Hi The Zagorsky article appears to go out of its way to make the case for a lack of relationship between IQ and wealth. Just a couple of observations.
1. From figures 1 and 2, Zagorsky points out disparity in upper quadrants for income but not wealth. That is, more people of high income have high IQ than low IQ, but about equal numbers for wealth. But looking at figure 2 (wealth), it is clear that the (ignored) quadrant of low income and low wealth is much denser than the (ignored) quadrant of high income and low wealth. 2. In Table 2, average wealth (Net Worth) is presented for groups of different average IQ levels. The relationship is clearly linear with only one reversal. In fact the correlation between the aggregate figures (IQ and net worth) produces r2 = .963, only marginally less than IQs correlation with income for these aggregate data, r2 = .968. Much lower correlations for individual scores appears to be more due to noise in the data than to a lack of relationship. 3. The regression analyses, some of which actually show a negative relationship between IQ and wealth, appear problematic to me because they include predictors that are at least moderately correlated and arguably serve as mediators of relationships. For example, IQ and education correlated .62 according to Table 1 and both correlated about .16 / .17 with wealth. Including both in the regression analysis means that one is examing the relationship between wealth and IQ controlling statistically for education. That is, what is impact of IQ if education level does not differ. Is that really a sensible thing to do if the causal path is IQ *> Education *> Wealth or Income? My main take from this study is if you want to be wealthy ... don't get divorced, don't be born Black or Hispanic or in the USA, be self-employed (good luck) rather than a professional, don't marry someone who works (presumably wealthy people can keep their spouse at home), don't smoke heavily (good advice at the best of time), and don't be the primary earner (anyone looking for a partner to keep at home to make themselves wealthy, give me a call ... but don't tell my wife and ignore the fact that you would be the primary earner!). Personally I think this is a good candidate for the correlation (i.e., non-experimental) does not imply causation book, despite the seeming sophistication of the analyses. One final note ... anyone wanting to give away IQ points can also give me a call. I find that one can never have enough! Take care Jim James M. Clark Professor of Psychology 204-786-9757 204-774-4134 Fax [email protected] >>> "Mike Palij" <[email protected]> 06-Oct-09 8:04:33 AM >>> The Motley Fool website (a website that provides stock and investing advice) has a little article titled "Are You Too Smart to Be Rich?" in which the author goes over the reasons for why "smart people" (aka Big Brain/High IQ types -- I think that's a Jungian category :-) do badly at getting wealthy. Although skimpy on details (e.g., Michael Lewis wrote about the collapse of Long-Term Captial Management, an investment house with a couple of Nobel prize winning economists and heavy duty quantitative modelers and the collapse was not as simple as presented here; Lewis' article appeared in the NY Times and I provided a link to in a previous post to TiPS, so one should be able to search the archives for it). For more, see: http://www.fool.com/investing/value/2009/09/28/are-you-too-smart-to-be-rich.aspx To provide a sense of the presentation consider the following quote: |Economist Jay Zagorsky ran a study to determine whether |brains translate into riches. His conclusion? "Intelligence is not |a factor for explaining wealth. Those with low intelligence should |not believe they are handicapped, and those with high intelligence |should not believe they have an advantage." | |In his book Outliers, Malcolm Gladwell explored example |after example of how the successful became so. He concluded |that "once someone has reached an IQ of somewhere around 120, |having additional IQ points doesn't seem to translate into any |measurable real-world advantage." I'm not a fan of Gladwell so I haven't read "Outliers" but I presume some Tipsters are fans and wonder if they can confirm that Gladwell actually says that one doesn't get a benefit for having an IQ over 120. Some people seem to believe in this as shown in the following quote: |Berkshire Hathaway (NYSE: BRK-A) (NYSE: BRK-B) billionaire |Warren Buffett seems to agree: "If you are in the investment business |and have an IQ of 150, sell 30 points to someone else." Anybody know where one can sell some excess IQ points? ;-) -Mike Palij New York University [email protected] --- To make changes to your subscription contact: Bill Southerly ([email protected]) --- To make changes to your subscription contact: Bill Southerly ([email protected])
