists fled like rats, and like ISIS, they have simply licked their wounds and regrouped. It’s pathetic.
Fortunately I have been happy to live with that [first par] perhaps slightly delusional belief for decades which is a good thing because I lie down using a smartphone too much of the day and bursts on an exercise bike watching documentaries and at resistance exercises I hope make up for not getting near a swimming pool most of the year and relying mostly on tennis since I ran my one and only marathon at the same age as my father had his first heart attack. 4hrs 5min since you ask, but I was born to be a sprinter’s sprinter: out of breath 200 yards into a 220….
Y’know, I’ve never understood the importance given between the correlation of ‘wealth’ and IQ. It used to be an even vaguer ‘success’ associated with high IQ, but I was always given to understand that by ‘success’ they ultimately meant ‘wealth’ anyway.
I have a higher than average IQ (especially for a girl) and I have always excelled at anything I applied myself to. Yet beyond basic survival I couldn’t care less about money. And I’d rather live in a cave than anywhere near a city, where the vast majority of the high-income jobs are. Couldn’t care less for smart phones or fancy new cars or snazzy houses or any of that crap. And so on. Am I ‘successful’, though? By my standards, absolutely! (And yes I have money saved for emergencies and retirement.) But by the ‘success equals wealth’ crowd, I’m not at all, simply because I value different things, with no credence at all given to my own measure of happiness.
I’m not trying to argue with the article here, just pointing out there’s a whole different world with both high and low IQ folk that is largely ignored. Not all of us want gobs of money. Especially not this worthless, devalued fiat currency. I don’t know. Just always puzzled me.
Yeah…Terrence tao is from where I am from…Hong Kong…but he studied in Australia.
I haven’t met him but I have met some pretty impressive math guys in my life,
Anyway…
The IQ of interest here is G…fluid intelligence.
No idea what you babble on here.
My point is simply, there is a scam fiat “money” system, in fact a slave system.
The other point is, the US Americans have a pretty crazy idea, that everything is about money and that everything can be bought.
Intelligence has nothing to do with earning in a fiat scam system, that is self destructive.
Nothing justifies an multimillion income for a freaking useless manager or some CEO, well paid criminals in suits, whereas a simple fireman or nurse earns nothing but indeed contributes to society.
Everyone participating in the fiat system is basically contributing to his own destruction, and the day when they pull the plug from this system is near.
A wage is a fiat system is just more IOU promises, backed by nothing but thin air.
Your labour is the value, not the assigned fiat number
Mild emphasis edit: It’s not “my” high IQ society. Realtalk(tm) gets one booted from it by the snowflakes.
As for Asimov, I look to the son as a comment on the father.
Yes, and all men are created equal, too.
Poetry generally produces evil and misery when placed into a political context. No doubt you’d find just as much flowery idealism in the founding documents of Mao’s China, Lenin’s USSR and Pol Pot’s Cambodia.
If I told you my goal was X but I consistently produced Y, at what point would you realize that producing X was either impossible or that I had lied to you in the first place? Political documents, including both the Declaration of Independence (which was historical BS as evidenced by contemporaneous analysis in the “Strictures”) and the Constitution of 1787 (which was an open coup d’eta against the Articles of Confederation for which colonists fought) are fully of naked sophistry.
Newspeak didn’t begin with Nineteen Eighty-Four.
You were lucky not to be brought up to be either competitive by the Tiger or Jewish mother style of indoctrination or with a duty to change the world. So you can enjoy the privilege of the superior intellect cruising – lazily as some would put it – and, while avoiding poverty and misfortune thanks in good part to your wits, enjoying life by using your brain in at least many of its possibilities. Do you get pleasure out of reading books like Stephen Hawking’s and Leonard Mlodinov’s “The Grand Design”? Sad for those whose IQs don’t allow them that sort of pleasure.
Have you seen Steve Sailer’s stuff – years back – on the IQs of footballers playing in different positions? I know practically nothing about American football but think I remember quarterbacks had to be smart.
I take it you are not expecting to earn a living writing up or teaching your economic views. Enjoy your freedom to kick the ball all over the park and disturb no one.
Returning to the origin:
As you correctly observed, I used the word “just” quite purposely.
If I had written my statement without the “just” (which you state is “wrong”) your criticism would make sense.
I said “just” as a means of expressing the fact that wealth and income are NOT exclusively luck. You turned that on its head, suggesting that my statement indicates belief that wealth and income are exclusively a product of not-luck (intelligence, for instance.)
What was your reasoning here? Why did you attempt to twist what I said into something you could deride? Given my statement as an attack on rationalizing envy, your ham-handed reframe looks like a defense of envy. I stand by my observation that doing so suggests you are envious.
As to my being a cretin, perhaps so…but this cretin appears to have a 2-sd communication gap with you, and odds do not favor it being in your favor. PS: In this Age of Sophistry, I loathe sophists.
If you want to part with any of your “worthless, devalued currency,” I’m sure I can give you my address so I can take it off your hands.
I am an ant, riding on a leaf that floats down a wide river. The course of the river ahead is set, and what I desire has zero effect on it. I can see but a tiny bit of the river ahead, and while I may paddle madly to move toward one side or the other, it’s entirely possible that beyond my view are rapids or falls I’ve paddled into by accident.
Human history is one absurd fad after another. The only cooperation humans perform is spontaneous; both markets and herding behavior (fads & fashions) emanate from human cognition operating at a pre-conscious level. 100 years ago every right thinking person believed in eugenics. Today “everyone knows” it’s unconscionably evil to so believe. This is but one among many examples of how certain we all become about the timelessness of long-lived fads which happen to surround us.
My primary characterization of this Age is that it’s the Age of Passions. People feel so freed from concerns about survival that their impulsive mind runs amok with one Passion after another. Save the whales, stop climate change, free love, gay marriage, Go-grrrl-Power, magic dirt, blank slate, the list goes on and on.
My preference is to resist that Mr. Hyde, the source of my own passions.
YMMV.
Of course someone is going to get to what’s left over. That’s precisely the idea. What is left over can be redistributed equitably, rather than all of it going to your heirs.
In neither case is that wealth “earned” by its recipients; only, one distribution is rather obviously more equitable than the other.
Yes, that’s why I prefer taxing income as it’s earned, rather than waiting until a person dies to tax their estate – much harder to evade.
You asked me in another post why I’m so “envious.” I’m not surprised you’d ask that, as it’s about the only response a libertarian could make that sounds remotely appealing to anyone’s moral sensibilities. The answer is that I’m not; I just want to tax you (and me – I don’t get off the hook) in order to create a more equal society, which I think is a more pleasant society. It’s really not rocket science.
You know, I really fail to see how a reduction in earnings from 100x the median wage to “only,” say, 30x the median wage would make it hardly worth getting up in the morning. You still get to live materially far, far better than most people could ever dream of, so like, what’s the big deal here? What exactly are billionaires so worried about? You’re not a billionaire? You only earn, say, twice or three times the median? If that’s reduced to one-and-a-half to two times the median, I don’t see how that’s the end of the world either.
If IQ matters in life, and IQ trends are dysgenic, then the only thing that could make them eugenic is some kind of eugenics program. Only a eugenics program premised on creating a more equal society has even a whiff of chance of gaining traction. And that is going to cost money – you can guess where that is going to come from.
It does not seem surprising if quarterbacks are smart, although whether the kind of dynamic visuo-spatial intelligence that a good QB requires is measured by an IQ test, I’d rather doubt.
The best athlete I ever knew was the son of a surgeon. He had superb hand–eye coordination and could dissect out the nerves of a dogfish in minutes as the rest of us messed up the assignment in the course of several hours. But otherwise, his classroom performance was abysmal.
Equality of what?
Talent?
Health?
Wealth?
Opportunity?
Height?
Attractiveness?
Propensity to disease?
Size of house?
Number of recreational vehicles?
You use the term but clearly don’t realize that (1) some things cannot be made equal and (2) different concepts of equality are mutually incompatible. There’s a book that might be illuminating: “Equality, the Impossible Quest” by Martin Creveld.
I find the prospect of a more pleasant society equally attractive. (wink)
The difference is, I don’t think socializing such things has proved effective at producing one. I categorize your position as parallel to the disillusioned communists who wrote, “The God that Failed.” (Communism’s great, it’s just not yet been done correctly.)
