IQ, Income and Wealth | Hacker News Reader

IQ, Income and Wealth

super-economy.blogspot.com

40 pointsyummyfajitas43 comments

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

(In the United States) I have never heard this as a conservative viewpoint.

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

I'm confused. What does productivity mean?

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

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

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

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

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

> I have never heard this as a conservative viewpoint.

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

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

http://philanthropy.com/blogs/prospecting/conservative-voter...

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

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

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

http://blog.beliefnet.com/castingstones/2008/04/conservative...

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

I have been on both sides of the fence. As a conservative religions individual, I gave away a higher percentage of my income to what is considered charity. However, even when I don't include tithe, much of that charity was sent to evangelical initiatives, not things that actually... help people. Today, I give less as a percentage of my income, but the percentage of income that actually helps others is substantially higher.

Let's go further. What is charity, in the first place? A donation to public radio is charity, but is more of a payment for a public good. Focus on the Family? Neither of these would be considered a substitute for an abused woman's shelter or a food bank...

Note: In the time and place I was in, there was open talk among evangelicals that social spending was bad because it led people away from the church helping people, decreasing its influence. Charity to the American Evangelical church, much like Hamas or Hezbollah, look at charity as a strategy to consolidate power.

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

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

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

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

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

To round the subject out, Brooks also found that liberals were more likely to donate their time, and that both liberals and conservatives were more likely to donate money than moderates.

(In the United States) I have never heard this as a conservative viewpoint.

While I'm not a conservative, this is a quite common old-school-Conservative view. Most of these got pushed out of the mainstream of the Republican party, in favor of neo-conservatives and such, so there's no major outlet with a mostly-Conservative viewpoint in the US today. Probably two good current examples are Jerry Pournelle and John Derbyshire.

http://en.wikipedia.org/wiki/John_Derbyshire http://en.wikipedia.org/wiki/Jerry_Pournelle

I think you are on the right track that the author of the post has not equated productivity to an accepted definition. He seems to fail to take into account capital. The relevance of which probably best makes sense to the layman via looking at marginal rate of substitution: http://en.wikipedia.org/wiki/Production_theory_basics#The_ma...

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

>(In the United States) I have never heard this as a conservative viewpoint.

Most of the conservatives I know fall into two groups - social conservatives and fiscal conservatives. The social conservatives - some Jewish but mostly Christian - are very charitable because it's part of their faith. The fiscal conservatives I know are cheap bastards (like me).

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

Agreed. That doesn't sound like the US Republican Party that I know. And they are supposedly conservative.

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

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

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

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

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

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

You are arguing against a straw man.

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

http://super-economy.blogspot.com/2010/03/super-economy-in-o...

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

He failed to demonstrate how higher income is unequivocally better, though. Compared to a more homogenous society, for instance.

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

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

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

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

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

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

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

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

Perhaps he meant "are controversial" and thus "likely to spark discussion."

If he literally meant "piss people off", then I agree with you...

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

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

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

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

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

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

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

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

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

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

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

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

Complete disconnect with reality. Plenty of mainstream US conservatives, at least in recent years, tend to increase spending on social programs. See Bush, Romney and Huckabee as examples of this.

But lets ignore that for a moment. The fact that conservatives occasionally reduce the growth rate of spending on social programs does not mean they oppose said programs. Similarly, I might advocate ending the war on drugs, and reducing spending on police. That doesn't mean I'm against all policing. It merely means I believe the optimal level of policing is less than what it currently is.

I think (I'm not a conservative) they see a difference between a moral obligation and a legal requirement. Between them deciding where to donate their money, and having big government make the decision for them.

My sense is that conservatives tend to be good about that as individuals, but they don't notice that corporations are resistant to moral obligations. And corporations have a far larger (and more coherent) effect on society than individuals do.

Cutting social programs seems is in line with a moral obligation towards those less fortunate if it's a personal obligation. I know many people who dislike any kind of government welfare programs and many private organizations that do what those government programs are supposed to. They believe in helping those less fortunate through charity rather than being forced to pay.

probably speaking about Europe

conservatives in Europe would be considered commies in USA

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

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

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

It's not at all inconsistent to believe that there is a moral obligation to do something, and also that government should not force people to do it.

Probably talking about conservatives in Sweden, where it's the other way around.

Anyway, now we just have to determine whether the money earned by high IQ people adds more/less long term value to our civilization than money earned by medium IQ people.

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

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