Money measures Intellect

[Speedlimits]

This statement needs some amending but on a general level provides more fact than most people would like to admit. It is fair to say that given no other information about a person besides their income. One can deduce that the person with the higher income tends to be more intelligent than the person with the lower income.

Given that statement. I think some distinction needs to be made between self made and inherited. We are going to assume that every person in this discussion has made their own money through various vehicles.

The amount of money also tends to have a cumulative effect. For instance a billionaire is more likely to have an intellectual edge over a millionaire. And a millionaire is more likely to have an intellectual edge over someone that makes 6 figures.

(I will define 6 figures as making an annual income of $100,000.00 - $250,000.00)

This concept also suffers from the phenomenon of diminishing returns. That is to say that the richest person in the world is not necessarily the smartest. But is most certainly a genius. (Genius will be defined as being in the top 1% of the population)

This phenomenon also carries over to another extreme. The poorest person in the world may not be the least intelligent. But is most certainly in the bottom 1% of the population.

One example: You are given two annual incomes in the amount of $US Dollars (does not necessarily mean they work in the United States but for simplicity's sake let's say they have been converted).

Model 1: Unknown earns $40,000.00 a year.

Model 2: Unknown earns $10,000,000.00 a year.

My premise is that Model 2 will have a higher probability of being more intelligent than Model 1. Suffice to say, he will be smarter.

Is this a logical conclusion?

[cambraceres]

Now if we assume a normal world, that is one devoid of majic and what we would at this point consider supernatural processes, then capability would be defined as the logical intersection of two things, chance and initiative.

1. Chance, I hardly can fathom a group of professional poker players not getting even the subtleties of why chance is important in determining the outcome of a specific set of actions.

2. Initiative, this is the mental bit, to decide what to do and have the will to do so is intiative. Even if one is intelligent, he/she could be a victim of what Napoleon called "Moral Palsy", and be incapable of meaningful action in the face of even transitory uncertainty.

The question of whether or not a stereotype is validated or not in one specific case or another is a question of statistics, and the philosophical structures of stochastic systems are not difficult to grasp or manipulate.

Indivual deerminations cannot be made on the basis of broad generalizations, trends are merely indicative, not absolute, but enough of that.

Also there is a cultural issue that should be addressed. Much of business success is networking, which with an heir is already equipped. There is also the fact that heirs already have capital, a huge advantage.

Also it seems woth many decisions, knowing a great deal about my choices rather than possessing merely common knowledge, does not make that much difference. Ignorance makes one brave, and this is good in some enterprises.

enough idle musing

Cam

[KUJustin]

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This phenomenon also carries over to another extreme. The poorest person in the world may not be the least intelligent. But is most certainly in the bottom 1% of the population.

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While your ideas probably have merit for the rich, one can choose to be poor meaning they may not hold up so well on that end. If I sell everything I own to give to the poor and live out my life in extreme poverty do I suddenly fall into the 99th percentile of stupidity even though I'm in the 99th percentile of intelligence according to our current methods of testing?

[CityFan]

How do you explain academic salaries then? Or smart people working in the public sector?

At the same time, there are people working long, boring hours on Wall Street who aren't actually that smart.

There is clearly a correlation between income and intellect, but do not overestimate it.

[CityFan]

Speedlimts' assumption is that everyone is devoting their energies to trying to get rich, so that your wealth is a measure of your success.

That is a gross misunderstanding of human nature.

[MidGe]

More likely to be "inversely". Could not help myself! /images/graemlins/smile.gif

[Speedlimits]

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This phenomenon also carries over to another extreme. The poorest person in the world may not be the least intelligent. But is most certainly in the bottom 1% of the population.

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While your ideas probably have merit for the rich, one can choose to be poor meaning they may not hold up so well on that end. If I sell everything I own to give to the poor and live out my life in extreme poverty do I suddenly fall into the 99th percentile of stupidity even though I'm in the 99th percentile of intelligence according to our current methods of testing?

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Perhaps it should be restated. The relative IQ or overall IQ of the bottom 1% will be significantly lower than the relative IQ of the top 1%. Certain exceptions like the one you pointed out are not the norm and would not influence the overall IQ significantly enough to matter.

[soon2bepro]

It doesn't tell you much, but yeah, with no other information, higher income ---> higher IQ.

You don't need to be able to tell if it's self earned either.

[madnak]

Certainly there's a correlation, but it's a huge oversimplification. The very smartest people often have low incomes. Based on my experience the curve probably peaks at around IQ 130. Thus, a person who makes a lot of money is likely to be "sort of smart, but not really."

Of course, there are many more people < 130 than there are > 130, thus the strong correlation.

[Speedlimits]

[ QUOTE ]
Certainly there's a correlation, but it's a huge oversimplification. The very smartest people often have low incomes. Based on my experience the curve probably peaks at around IQ 130. Thus, a person who makes a lot of money is likely to be "sort of smart, but not really."

Of course, there are many more people < 130 than there are > 130, thus the strong correlation.

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So according to you someone that is a multi-millionaire is more likely to have an IQ of 130, not 100 or 160?

[madnak]

Hmmm, more likely 130 than 160. But more likely 160 than 100. I'd bet the average IQ among billionaires is lower than the average IQ among physicists, for example.

[jogsxyz]

Anna Nicole Smith is a genius.

[FortunaMaximus]

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More likely to be "inversely". Could not help myself! /images/graemlins/smile.gif

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Still can't yet. /images/graemlins/grin.gif

[Speedlimits]

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Anna Nicole Smith is a genius.

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That's not self-made. Also obviously there are going to be exceptions. Most celebrities are not geniuses but are millionaires.