I’m not concerned. I believe the era of these behemoth nation-states is over, and that the future will be a break-up into ever-smaller social/political entities. Some of those entities may embrace your “spread the wealth” policies, others may be less inclined to do so. Ideally, people will vote with their feet as to which to choose. Then again, this is pretty idealistic. But I’d rather that than discovering the current fictional Zombie Apocalypse mania is art foreshadowing reality.
Imagine a community where the absence of vast-scale anonymity prevents Able from gaming the local politics in order to obtain 100x the median production/wealth of others. In the same community, Benjamin (who is the most productive of all members) isn’t forced to pay the way of those who choose to be unproductive. It’s a small community by today’s standards, so the truth of these conclusions is fairly self-evident, not the product of some clown in a news organization presenting his own self-serving fiction.
This sounds a lot more pleasant than a nation-state of 300,000,000 people where leftists want to rob the “rich” but end up eating the working wealthy (higher income, but lower total wealth than the Pritzgers, the Buffets, etc.) and when there aren’t enough of THEM, the leftists start eating the hard-working middle class.
Today in America about half the country pays no income tax. The top 20% (which includes pretty much the entire Middle Class) pays something like 95-98% of income tax. The super rich, who have transcendent levels of wealth but often little reportable income, pay relatively little income tax.
Yet you like to tax income, spread “the wealth.” You don’t seem to notice that dynastic wealth seems to somehow escape the tax man no matter who seems to write the tax laws….instead, we see farmers who can’t leave their farm to the kids, or entrepreneurs whose businesses must be sold in order to satisfy death-transfer taxes (obviously, easily liquidated wealth can side-step Mr. Taxman without much difficulty.)
When will “taxing the productive” reach the optimal level? When a family with the capacity to earn $200k/yr is stripped of half that, so it can peacefully be given to their neighbor who sits on his ass on SSDI? Logic dictates that taxes are a disincentive to produce.
Like I said, these questions will be mooted soon enough. If those who PAY the taxes had to actually be taxed at the levels governments currently spend (AKA no borrowing) the entire game would be over. And it will be. No tree grows to the sky.
Nature runs the original and permanent eugenics program (I ignore for the moment that Nature’s program is not teleological.) It is the only one that will be chosen. If you think a deliberative body of people will choose something in this category, then I have a bridge to sell you. Or I can wait until you finish high school.
Today we exist in Plenitude. People behave (and clearly believe) as though resources are permanently unlimited. Somehow no one seems to notice that Modern Prosperity is all going on the Collective MasterCard. I guess no one grasps that when a family begins to put all their bills on plastic it’s a signal of impending (ahem) status change. What makes an axiom of Nature axiomatic is that it applies at all degrees of scale.
We’re living in an antebellum Golden Age despite the collective insanity and stupidity extant. History hasn’t been repealed, and the fractal of human social experience shows that the higher the rise, the bigger the fall. I have no idea what tools Nature will employ when Nature’s culling of humanity resumes after a hiatus (waterborne disease is a favorite, but crop failures and famine…both natural and man-made, are useful, too.) But I suspect that current UN population estimates for the next century will prove to be the subject of black humor for a very long time.
Whatever Nature’s program, I seriously doubt “more equality” will be its product (unless you count the equality of life among the dead.) I’m rather counting on “better smarts” being a survival tool, but nothing is ever guaranteed. Many (most?) of the greatest minds from two thousand years ago have no living descendants.
Lynn has data on regional differences across the world, so this is a bigger subject than I can cover in this answer. Again, for average IQ over time, start by putting “Flynn effect” in my search bar. Good questions, both of them, but the replies will be on the very long side.
Pleased to hear it. My regards to her.
Excellent point. We are just an off shore establishment of European civilization and since the Romans, there’s always been the general welfare component of western civilization.
Our religious culture, Christianity provides for the general welfare. Islam and Judaism provides for the general welfare. Atheists still belong to the religious culture of their civilization.
Building roads bridges and canals to promote trade and so farmers can get food to the nearby towns promotes the general welfare.
Creating caravanasires in Central Asia networks of castles and monasteries in Europe or the American highway system with regular rest stops and gas stations is for travelers is for the general welfare.
Living wages would make the phenomenon of families with working parents getting food stamps and government subsidized housing unnecessary.
General good and welfare is a lot more than 4 generations of 300 pound black women popping out a new generation of black criminals every 20 years. General good and welfare today demands we end the policy of paying black women to produce criminals. Short simple procedures at black births would solve the problem
What interest? Have you looked at your bank statements or the CD rate signs at your bank lately? My highest is . 35. But 2 of my banks don’t charge monthly or any other fees. So I’m not ripped off for the monthly fees. Nothing but $10 for new checks every few years.
$15 or $20 monthly fees wipe out the old $3.00 monthly interest we used to get. Because of extremely low interest rates bank accounts are just a convenience for direct deposit, paying bills on line or checks and making purchases with debit cards. Checks have to be processed and ATMs have to be stocked by paid employees. But debit cards and on line payments don’t cost banks salaries.
At least we don’t have to pay income tax on bank account interest anymore because there isn’t any bank account interest anymore.
Soon the banks will charge us for the privilege of having a bank account as we’ charged for renting their safe deposit boxes.
And what’s $20.00 monthly fees but a negative interest charge, especially as so many people pay bills on line instead of with checks anymore.?
I’m glad bank interest’s worked for you. I can remember when we could pay all the monthly and quarterly utility bills just with the monthly interest.
No more.
High IQ causing high earned income ended with the affirmative action civil rights act of 1968 and the Griggs vs Duke Power and Kaiser vs Weber cases in which the Supreme Court decreed that an employer’s requiring a high school diploma and 4th grade reading ability and 2nd grade math was racist and discriminatory.
The haute bourgeoisie era of the merit system and brains, hard work, good choices etc resulting in high earned income ended 51 years ago in America. It’s not coming back. We all know that.
Alden, yep.
I’ve noticed “cascade effects”, too, where the strong education-strong experience White male candidates are rejected from most higher-end employment, where the salaries and professional growth are, because those employers fear EEOC scrutiny, and they’re okay with a “good-enough” affirmative action candidate.
I had a Black male high school classmate who scored at the 2nd percentile (no misprint)
on the ACT. (He seemed brighter than that score, though, and had a good personality.) He worked his way up from the deep fryer to assistant manager through in-house training at McD’s, right?
Nope. Four-year engineering degree from our local less selective university, then on to Westinghouse.
Paris Hilton, Trump, Trumps kids. They’re all rich so they’re obviously geniuses. Duh!
Noooo, the system ain’t rigged by the rich to favor the rich! You communist retard!
You idiots act like rich people can just buy their way into elite schools and careers.
Pfffft!!!
Completely wrong. Both about Darwinian traits and otherwise.
It’s easier to break things than find a better protein, so much of the genome is loaded down with mutations that accrue generation by generation. Higher is usually better on the things typically considered good.
There is evidence of very strong past selection for intelligence (https://www.nature.com/articles/s41380-017-0005-1). Much of the variance comes from extremely rare <1% alleles that hurt intelligence and have been almost weeded out.
[150 years of dysgenic selection doesn't change the fact that there's been tens of thousands of years of selection on intelligence among Africa-leaving peoples.]
The correlation is 0.5 between IQ and the log of income.
15 points more IQ, ~45% higher average earnings.
Average lifetime income for IQ 130 more than double that for IQ 100. Sounds pretty reasonable.
Even up around IQ 160, there are clearly some six-figurish earners and a lot of decabillionares. Exactly what you’d expect from the correlation.
(There should be quiz to only let those who looked at the post or links comment here.)
You mean fluid intelligence (mental quickness or learning new things). Accrued information (e.g. things like vocabulary tests, or perhaps knowledge of investment situations and pattern recognition) continues to grow: https://encrypted-tbn0.gstatic.com/images?q=tbn%3AANd9GcSIeEWHuasZTwoabGWqbQZLmMSC6kHPz_apWfJN_aUKsKf4s4hg
Gates stepped away a long time ago. And there’s a correlation between the fact Buffett emphasizes doing the same exact thing over and over and has had continued success despite his increasing age.
Did you ever think the rich guys out socializing all the time and buying Ferraris might not be the high IQ rich? The range of people you’re interacting with caps both their income and IQ. (Google Berkson’s paradox.)
Bezos and Gates don’t exactly go to the dealership themselves or focus on the trivial status symbols of people with 1000x less wealth.
