Wednesday, April 25, 2007

IQ and Wealth

New Scientist Tech is running an article called Smarter people are no better off by Roxanne Khamsi. It confirms something many of us already know.
On the surface, people with higher intelligence scores also had greater wealth. The median net worth for people with an IQ of 120 was almost $128,000 compared with $58,000 for those with an IQ of 100.

But when Zagorsky controlled for other factors – such as divorce, years spent in school, type of work and inheritance – he found no link between IQ and net worth. In fact, people with a slightly above-average IQ of 105 , had an average net worth higher than those who were just a bit smarter, with a score of 110.

Cultural trump

People who had divorced once had about $9600 less wealth on average than their never-divorced counterparts. And those who smoked heavily had an $11,000 reduction in net worth. These external factors – rather than IQ – could explain the differences in wealth, Zagorsky suggests.

"IQ is clearly overwhelmed or trumped by the cultural imperative to consume," says economist Richard Wolff at the University of Massachusetts-Amherst, US. "People with higher IQs are acutely aware of all the goods and services that they can consume," he says.

Wolff believes that smart people often have high expectations for what they deserve. "It’s a notion of 'That's what I'm entitled to as an American – that's what I get for working hard.'" He notes that wages of American workers increased steadily, in real terms, from the 1820s to the 1970s, and people in the US expect their standard of living to constantly improve. However, the buying power of US wages has recently declined.

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