[FortunaMaximus]

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Anna Nicole Smith is a genius.

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That's not self-made. Also obviously there are going to be exceptions. Most celebrities are not geniuses but are millionaires.

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Art != genius? The ability to recognize one's own talents and, uh, assets isn't a form of genius too?

What do you define genius as? Scores on a test?

[arahant]

Not only logical, but pretty much empirically verfied. I think you have some problems with the tail ends, though. The 1% poorest are by no means the 1% dumbest...they are the isolated aboriginal tribes and such. It's also not clear that the richest person in the world is neccesarily a genius (in actual fact, he probably is, but it certainly needn't be so).

[arahant]

I dunno...bear in mind that there are like 3,000 times as many 100's as 160's...

[jogsxyz]

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Not only logical, but pretty much empirically verfied. I think you have some problems with the tail ends, though. The 1% poorest are by no means the 1% dumbest...they are the isolated aboriginal tribes and such. It's also not clear that the richest person in the world is neccesarily a genius (in actual fact, he probably is, but it certainly needn't be so).

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He paid $50K for someone else's operating system.

[FortunaMaximus]

[ QUOTE ]
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Not only logical, but pretty much empirically verfied. I think you have some problems with the tail ends, though. The 1% poorest are by no means the 1% dumbest...they are the isolated aboriginal tribes and such. It's also not clear that the richest person in the world is neccesarily a genius (in actual fact, he probably is, but it certainly needn't be so).

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He paid $50K for someone else's operating system.

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Oh, yes, now that was genius. What'd he do soph year at Havahhhhd?

[DougShrapnel]

The studies I have read show that it's the other way around. Kids raised wealthy have Higher IQ's than kids raised poor. Yet if you put a low socio-economic status (SES) student in a program like Head Start the low SES student almost immediately fits into the IQ range of the high SESer's. And if you take a kid out of the program it almost immediately drops back down to the low SES range. It is very clear that if IQ points are what you want to maximize all kids should be raised in a high SES environment.

I remember a different study that tried to measure wealth and smarts by gathering the ratio of poor and rich neighborhoods around a major city. And the researchers figured that smart people would not like to drive into the city in the morning looking at the sun, and of course back into the sun on the way home. Poor neighbors managed to aviod the sun during thier commute into work in the city better than rich neighborhoods. Obviously the results aren't conclusive, but I found the results and methods interesting.

[madnak]

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I dunno...bear in mind that there are like 3,000 times as many 100's as 160's...

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Hmm... Maybe you're right. I think a relatively large proportion of 160s will become self-made multimillionaires, while a relatively small proportion of 100s will accomplish the same thing. But you're right, 160s aren't exactly all over the place.

Regarding the correlation between wealth and IQ... At the sky-high limits it largely falls apart. Oh, it's there, but socioeconomic status will never push someone into the >160 range, and there have been plenty of people in that range who came from poor families or even had to teach themselves out of thin air.

[John21]

I'm not sure if there's a correlation, but wouldn't drive or desire factor into it.

Lets say that everyone shows the minimum desire needed to maintain their socio-economic status, what would be a bigger factor causing someone to exceed that baseline - drive or intelligence?

I'm not sure if just being more intelligent would necessarily make you driven to become wealthly?

[Turn Prophet]

I think a lot of this discussion assumes too heavily that what one means by "intelligence" is subject to the same standard as everyone else's meaning.

I would submit that there are many different types of intelligence, and that someone who makes a lot more money than someone else is likely (but not absolutely) smarter financially than someone who makes less, but may not be more intelligent than him in any other way.

There are a ton of high school teachers out there who make a lot less than than politicians, but I would say that on the whole, the teachers are probably a whole lot smarter.

[CityFan]

[ QUOTE ]
I think a lot of this discussion assumes too heavily that what one means by "intelligence" is subject to the same standard as everyone else's meaning.

I would submit that there are many different types of intelligence, and that someone who makes a lot more money than someone else is likely (but not absolutely) smarter financially than someone who makes less, but may not be more intelligent than him in any other way.

There are a ton of high school teachers out there who make a lot less than than politicians, but I would say that on the whole, the teachers are probably a whole lot smarter.

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Not to mention the assumption that acquisition of wealth is a fundamental human goal. For some it is, and for some it isn't. For those with extremely high IQs, intellectual fulfilment probably takes on more importance.

(as others have pointed out with various examples)

[Skoob]

Not to brag, but I'm a member of Mensa and hang out with many "geniuses" from time to time.

In fact, an issue of the Mensa magazine recently included an article similar to this. I think it was called "If you're so smart, how come you're not rich?"

When I first joined, I was expecting all the smart people to behave and think just like I did. I was dead wrong. The intelligent folks (the one's who belong to Mensa at least) are just a cross-section of everyday society.

Some are dirt poor. Some are heavy drinkers (there's even a "drinking club"). Some are heavy smokers. Some are very religious. Some are into really nasty BDSM. Some are bikers. And, believe it or not, some play poker. We call it the "Statistics and Probability Special Interest Group."

My point is, you can't hedge the smart people into any single group.

[FortunaMaximus]

http://img293.imageshack.us/img293/3589/grouchomk3.jpg

+/- 1000 /images/graemlins/tongue.gif

[madnak]

You can establish various correlations, however.

[Propertarian]

IQ is correlated with income, but they are not very well correlated. Inherited wealth is a better correlate (and predictor) of income, but it itself is not very good.

Income of parents and years of schooling are the best correlates of one's income.

Source: Samuel Bowles and Herbert Gintis, "Unequal Chances", Princeton University Press, 2005 (http://www.amazon.com/Unequal-Chances-Background-Economic-Success/dp/0691119309)