As Pumpkin Person notes, lots of stratospheric IQs and perfect or near-perfect SATs among the 10-figure earners…+8 sd wealth, +4 sd IQ.
Right.
Physics has reached its Ptolemy moment and is now perfecting its epicycles.
We need to change paradigms but peer review is worse than Catholic Church, which at least was a separate institution, and divided into many infighting orders.
Maybe electric universe theory is right, after all. But who will say that gravity does not overpower everything?
But I have doubts about genetics too – research is partly based on statistics (how correct is statistic identification?) and isn’t the epigenetics concept a kind of epicycle of gen theory?
The brightest minds may have been crushed by peer conformity.
Maybe this is a trick with social status, maybe social status is BAD for science since science must not be “established”. Consensus does not lie at the root of a discovery.
Someday your doubts about Genetics will prove right. Is that today? I don’t know – I plead ignorance. Whereas in Physics it’s obvious (and just to be sure I consult my pal, a retired particle physicist).
On the other hand, I know of one distinguished theoretical chemist who gave up the field in the late 60s because everything fundamental had been done – only detail remained. I’d think he was right – what else was there to say about the quantum mechanics of those buzzing electrons? – but since then an awful lot of practical Chemistry has been pursued successfully.
It’s because of that that I started to refer to Chemistry as an Applied Science, a habit that seemed to annoy Chemists. The only explanation for that must be some sort of snobbery – which is hardly unknown in the scientific world.
You can get savings (and CD) rates in the 2% range. It’s a crime, yes, because credit emission (the real measure of inflation) remains at sky-high rates, but it’s better than nothing while doing the Chicken Little Dance (of which I am quite tired.)
We’ve had an indescribable credit bubble. And an asset price bubble. And a borrowing binge for All Time.
Despite ample evidence to support its end for literally decades, here we are…with the 30-year T-bond yield hitting all time lows. There is simply no way to forecast with any precision when a long-lived and extremely widespread fashion will end.
As long as it is fashionable to see IOU’s as worthy (i.e., trusting that their issuers can make good on those promises), there is quite literally no limit to how large a QUANTITY of IOUs can be flooded into a market.
Markets for intangibles Do. Not. Obey. Supply-Demand price curves from Econ 101. As supply to a market goes up, Econ 101 says prices should go down (and vice-versa, assuming elasticity.) This is demonstrably false when it comes to intangible investment assets. As price rises, quantity demanded can (and usually does) rise, and if things remain in “bull market mode,” it won’t matter HOW MUCH is supplied, it doesn’t cause price to decrease.
This is the dynamic in the bond market since 1981. Thirty-eight years and counting…no wonder every entity in Earth (governments, corporations, individuals) can obtain credit in endless amounts (thus creating IOU’s by the galaxy.)
This is a FAD. It will end when it ends, and when it ends people will stop trusting all those issuers’ ability to produce the promised cash flows.
Given the scale of the buildup, Heaven only knows what will happen. But when it starts, nothing will prevent the collapse of the wealth value of most of those debt instruments (and pensions.)
No doubt Affirmative Action is ruining one industry after another, but with three kids in STEM fields I can’t say it’s hopeless for whitey. They’re all doing fine.
When a firm has a regulatory sledge-hammer hanging over its head and solutions MUST be developed among the engineers, polluting their six-figure (i.e., costly) ranks with morons (regardless of skin pigmentation) would be business suicide.
There are definitely industrial segments where old-school firms can continue to limp along while dragging A-A deadweight by the traincar load. I’m on record saying that large firms (and large nation-states) are dinosaurs whose time on Earth is ending, in part because they’re becoming black holes (resources go in, nothing of value comes out.) Stuff has to be done, and when the dinosaurs (All of which have Diversity Departments) are trapped in the Tar Pits, smaller, more-nimble mammal-like firms will quietly end up with the business.
You just won’t read about it in the Dinosaur Press.
That is an interesting paper. Thank you!
They also use this information as evidence of selective pressure. The divergence between education and intelligence in this analysis is extremely interesting.
Any idea if these conclusions are holding up and are generally accepted?
Here is background on their data source: Generation Scotland: Scottish Family Health Study
https://www.ed.ac.uk/generation-scotland/our-resources/scottish-family-health-study
They provide a data dictionary including 1238 data fields. Unsurprisingly, height is one of them. I wonder if they have (or would be willing to) run a similar analysis on height. That would make another good data point for thinking about how good a genetic structure proxy height is for IQ.
I find it very interesting that they are able to get these results with only 24,000 volunteers! In the end they only used 519,729 common SNPs from 22 autosomes (no X chromosome!) for 20,032 genotyped individuals.
P.S. For anyone interested, the supplementary material (Table 1) contains breakdowns by different cognitive areas (more detail there). G is common genetic factors, K is pedigree associated genetic factors.
trait G% Variance K% Variance
Cognitive: g 21 41
Cognitive: Education 11 36
Cognitive: Vocabulary 23 39
Cognitive: Digit symbol 20 23
Cognitive: Verbal fluency 18 31
Cognitive: Logical memory 11 24
Personality: Neuroticism 11 15
Personality: Extraversion 11 5
If I understand correctly (they mention this in the text) they controlled for 6-7 principal components to control for population stratification. See Supplementary Fig. 1. I wonder if any true variance explained was lost through that process.
Are you taking this from Dalliard or somewhere else?
I am slowly digging into the post more and one thing I think is very relevant (as mentioned in the original post above) is that Dalliard used the same data source as Zagorsky–the NLSY. And Dalliard also includes great detail on how the analysis was done (i.e. should be easy to replicate). For ease of access here is a link to that post (also in original post above). Well worth a look for anyone who hasn’t already seen it. I am a little surprised Dalliard did not reference Zagorsky’s paper.
http://humanvarieties.org/2016/01/31/iq-and-permanent-income-sizing-up-the-iq-paradox/
BTW, Dalliard gave a non-thresholded scatterplot of his Permanent Income vs. IQ data. Comparing this to the (roughly) equivalent Zagorsky plot gives an idea how misleading those thresholded scatterplots can be.
P.S. Does anyone know the original source of the income-IQ relationship information in Garret Jones’ Hive Mind? Was it Zagorsky or someone else? Here is Dr. Thompson’s review of that book: https://www.unz.com/jthompson/hive-minds/
It would have been interesting to know why you thought I was completely wrong to state:
But apparently that was too challenging for you, so instead you offer a general theorem about the molecular basis of evolution by natural selection without an evidence whatever.
As for your claim that:
LOL, no such evidence is provided by the paper you cite. The paper merely states:
Nothing there about selection favoring high intelligence. And nothing at all about IQ. LOL.
But as we know, to the IQ-ist it is axiomatic that (a) only an IQ-ist knows what intelligence is or how to measure it, and (b) the higher the IQ the better, an assumption for which, in terms of Darwinian fitness, the IQ-ist sees no need for evidence.
But here’s a bit of evidence that should impress an IQ-ist if no one else: Among human groups, sub-Saharran Africans have the lowest mean IQs and by far the highest fertility rates — over twice the replacement rate, while all the higher IQ races from China to Peru and from Santiago de Compostela to Petropavlovsk are dying out due to systematic reproductive failure.
Now tell us again how is it that high IQ contributes to Darwinian fitness.
What about the excerpt I quoted in the comment immediately before yours?
Here is how they calculated g:
I am not sure you understood their use of “mutation-selection balance” in the abstract. Here are some additional comments about that from the body of the paper. I bolded one part which may support what you are saying (if only by allowing the possibility you are correct), but I think the parsimonious conclusion is the first order effect of intelligence being selected for rather than the second order effect of intelligence being associated with something else that is being selected for (reality is probably a mix of the two, with the first order effect being larger IMO).
One other thing about that paper. They also talk about CNVs and structural variants. If I understand correctly, GREML-MS (Figure 3 which I included above) does not capture those, while GREML-KIN does.
I think this is a useful methodological note (i.e. how they looked at very rare alleles):
Was anyone able to understand what they concluded about CNVs and structural variants? The closest thing I find references Supplementary Figs. 15 and 16 which I have been unable to find.
I should think that AFT can speak for himself. He seems aggressive enough.
Also, I don’t see how these remarks relate to the contention that AFT claimed to be rubbish, namely, that:
The case of sub-Saharan Africans who are, according to the IQ-ists of low intelligence, have the highest fertility rates seems compelling.
