IQ matters!

The Bell Curve revisited

Driving back and forth to Nashua, NH yesterday I listened to The Bell Curve as an abridged book on tape (picked it up for $5 in a used bookstore in San Diego).  This book created quite a stir in 1994 because of its discussion of average IQ differences among races but I had never read it.  It turns out that even if you leave out all the controversial stuff about race the book is potentially very relevant to our times.

The Bell Curve starts out by talking about how we live in an era where people get sorted by cognitive ability into socioeconomic classes.  In 14th century England if you were a peasant with a high IQ or a noble with a low IQ it didn't affect your life, reproductive potential, or income very much.  In our more meritocratic and vastly more sophisticated economy a smart kid from a lower middle class might make it to the top of a big company (cf. Jack Welch, who paid himself $680 million as CEO of GE) or at least into a $300,000/year job as a radiologist.  For the authors of the Bell Curve the increasing disparity in income in the U.S. is primarly due to the fact that employees with high IQs are worth a lot more than employees with low IQs.  They note that we have an incredibly complex legal system and criminal justice system.  So you'd expect people with poor cognitive ability to fail to figure out what is a crime, which crimes are actually likely to be punished, etc., and end up in jail.  (A Google search brought up a report on juvenile justice in North Carolina; the average offender had an IQ of 79.)  If they stay out of jail through dumb (literally) luck, there is no way that they are ever going to be able to start a small business; the legal and administrative hoops through which one must jump in order to employ even one other person are impenetrable obstacles to those with below-average intelligence.

The trend that the decade-old Bell Curve book misses is telecom and outsourcing.  The authors assume that an American with high IQ will have a higher income and better standard of living than an American with low IQ.  That's the sorting function of an advanced economy.  They don't get into the question of whether it is sustainable that an American with low IQ should have a higher income than someone in India or China with a high IQ.  Statistically, due to their sheer hugeness, you'd have to expect that there are more really smart people in India and China than the total population of the U.S.  If the sorting-by-IQ process were efficient across international borders you'd expect that an American with an IQ of 100 should be making less than an Indian with an IQ of 120.  Given that a lot of brilliant well-educated people in India are getting paid less than $5,000 per year, this is a bit worrisome those of us here who are fat, dumb, and happy.  [Imagine that you were running a company.  Would you rather employ a local high school graduate with an IQ of 90 or an Indian college grad with an IQ of 130 via Internet link?]

For us oldsters, one unexpected piece of cheerful news from this book is that younger Americans are getting genetically dumber every year.  Even if you ignore the racial and immigrant angles of the book that created so much controversy back in 1994 it is hard to argue with the authors' assertion that smart women tend to choose higher education and careers rather than cranking out lots of babies.  As a middle-aged (40) guy whose own cognitive abilities are beginning to fade due to neuron death I felt sure that there would be no place me for in the America of 2050.  Our population is predicted to reach 450 million or so, i.e., the same as India had back when we were kids and our mothers told us about this starving and overpopulated country.  An individual person's labor in India has negligible economic value--the American firm Office Tiger gets 1500 applicants, many of whom are very well qualified, on a good day in Chennai.  It would seem that no enterprise would need an old guy's skills in a country of 450 million; why bother when there are so many energetic young people around?  And how would we be able to afford a house or apartment if there are 450 million smart young people out there earning big bucks and putting pressure on real estate prices?  But if the book is right most of those young people will be dumb as bricks.

[Update:  The Sunday New York Times has a long article in the Business section "Hourly Pay in U.S. Not Keeping Pace With Price Rises" about how American workers in jobs that don't require high IQs are losing ground compared to the middle class and compared to inflation.  Raw labor isn't worth very much right now.]

# Posted by Philip Greenspun on 7/16/04; 4:18:31 PM - Comments [20] Trackback [1]