Likewise, the case of Askenazi women in America who are said to be of high intelligence but who have among the lowest, if not the absolutely lowest, fertility rate among all ethnicities.
My comment at #127 should have been linked as a response to yours at #117.
Agreed. I just felt it was appropriate to correct what I saw as misinformation. Do you disagree with the points I made as they apply to the points of yours which I quoted?
Rubbish is perhaps too strong, but your statement is definitely questionable IMO. In the case of intelligence there are two things worth noting.
1. Intelligence is probably of greater survival value in a more complex society. I doubt evolution has caught up with that change yet.
2. Selection for intelligence is probably balancing. With the benefit of increased intelligence being traded off against the greater metabolic costs and birthing issues of larger brains.
I think your statement is useful as a default starting point for most traits keeping in mind qualifications like 1. and 2. above.
Regarding fertility, remember that what matters is survival (at minimum until childbearing age) and production of offspring, not births. Otherwise the ocean sunfish would rule the world: https://www.nationalgeographic.com/news/2017/04/animals-with-most-offspring-fish-eggs-reproduction/
It seems quite reasonable to posit a tradeoff between fertility and intelligence. Those big brains are expensive to develop. Funny how this starts sounding a lot like Rushton’s r/K theory.
https://en.wikipedia.org/wiki/R/K_selection_theory
Though the low fertility you are talking about is more due to individual choices than anything physical AFAICT.
Nope … IQ is always measured to people you own age. There is no objective IQ – based on only raw score. Their IQ – Gates and Buffett- would probably stay the same …
I d love if there were an objective IQ not pushed into a Bell curve and indépendant of age and place. But there isn’t such a thing to y’a knowledge. The only objective comparison is between races in the same place. There is also a comparison between places but it’s less well done and subject to some (minor) legit critics.
Thank you for this excellent discussion. I am working on an income related post, so the selection paper will have to wait, particulary as I then wanted to look at some admixture studies.
This problem will never be cured entirely, since the super rich will always be best at legally evading taxes (or more accurately, have the money to hire the people who are best at it to do it for them), but one thing that would reduce their racketeering quite a bit would be to seriously crack down on the abuse of tax-exempt foundations and similar legal fictions as a hideaway for their ill-gotten gains. This would hurt few or no ordinary citizens, but would be at least a hassle for the group most people really mean they talk of the One Percent.
Of course, for this very reason that won’t ever happen under the current regime. But it’s not that we can’t do better than the completely corrupt tax system we have today. It’s just that our so-called elites who benefit from it naturally don’t want it to change. Just as with the Salt Tax prior to the French Revolution.
That is not something you need posit: rather, it appears to be a fact.
But if it is a fact it confirms my contention that high intelligence reduces Darwinian fitness.
Moreover, if those of high intelligence have a below replacement fertility rate, as appears to be the case worldwide, whereas those of lower intelligence have a much above replacement fertility rate as also appears to be the case worldwide, then a decline in population mean intelligence is inevitable.
Such an ongoing decline is now suggested by the trend in IQ test scores in the developed world.
The reason for such a decline also seems fairly clear. Life is much easier today than in times past. Think sewage treatment, clean water systems, the Green Revolution, supermarkets, food stamps, publicly funding for healthcare, etc.
That technological advancement leads to a decline in intelligence means that intelligence is self-limiting — that is, it is self-limiting unless intelligent people begin to think more intelligently about the consequences of their actions.
In particular, intelligent people need to put aside the PC BS about immigration, sex “education,” and transgender rights, and start thinking intelligently about a population policy — before we revert to the world of the apes.
Hope this adds something to the conversation.
” In 2016 in America, the correlation of income and net worth was only .5069, for an R^2 of .2569.”
https://dqydj.com/correlation-of-income-and-net-worth-america-2016/
The article’s thesis that wealth co-relates with IQ is alien and even laughable in a European context.
Here money co-relates with certain professions, such as finance, media, politics, arms manufacture, casinos and crime. Swamp-style salaries can be earned at the EU and – more or less synonymous – by aligning oneself with and working for the “Atlantic integrationists” (i.e. Washington’s interests and spinoffs). Fabulous amounts of money is made through crime, with heroin and arms trafficking the most lucrative.
Perhaps Europeans are simply blinded by prejudice, but it is the general opinion here that these pursuits do NOT attract the ‘brightest and best’. Furthermore it is a general belief that vast fortunes are always based on crime.
The people that are respected and even admired in Europe as our intelligencia – whether in universities, mathematics, science, theology, philosophy, engineering, architecture, archeology etc – normally earn only modest salaries and have little spare time to earn more – except through corruption. The majority of European doctors receive state salaries and only those who start a private sideline receive more – but at the cost of their professional credibility / loss of reputation.
Where does the Mammonite assumption underlying this article spring from?
IF it’s true that in America money is the only yardstick of success, then this can only lead to loss of intellectual achievement – to corruption, immorality, criminality and degradation of values. How all this is indicative of high IQ is beyond me, since I, we, thought IQ measured intelligence.
Or, at least, a few mundane tricks of swindling, as H.L. Mencken put it — a view that conforms with my experience of richest-man-in-the-world Bezos’s Amazon.com.
The article doesn’t apply to real wealth and fortunes. It’s just the old American ideal of intelligent kids getting degrees in medicine law accounting engineering programming business administration school and college administration management and earning higher incomes than the great mass of lower middle class cubicle coolies and clerks
There’s a big big difference between professionally credentialed earned income and real wealth and net worth.
In my opinion, the article is worthless because
1 it ignores hiring and promoting 90 IQ black women instead of 120 IQ Whites.
2 it doesn’t subtract the cost of the lengthy educational and low earning internship/apprentice years from life long earnings of all these professionals.
It’s 2019, not 1919. 90 IQ black school administrators and principals make 3 times as much as 120 IQ White teachers. That’s just one occupation.
The 90 IQ black female diversity officer makes triple what the 125 IQ male programmers and engineers make.
Of course you get a low correlation coefficient when you try to put a straight line through scattered data which are obviously related curvilinearly. That is to say, even in log-log co-ordinates the relationship curves so that the results in those co-ordinates (Correlation: 0.6509
R^2: 0.4238) is still open to improvement.
Interesting and data rich plot, particulary showing the different ages of wealthy people. The authors say:
For the log base 10 variables, here is the correlation of net worth and income:
Correlation: 0.6509
R^2: 0.4238
Which makes more sense, and calls into question their initial comments.
Yeah Fed!
This is a very nice plot.
They can toss around trillions in easing, though this figure is pure gold.
I’ll have to think carefully about the comment about linear correlation.
I am worried that log log might in some way distort the deeper meaning of the figure.
When I first looked at the figure what leapt out for me was the near vertical Net worth
that happens in the middle range between 10,000 and 100,000 in income.
People in this range can go from negative net worth all the way up to $10M.
There is also this telescoping of net worth as you move to the stratosphere.
So at 500K income you have at least 500 K NW, 1 M at least 1M and so on.
However, at 100 K you have people who don’t have enough for bus fare.
It would probably be too inflammatory for present sensitivities, though color coding for race might also be informative.
The grouping by age is also quite remarkable. When you look at those with net worth less than 100K there is almost a sea of red (under 40s). Does no one under 40 have any money? It is not difficult to imagine if one were to round up almost any generic dorm full of college kids that you could start up your own socialist revolution right there and then. Ergo, the 1960s. I am greatly looking forward to a society that looks more like a sea of blue (over 60) than a sea of red (under 40). Once you have people that are fully committed to their own economic futures (i.e. retirements) through their mutual funds etc. and less to the Communist Manifesto we can create a political discourse less on radical state appropriation of other people’s assets and more on optimizing individual wealth accumulation. When you look at the Figure below that only looks at those with NW over $1M one certainly can wonder what role exactly government can meaningfully play in servicing their needs. Didn’t see a correlation for the $1M+ club.
Err…IQ, G factor purports to measures fluid intelligence. Not knowledge or crystallised intelligence. I am quite certain that the correlation between IQ and wealth you have cited have noting to do with Crystallised intelligence so the paradox remains unresolved that wealth generation happens when their IQ is at their lowest.
A lot of commenters here throws out numbers like 150 or 160 IQ. I believed ( and I can wrong) that the most reliable IQ test that we have today can only measure IQ up to 135-140. There is a well known ceiling effect in IQ. I have administer the raven advanced progressive matrix to hundreds to phds and ivy leagues graduates during the interview process. The right tail is truncated and quite a few people get max scores. If 1 standard deviation is 15 IQ points, then A 160 IQ is 4 standard deviation and we need a test where only 1 in 1000 can solve the final question. I don’t know of such a test, or at least one that have been norm. We can use SAT or other proxies of course but I think we are really guessing and assigning an IQ to bill gates and warren buffet. It is a well chosen sample size of 2…
I will give you 2 more.
10 million Chinese graduated from high school in China each year, 6 of them get chosen on the IMO match team. Using IMO selection as a proxy, that would be IQ above 200.
I know 2 of them personally. One of them makes USD 1-2m every year. The other probably less. You could argue that this prove the correlation at that level but this level of intellect is way above bill gates or the warren of the world so you can even argue that the relationship is parabolic.
I just think given the crude measurement tools we are using, the samples size at the tails and the numerous confounders, the statistical significance of the correlations above 3 standard deviation are suspect. In fact, in the IQ and earning scatter plots posted here, IQ do not go beyond 130 and there is a clear ceiling effect here. Let’s not be too enthusiastic and do a linear extrapolation here.
By the way, Warren and Bill would have taken their IQ test or whatever proxy you use in the 50s or 70s so we also need to account for the Flynn effect here. A lot of people commenting here would have ace those test and an IQ of 140-150 using those old obsolete test.
Caveat: I will humbly state that I am not an expert and there are experts so happy to be proven wrong so learn something.
I think you are making too many assumptions about the people I know whom you don’t know.
The ferrari owners i know have dropped at least 10 figures into the collection and using the rule you spent 1-5% on your cars, they are 200m to billionaires. Most of them are billionaires and own listed companies.
I know the guy who owns the most Ferrari in the world. 150 of them, worth about USD 100m usd. Is that +8 std by your measure? These are not guys who get finance when buying a car.
It is not a status symbol…it is an investment which you can enjoy…like art, you know? A 250 GTO sold for 80 million…
These guys would be 1 rung below Forbes 1000. Forbes 1000 is dominated by old money and people like Trump. Beside warren and gates, don’t think the R square between IQ and wealth is anything to speak of. I know a few on that Forbes list…very old, very stingy people.
That aside, I also have my other foot on the ground and I am honoured to know and worked with a lot of truly high IQ people. I dare say smarter than your Gates and bezo based on academic achievement.
Perfect SAT is nothing, try getting perfect GaoKAo scores. One in a million kind of guys. Some of them which I have administered IQ test to. They are not at that 10 figure mark. I know how much they earn.
I have about 70 empirical samples of the very Rich and the very smart, people who I know and spoken to. Anecdotally, I am telling you there is no correlation at these levels or it is invented U.
Now, Beside gates and warren (which I have addressed), how many other samples at that + 4 sd level do you have ?
I should also state that the dataset that are used in any of these papers cited here will most likely not include IMO golds or the Forbes 1000 so we are just extrapolating and guessing here.
Common sense tells us that IMO golds or Nobel laureates are not very rich. We also know that a lot of old money billionaires are necessarily book smart.
I don’t know why we must insist that the correlations are valid at the tails even though a cursory review would suggest otherwise? Why does the relationship have to be linear and extend to infinity? Why can’t it be an inverted U or some other polynomial?
> I don’t know of such a test, or at least one that have been norm.
Many tests bend to the political or social pressure. Some tests really want to gauge the potential of the candidates. For example, for the grade 8 New York students the SHSAT test, the maximum score is 800.
https://caddellprep.com/scoring-on-the-shsat/
“Each section (ELA, Math) is worth up to 400 points and the highest score you can get in SHSAT is 800, theoretically. However, each year the highest score is in the low 700s.”
That is a statement from a prep school. Some claimed the actual score is scaled to max 700. I have a list of 163 self reported SHSAT scores posted by the proud parents, the highest is 702.
Score = 702, Year = 2018, Parent = Liza***
Score = 696, Year = 2019, Parent = loke***
The selection SHSAT scores for the NYC Elite8 specialized high schools, the reported highest for 2019 is 696 for Bronx Science.
2019 (low score / high score, last updated 3/21)
Stuyvesant 557/ 665 (556 did not get offer)
Bronx Science 525 / 696 <—
Brooklyn Latin 488 / 505
Brooklyn Technical 498 / 631 (496 did not get offer)
HSMSE @ CCNY 519 / 620 (515 did not get offer)
HSAS @ Lehman 524/ 617
Queens Science @ York College 514/ 524
Staten Island Tech 527/ 688 (525 did not get offer)
2018 (low score / high score, last updated 6/2/18)
Stuyvesant 559 / 698 <—
Bronx Science 518 / 637
Brooklyn Latin 482 / 555
Brooklyn Technical 493 / 668
HSMSE @ CCNY 516 / 616
HSAS @ Lehman 516 / 633
Queens Science @ York College 511 / 542
Staten Island Tech 519 / 660
After all the brouhaha about discrimination, the estimated lowest IQ to enter the elite8 is about 106. Those whingers only have themselves to blame if they were not successful. The Asian Americans got 51.1% of offers is just about right with respect to the strictly objective IQ scale. Poverty is not the problem as at the top feeder Christa Macauliff Junior High School more than 60% of the students’ families are at the official poverty level. However, the NYC Regent tests were alledgedly reported to be ‘cooked’.
Then there is the notorious Chinese Gaokao. In 2017 the top student Xiong Xuanang from the Beijing No 2 Middle School who scored 690 out of 750 in the liberal arts Gaokao, https://www.scmp.com/news/china/society/article/2100000/how-now-gaokao-chinese-media-gloat-over-non-academic-attributes
You’re positing the “benefit” of substituting political fiat in place of nature’s random assignment of outcome, your arbitrary view vs Nature’s arbitrary selection.
This debate began over my distaste for those who cite “luck” (whether it’s luck in life or even “luck” in whose genes one inherits from mom and dad) as a rationale for taking from the particularly-able part of their product and giving it to others.
Any tax regime you posit is certain to be a constant source of political battle, complete with the inevitable subterfuge, criminality, corruption and such that politics always engenders. The reason is that any level or method of taxation is doomed to subjectivity. You like yours because…you like it, not because it is objectively defensible.
As I’ve said, what you or I desire will have no affect on the condition-of-the-day. But since my family is made up of relatively capable people, I am highly sensitive to notions that their aptitudes, a product of their genetic birthright, are somehow yours to take. Indirectly, you want to take a part of their product, but your intellectual forebears like Pol Pot were happy just to eliminate such “beneficiaries of random good fortune” directly. I see no intellectual difference, only degree.
If Able works two jobs, 70-80 hours a week, and Bruce barely works part-time, and they produce (per hour of work) the same remunerative product, why should Able pay a larger percentage of his product in tax? I ask, because we sail directly into a storm over “entitlements,” where “means testing” will certainly raise its ugly head. It is a system whereby proponents intend to punish a family for its prudence (because they accumulated means) and reward the profligate spenders who have rusting ATV’s, boats and sports cars littering their yards.
And this is what some people call “fair.”
Equality does not exist in nature…anywhere.
Those 2019 SHSAT numbers are from an online survey which only has 113 (see Google sheet) responses.
http://www.theschoolboards.com/showthread.php/4870-Specialized-High-School-SHSAT-Cutoff-Scores-for-2019
Does anyone have real data for the SHSAT score distribution? Everyone says the highest score is around 700, but I have been able to find almost no hard data. The best reference I found was
https://academicworks.cuny.edu/cgi/viewcontent.cgi?httpsredir=1&article=2168&context=gc_etds
Figure 3 on page 107 shows a cluster of scores around 725 at Stuy (with the next highest scores being another cluster at 700). But that data is a decade old.
Might someone help me out with a question of debunking pseudo-economics? The argument presented is that the wealthy could simply remove all the money from the economy and thus ergo ipso fatso, no economy. Simple as that. It might seem to be superficially true considering that 100 people own most of the planer’s wealth, though clearly wealth does not equal money. Nonetheless the idea that an economy could run out of money given the powers of Central banks is completely absurd, though any comments to help me work this through would be appreciated. Has there ever been an economy that just ran out of cash?
Hopefully someone else will respond to the rest of your interesting question, but regarding this.
Links from this Quora question https://www.quora.com/What-is-the-total-net-worth-of-the-world
give an estimate of $250T for total planetary wealth.
I did not do an exact calculation, but eyeballing the average wealth of the top 100 as about $40B
https://www.forbes.com/forbes-400/
That gives their total wealth as about $4T. A huge number to be sure, but “only” about 2% of the planet’s wealth.
Ah, let me take a stab at the rest.
Running out of cash should be impossible for fiat money economies unless there is a loss of confidence in the currency. Hard currency is a different case.
To answer your question look for cases of the following forms.
– Loss of confidence in a fiat currency resulting in barter or a retreat to harder “currencies.”
– Countries which have grown faster than the supply of their hard (e.g. gold) currency (I think this just results in deflation though).
– Fiat money countries which rely on reserves (hard like gold, or more trustworthy fiat currencies like the dollar) where the reserves became insufficient. I think this just results in inflation followed by loss of confidence in the worst case.
Argentina, 8 times.
Zimbabwe twice, I think.
Germany once, and look where that led us.
res, thank you again. I just pulled that number out of intuitive memory; whenever I do that on this site I know that I will feel the pain as you will actually fact check such claims. Nonetheless I am glad that I did because it is exactly these sorts of false memories that are often never brought to attention that wind up shaping political discourse through subliminal memes. I was able to find a url that while not claiming exactly what I posted is surprising all the same for the extent to which wealth inequality is highlighted; this time it is 8 men own the same as half the world (clearly a different claim).
https://www.oxfam.org/en/pressroom/pressreleases/2017-01-16/just-8-men-own-same-wealth-half-world
res, you really should take a sociology course. My SOCI course has been the best ever! So much of the course is just so completely wrong that it has provoked me to do a great deal of thinking. Time after time the course text takes on a subject (e.g., psychometrics) and then proceeds to completely misstate all the basic findings. Have they never heard the phrase “stay in your lane”? One presumes, No. The course materials treatment of economics does not disappoint in the least. It is a complete mystery. WHAT ARE YOU TALKING ABOUT?, no reply is audible from the text. The pseudoeconomic theory they propose as far as I am aware is entirely novel.
The basic idea that is advanced is that money is at the center of an economy; A statement seemingly unsupported by the evidence: Marx wrote Das Kapital not Das Geld for a very convincing reason, Capital is the engine of a capitalist economy. A web search found that money supply is only ~ 1% of US total assets (“capital”). The fixation on money seems very misplaced to me. However, I suppose the reasoning was that going back to lecturing on capital would only bring back bad memory associations with communism, so they decided to go downstream and went with money instead. {Hmm, it looks like one of the main ideas from the course text relates to Marx’s Tendency of the Rate of Profit to Fall (TRPF) which could now be reasonably replaced by the even greater Tendency of the Regime of the People (i.e., communism) to Fail (TRPF).} Money does not have capital’s economic centrality. Marx’s preoccupation with capital in the 1870s was in fact highly perceptive. In the decades ahead the roll out of a wave of mechanization would largely displace much of the farm labor economy just as he had foresaw. The fact that we are now approaching a time in which human capital will be replaced with cognitively enhanced humanoids through genetics engineering should be of some concern to all of us. All existing human labor could become redundant.
Money? I have no money! I never carry more than $50 at any given time, and only carry this minimal amount for milk and bread money. If I were held up, the muggers might even feel sorry for me and give me a donation. However, no money does not mean no wealth. I had not fully understood the importance of being an owner of capital versus a holder of money.
{Through time we forget the learnings from our past. Perhaps there might be crisis tours in which you could travel to an economy that has lost control of their money supply and see in real time how people responded. It is in fact surprising to me that with all the trillions of dollars of easing in the US that there was not a greater real world impact on the American economy. How can you cycle through $100,000 per person of mortgage defaults and not have a highly visible effect on the economy?}
When you own capital through shares etc. it hardly matters what your central bank might dream up; you are almost totally insulated from their machinations. If they woke up one day and decided to double the money supply, it would make no difference to the value of your capital. The people who would be most directly hurt by such deceptions would be those people who held mostly money assets (i.e., the poor). It surprises me that any modern government would go down the route of essentially invalidating their own fiat currency, when the real wealth of a nation is in its capital. The example from Germany is of interest. After introducing the Rentenmark in 1923, their monetary crisis quickly resolved within about a year. Yet, after the war with most of the Germany’s capital destroyed, recovery took decades.
{If you were to have a currency collapse, might it be possible for the people or some other organization to create their own money supply? Has this ever happened before? People would likely wait for the government to figure it out. Yet, there would seem to be a potential role for some other intermediary to step forward. If people no longer trusted the government to manage the money, why not try someone else? Possibly the banks or the church? Instead of it being on a gold standard it could if necessary be on a milk and bread standard (a stated currency amount could be converted into a specific hard commodities on demand). Yeah Me! Good going Factorize; this is brilliant. There might be quite a few people who would be interested in such a monetary innovation in the current circumstances, as the money supply increases with close to zero interest rates, one can legitimately question the store house value of current fiat currencies. However, a people’s currency with actual convertability to goods of real world economic relevance might actually be more competitive.}
Yes, It is called Bitcoin( or cryptocurrency) but they are already shutting it down. Money is called legal tender for a reason. No government will allow its people to issue their own currency because this would 1) prevent from conducting monetary policy or controlling interest rate. 2) prevent them from collecting tax either via a direct tax and more insidiously, inflation.
Money and wealth is debt in this day and age. If all the debt is repaid in the world, all the money would disappear. The monetary base, which you can argue is real money issue by the central banks is only 1-10% of all money. The rest is debt issued by the banks. It is called the factional reserve banking system.
https://en.m.wikipedia.org/wiki/Money_creation
Very interesting…
Given that you have a very diverse group taking the test, I think you will end up with an multi-modal distribution with very high kurtosis. I wonder what is the sample size of Asian cohort given the very high acceptance rate of 50%. I guess it is generally known that Asians score higher on the math and visual-spatio part of the IQ test but lower on verbal IQ.
I will say that Math proficiency is ultimately, age dependent so the whole distribution will shift to the right if the whole cohort are 1-2 years older. There is still a chance we will have a ceiling effect if we get 25 year old adults ( peak IQ) or math undergraduates taking it. All depends on your cohort.
In a fiat regime debt IS money. This tells me that confidence in the trustworthiness of the issuers of the debt is the foundation for the entire monetary system. Interesting, to me, is that the debt market experienced a bull run of astonishing proportion these past 38 years (and counting.) It is self-evident that under bull market conditions, rising supply does not reduce demand or price. Rising price is simply, for a time, a feedback loop. This explains how a metaphorical ocean of debt was issued these last near-four decades. Historically, when such conditions occur, the denouement is a debt-value collapse and subsequent deflationary depression.
The era of central banks has been one of wild swings in monetary cycles, none larger in history than the current moon-shot.
In a stable-money regime, rising innovation generally results in gradual deflation, i.e., good stuff just gets cheaper to buy…and affording a better standard of living becomes easier. The late 18th and much of the 19th centuries had relatively stable money in the United States, and it was a period of phenomenally rising living standards even as prices for staples did in fact decline.
The problem is that history teaches us nothing. It is compatible with mutually exclusive theories of causality, rendering appeals to the historical record largely useless. From https://mises.org/library/democratic-leviathan
A fiat money regime + central banking + a bull market for debt were the ingredients of the largest buildup of IOU’s (and their accounting as WEALTH) in recorded history. Since no trend lasts forever, it will be quite an adventure when we discover how far off Sanity Island the world’s financial system drifted.
Bingo. If the government (political state) doesn’t call it money, it’s a good or service and subject to sales tax or VAT. If officially-designated (or chosen-by-acclamation) money doesn’t exist, everything is barter, including trading gold coins for gasoline.
Since the US dollar went full fiat (in 1964 for American citizens, when silver was pulled from coinage) there was an astonishing transfer of wealth from productive people to those who created bank credit from thin air and then charged rent (interest) on that product. Creditors lent with abandon as they reaped capital gains on the IOU’s on their balance sheets (it was a bull market for bonds) and no matter how much legislators, political executives, corporate managers and Joe & Jane Citizen borrowed, the tsunami of new IOU’s simply were collateral for exponentially more credit offered. Credit creation broke free from the banking sector as Wall Street learned to create credit, take a huge fee, and dump the liability on customers clamoring for Collateralized Debt Obligations.
This is the textbook definition of an exponentially-growing positive feedback loop, something any engineer (or person with common sense) knows will result in dramatic excesses–huge booms–followed by commensurately catastrophic busts.
An entire industry arose to rationalize this folly as it grew from molehill to mountain to planet-killing asteroid size. Part of the support for it was that those at the top appear to reap unimaginable wealth and “everyone else” believed he or she too was on an inevitable, compound-growth path to riches.
Today the yield on the 30-year T-bond is 2.125%, indicating that the collective fad of trust in that galaxy of debt is still pinning the needle. The herd has not yet stopped. But someday it will.
I thought apogee would occur 25 years ago, yet here we are. So much for logic or reason guiding such things.
I spent 10 years of my investment career complaining how insane and irrational the system is and how all this wealth is a mirage and a scam. It is true. I had a front row seat when shit hit the fan in 2008.
The end result is that I miss the biggest big bull market of bonds and stocks we have seen in a generation. A lot of experienced and rational investor didn’t buy it too. They are still bitching about how valuations are crazy…
Here’s the point. Don’t fight the fed. If you can’t beat them, join them. Play along , join the circus and make some money. Inflation is good for debtors and the government is the biggest debtor. So piggy back on the government and borrow some money. Let inflation inflate it away.
It is salient you mention that 30 yr bonds are 2%. It will go even lower with a inverted yield curve. The smartest thing to do might be to buy some 10 year bond futures which means you are borrowing from the fed to buy bonds.
I had a front row seat in 2008/9, 2000, 1995, 1987 and arguably in 1982. I doubled my capital in 2008 and I called the low of March 2009 within a week of it occurring (I have the date-stamped file) but I thought the Top Was In and what was coming was “just” a rally within a bear market.
Ooops. Ultimately I learned to stop trading.
I disagree with your “don’t fight the Fed.” You are conflating an effect with the cause. The cause (for me) is a once-in-3-centuries social mood mania, the first-order effect of which is the Great Bond Bull Market. Everything is subsidiary of bonds, so when rates collapsed into the stock low of 2009 the proper (in hindsight) view was that a major rally in stocks was likely as long as bond prices were in the ionosphere.
Currently, long bonds are hitting new lows but shorter term debt is NOT. Yes, that can and very well may change in coming months or a couple years, but as we stand right now, it is a bond market in non-confirmation…which is something that should occur when this 38 year (and counting) rally in bond prices has breathed its last. There’s no way to know in advance if the current non-confirmation is “it.” Only in hindsight.
When the bond bull market ends, nothing the Fed will do will reverse the decline in the value of debt. Until then, debt is wealth and wealth collateralizes more credit (and credit is all loaned into existence as bonds.) No money actually moves in the stock or other asset markets, so their rallies are ENTIRELY a product of mass psychology, but the wealth effect of pyramiding debt surely provides nifty rationalizations for why stock prices “should” fly so high.
Unless you think trees grow to the sky, credit inflation MUST end at some point, and when it does, the wealth value of most debt must collapse. The largest deflationary collapse in history will result, but until we get there, it’s just irrelevant. I think, however, that going into debt is still like playing Russian Roulette. Thanks but no thanks.
Inflation is raging, but it’s going into asset prices. When they collapse someday, the inflation will go back into nothingness, which is where it came from. What matters is who is holding the grenade when it detonates. Yes, that blow-up might be a decade off, but the math is getting pretty fuzzy where we are now, so I’m happier to sit out this dance.
Oh, and NO, you didn’t miss the greatest bull market in a generation, not from my perspective. While useless as an investment tool, I find Elliott Wave to be insightful. Motive waves come in three subwaves (labeled 1, 3 an 5) where usually wave 3 is the longest and most powerful. Looking back on the DJIA in log scale (to partially account for the warping nature of credit inflation), wave 1 (1941 to 1964) was ~874%, wave 3 (1974 to 2000) was a whopping ~1181% and so far wave 5 (2009 to now-and-still-going) is a paltry ~320%.) Yes, in nominal terms it is monstrous, but in percentage terms, still small. Yes, that can change, and if we break to new Highs I’d not be surprised to see Dow 36,000, just like Glassman’s book. But the percentage rise would STILL be small compared to 1974 to 2000.
If you look at total credit market debt outstanding (St. Louis Fed’s FRED website) and an arithmetic chart of the DJIA going back to 1928, it is clear that something happened around 1980 give or take a few years. And I think that whatever it was, it is not permanent.
There are two necessary preconditions to a once-in-several-lifetimes asset market collapse: (1) A buildup society-wide of non-self-liquidating debt, and (2) recent experience teaching everyone that only fools ever sell. The former condition has been extant now for years and years. The latter one was completely satisfied by stock market history since 1982, whereby we see that EVERY SINGLE MAJOR DECLINE was erased within a few years. In other words, if stocks fall 50%, the smart thing to do, that EVERYONE knows, is buy stocks, even if you have to take a 2nd mortgage to do it.
I believe it is this psychology that will eventually yield some kind of the following:
Stocks fall 75%, rally 75%, fall another 75%, rally another 75%, fall another 75%. That’s a cumulative 95% decline…with each subsequent rally telling everyone that it’s 2009 again and time to go 200% long. Note that someone who tried to short the market using one of the numerous “bear indexed” ETFs would be crushed by this too. Those funds are pitcher plants for bearish speculators’ $.
That’s how a credit bubble comes back out of asset markets. It hasn’t happened yet, but I think it’s inevitable sooner or later.
There’s a long way between here and infinity, so the day credit inflation “MUST” end may be an infinitely long time away.
Today’s US $ is worth less than one 1800 cent, or two or three 1900 cents. So why should we not think it possible that today’s dollar will be worth something like thirty 2100 dollars and perhaps three hundred 2200 dollars? The idea that inflation will die and money will achieve a stable or even increased value seems truly improbable.
No, rich people will continue to arrange their own access to cheap or even less-than-zero-cost money with which they will buy real assets to stuff into the family foundation.
What we should expect is a return to the social conditions of 18th Century France, where the rich paid no tax and owned everything and were even immune from arrest.
The only difference will be that the tech billionaires keep the serfs truly bound, or at least chipped, and brainwashed, to ensure no damn revolution.
Or to bring the discussion back to the present topic, I expect that in the coming post-democratic, high-tech world, the brainwashing will inculcate the notion that billionaires invariably have IQ’s in excess of 200 and that an IQ over 200 is the mark of Unz-like divinity.
I held everyone of these thoughts you mentioned at one point and still agree with it…except it is “what it should be” instead of “what is” now. It does not conform to reality. So I learn to stop worrying and when the “reset” comes, so be it.
My general thesis is that the world is becoming Japan. Demographic is destiny. Population aging is deflationary. Japanese 10 year bond have been negative yielding for almost 15-20 years now? So this game can go on a long time. if you think 2% bonds are low, look at JGB and the bund.
Don’t listen to me, this is what Ray Dalio of bridgewater says. We are back to the 1935-1940.
Yes, and history ended a while back.
I concur, this is all parlor speculation. I disagree, we’re late in a cycle and positing its continuation beyond mathematical possibility seems a stretch. But you go ahead and follow your own path. I’m happy enough with mine.
Nope. We’re in the late 1920’s. Or better, the late 17-teens.
Come on, folks. Yes, the mass mind can perhaps rationalize paying the interest on debt with debt issuance… but for how long? As to the Japanese, talk about apples to oranges. Can we imagine Americans sitting still while their ruling class crushed their finances like they were bugs underfoot while they made a mockery of their monetary system? I’ve never met an American who would knuckle under to what East Asians seem ready to accept.
What is interest? It is the price people are willing to pay to rent money. What did it mean when short-term interest rates fell to zero? That the Central Bank had to lower the rental costs of its primary product to zero. Talk about a lack of demand. At some point you can offer people free cars and they won’t take them because they have no place to put the last 10 you gave them.
What is something worth if it has a zero price? And NIRP? The only explanation for negative rates is that speculators expect them to go even more negative (obtaining a capital gain.) The emperor can be naked for a long time but where I live it gets cold in winter.
When you’re in an exponentially-rising series there’s no way to know how high is up. I got creamed shorting the NDX in early 2000, so I have relevant experience. But if you all think that this thing is only half or a quarter of the way through, I have a nice bridge for sale, the picture is on this post card.
PS: If demographics are the driver, then what does it mean when the stores I visit are stuffed to the rafters with Central American and Mexican migrants? Are these to whom my fellow baby boomers intend to liquidate their portfolios?
The nation today looks a lot more like 1859 than it does 1940. Ray Dalio must live in a bubble (he’s a great example of how great wealth can warp cognition), and unlike the 1930-32 period, the 2000-2009 bear market didn’t wash away any of the excesses at all. We ain’t seen nuttin yet.
________________
I really don’t care. I’m fine either way, and spend my time now learning to play the piano. I can pay my bills into the indefinite future and really don’t care to be richer than I am now. I’m in no danger of having enough such that I’d no longer fly commercial, and that to me is the difference between The Comfortable and the Transcendentally Wealthy. I’m grateful to be comfortable.
In which connection, it is interesting that among the initial casualties resulting from the Epstein bust is the director of the MIT Media Lab, who just decided that he’d best resign.
Epstein apparently persuaded many rich people, including Bill Gates, to donate millions to the lab. Epstein himself donated both to the lab and over a million dollars to the lab director’s personal investment fund.
To me, that suggests that whoever backed Epstein considered control of the narrative a vital issue and, moreover, that the MIT Media Lab was an important center for research into message control — a sort of American version of Britain’s notorious Tavistock Institute.
Chinaman, thank you for your response. There might yet be a certain amount of support for the idea of a currency backed by producers of consumer products; such money would have a stable valuation.
I am interested in any psychometric insights you might have into China’s history and future. Western thinkers including H.G. Wells and many psychometricians have seen the rise of China approaching for decades. They were able to see below superficial features hidden by economic circumstances etc. and recognize the massive potential that existed. One might certainly wonder if similar g incongruities (on a scale less than 1 billion people) continue to exist on our planet. It demonstrates that income can decouple with IQ on very large scale over the long term. Below is my best try at a psychometric psychohistory of China. The bubbles are suggesting to me that China needed to get down to a lowish TFR as occurred in the 1970s before a self-sustained liftoff could happen in the 1980s. Another plausible contributor is the rise of computers in the early 1980s initiated the economic boom in China.
(The full url below did not paste properly. Copy and paste the full url into your browser and you’ll see the slide show as I intend. It is in super slow mo with a trail on China. I think that the interesting breakthrough time happens somewhere in the 1970s to 1980s.)
https://www.gapminder.org/tools/#$state$time$value=2018&delay:1085;&marker$select@$country=chn&trailStartTime=1800;;&opacitySelectDim:1&axis_y$which=children_per_woman_total_fertility&domainMin:null&domainMax:null&zoomedMin:null&zoomedMax:null&spaceRef:null;;;&ui$presentation:true&chart$labels$removeLabelBox:true;;&dialogs$dialog$find$enableSelectShowSwitch:true;;;;&chart-type=bubbles
I love the GaoKao questions. I had a translated test in French and I found it more fun that Mega test !
I wish there would be the same worldwide with official results. But what’s horrible is that in some province you need to be 1 in 10 000 to get the dame thing as a 1 in 10 (yes 1k more !) in another province. And then there are some spots wich selects outside of GaoKao results for party members.
The system is far more rigged in China than even the corrupt USA selection process . It’s really unfair. Knowing they could just take the GaoKao wich is better than sat because it combines fluid and crystallized intelligence and industriousness.
GaoKao is a bit too « rote memory » biased. The Israeli test is more g oriented but has a too low ceiling to be interesting for highly gifted (>3 Sd) identification . But it’s perfect for bright (>5%, 125 or 1,2/3 sd) with is what universities need for creating good engineers, physicians, lawyers and teachers.
One hundred and fifty years of selection against education (and conscientiousness) takes its toll.
Other great paper on that: https://www.nber.org/papers/w12796.pdf (see esp. the graph on page 26/27)
On intelligence, they mostly line up with what Steve Hsu has been saying for a long time. It should be mostly rare variants on their way out of the genome (or at least that were headed that way prior to 1850).
See especially https://arxiv.org/abs/1408.3421, A Farewell to Alms, The Son Also Rises, etc.
—
On personality, hard to know (the sub-traits below each of the Big Five show significant heterogeneity; results vary based on self-reported versus peer reports; polygenic scores for personality tend to be much less reliable than wrt EA or G). This may just be one tiny subfacet of those traits.
These two sources are more thorough and credible than anything else I’ve seen: https://humanvarieties.org/2016/01/31/iq-and-permanent-income-sizing-up-the-iq-paradox/ and https://pumpkinperson.com/2016/02/11/the-incredible-correlation-between-iq-income/
One highly scientific based on a very reliable dataset. One highly anecdotal but surprisingly clever and robust in methodology.
Any lower correlations usually come from using a snapshot or severe range restriction. (Or using raw income without a logarithm which is absurb.)
1. https://pumpkinperson.com/2016/02/11/the-incredible-correlation-between-iq-income/ QED. Bezos, Gates, etc. Those stratospheric IQs are remarkably common among the ultra-wealthy.
2. The IMO is not a test of G. Show me someone competing in math olympiads who also has perfect verbal scores on standardized tests (to ensure it’s G not just mathematical ability) and then we’re talking.
3. Someone with 1 in 10-30k intelligence, aka +4SD, would be expected to have on average +2 SD income, meaning six figures. Far from uber-wealthy. R=0.5 has its limits.
4. Average Nobel laureate IQ is only in the high 140s. Again not that high on overall G. You’re purposely picking people successful in narrow niches less likely to pursue (or have pursued) wealth.
5. Gates and Bezos show very clearly that the trend continues all the way into the tails. Same for Jim Simons and many others. They (comfortably >4 SD intelligence, or 1 in 10-30k) are VASTLY over represented among the wealthiest few hundred people in the world.
6. “Old money billionaires” — we’re talking about earned wealth. Keep up. Also the original Rothschild family members do NOT sound dull to me.
7. “A cursory review”: see Pumpkin Person. Not your own personal biases and innumeracy.
Anyone bold enough to post their score on this: https://beatthewonderlic.com/take-a-free-wonderlic-test-online/
Re: IQ subcomponents and age
Ideally a good battery blends enough of both components to not punish age or an off day too severely.
The UN’s Income Index for the HDI has used the formula:
II = (ln(GDP/per capita) – ln(100))/ (ln(75000) – ln(100))
This formula estimates the utility of income. With this formula the marginal utility of wealth as evaluated by the UN is equal to zero at $75,000 per year and approaches zero at income levels above $25,000 per year. Given this, the median person in the figure would have very low marginal utility measured either by income or net worth.
There are around 12k tenured mathematics professors in the US. 0.004% of Americans.
To round up very generously for retirement, at most 0.01% of Americans have been tenured math professors at some point.
Yet 4% of the richest 25 Americans (or 1% of the top 100 to be especially harsh and use a round number) have been tenured math faculty.
https://www.forbes.com/profile/jim-simons/
Roughly 100-1000x over-representation of tenured math professors among the uber-wealthy does not bode well for your U-curve theory.
You don’t understand base rates or what a normal distribution looks like.
We are talking about IQ levels that are 1 in 1k, or IQ 145+ of which dozens of the richest 100 Americans sail past. Way more than 0.1%…
North of 160 IQ is 1 in 10-30k depending on how fat you assume the tails are. Yet at least a couple or a few of these richest 100 Americans, i.e. a few PERCENT attained a level that less than 0.01% of people achieve.
The reasons there are so many IQ 120-130ish billionaires (which of course most of them are) is because there are so many IQ 120-130ish people — about 1000x as many as the 160+. That you seem them at all (and near the top of the list…) despite their rarity is a clear sign there is no U curve.
Exactly. At a very high IQ (150+) from the 0.5 correlation you’d expect to see a lot of people with comfortable six figure incomes (professors, elite attorneys, etc.).
Those north of that mark would also be 100x or more likely to be a decabillionare than those with lower IQs but it’s still inordinately rare. The vast majority of people beyond 3 SD of intellect would make only +1-2 SD income under the r=0.5 assumption.
This was a thought-provoking read! The exploration of how intellect correlates with wages and success offers a unique perspective on a topic that’s often discussed but rarely analyzed in such depth. I found it particularly interesting how you break down the nuances of intelligence and how it impacts various sectors differently. It’s important to recognize that while intellect is valuable, other factors such as emotional intelligence and adaptability play key roles in career progression as well. Thank you for shedding light on such a complex issue!