Lion of the Blogosphere

Shame on Steve Hsu

iq quintiles
For promoting a chart alleging to show that “Cognitive ability has a strong impact on earnings at each level of educational attainment.”

Because cognitive ability is only broken down by quintiles, and because the majority of college graduates would be in the top quintile, the chart doesn’t draw a fine enough distinction between different cognitive ability levels to tell us anything about how having a genuinely high IQ affects income. Merely being in the top quintile of IQ doesn’t make someone that smart. This approximates to an IQ cutoff of 112.

The chart falls into the usual fallacy of assuming that all college degrees are identical. But in fact, the degree-holders with lower IQs are far more likely to hold useless degrees from places like the University of Phoenix. I suspect that the entire effect, and possibly even more than the entire effect, can be attributed to the fact that graduates in the top cognitive-ability quintile (which is the majority of college graduates) have more prestigious degrees in more difficult subjects than people in lower quintiles who manage to get a college degree.

The only way to get real data on how IQ affects income after a college degree is accounted for is to compare people with the same degree. You need to compare someone with a degree in chemical engineering from M.I.T. to another person with a degree in chemical engineering from M.I.T., and you need to compare someone with a degree in communications from the University of Phoenix with another person with a degree in communications from the University of Phoenix. And the two people that you compare must have graduated in the same year.

On the other hand, the chart clearly shows the benefit if someone with only average intelligence manages to get even any random college degree, because that causes their income to rise from $320/week (barely more than minimum wage) to $503/week.

Written by Lion of the Blogosphere

August 12, 2014 at 7:05 AM

32 Responses

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  1. The only way to get real data on how IQ affects income after a college degree is accounted for is to compare people with the same degree. You need to compare someone with a degree in chemical engineering from M.I.T. to another person with a degree in chemical engineering from M.I.T., and you need to compare someone with a degree in Ccmmunications from the University of Phoenix with another person with a degree in communications from the University of Phoenix. And the two people that you compare must have graduated in the same year.

    And ideally you would want to compare them on a test other than the SAT. Even though the SAT is one of the best intelligence tests, the fact that it’s used for college admissions & emphasizes academic skills means that people with identical degrees would be especially range restricted on the SAT so I suspect a different cognitive test like say the Raven, the WAIS-IV or chronometrics would be able to better predict future income (ideally measured at middle age when earnings peak) independently of education than the SAT could.

    I think if such a study were done with sufficient sample size, you would still find that IQ & income are positively correlated, but the correlation would be quite weak (uncontrolled for education IQ & income correlate about 0.4 in the U.S. population, & controlling so strictly for education would likely cut it in half to 0.2 or less).

    A 0.2 correlation would be very hard for most people to notice & hard to observe at all in poorly done studies. I’ve crudely hypothesized, roughly speaking, that uncontrolled for education, average IQ increases 8 points for every ten fold increase in financial success. Among people with identical degrees I suspect that would be reduced to only a 4 point IQ increase for every ten fold jump in money, so among people with the same degree, those who earn six figures would perhaps average 4 IQ points higher than those who earn five figures. For most college grads, their entire social circle earns either five figures or six figures & with the IQ gap being so small, it’s unlikely they would notice any correlation at all between IQ & income.

    But imagine a college reunion where the richest graduate is a self-made deca-billionaire (11 figure net worth & say a 10 figure income) & the poorest is a homeless guy who sleeps on park benches (3 figure income from begging). In the typical case, the IQ of the former would perhaps be 27 points higher than the latter, despite equivalent education. But admittedly, that’s the most extreme scenario and thus has little relevance, but you need to look to extremes for such small correlations to become visible.

    pumpkinperson

    August 12, 2014 at 8:21 AM

    • If I had to guess, I would guess that the verbal section of the SAT would have a higher positive correlation with income than any other test of g. That’s because verbal skills are important for value transference. An engineer with high math skills might be better at solving engineering problems, but an engineer with high verbal skills is more likely to be promoted to management, and management makes more money.

      Lion of the Blogosphere

      August 12, 2014 at 8:51 AM

      • Excuse my ignorance- what is “g”?

        Benelli_Bang

        August 12, 2014 at 9:10 AM

      • “g” is the general factor of intelligence. Charles Spearman coined the name.

        Lion of the Blogosphere

        August 12, 2014 at 9:53 AM

      • i think some people are confusing/conflating verbal IQ with extroversion and social skills.

        grey enlightenment

        August 12, 2014 at 9:16 AM

      • Right, this is not the case. Plenty of highly introverted English scholars out there. I think the funny thing is that with all the fancy models we have these days, old school D&D’s ‘Charisma’ was a pretty good general idea for understanding how a person’s good looks, social awareness and verbal ability work together to both open doors and bend knees. Now if only we could measure it.

        Sisyphean

        August 12, 2014 at 10:24 AM

      • Or could you not also use ‘Extraversion’ from the five factor personality model? I’m not sure if anyone had tried to correlate Extraversion with the verbal section of the SAT, but it would only make sense that there be some.

        Graf von Jung

        August 12, 2014 at 9:32 AM

      • Verbal intelligence is useful for value transference independent of personality and social skills. Although of course I am not denying the benefit of personality and social skills.

        Lion of the Blogosphere

        August 12, 2014 at 9:56 AM

      • I agree that verbal IQ correlates better with income than other g loaded psychometric measures however it also correlates better with education which correlates with income, so other g loaded tests might have more independent predictive power.

        pumpkinperson

        August 12, 2014 at 10:40 AM

      • The pre-2005 SAT Verbal section’s correlation with g was 0.8 (SAT Math was 0.7). Only IQ tests, the purest measure of g anyone has come up with, were better matches than verbal. Today, with analogies removed from the test, the relationship is weaker.

        The Undiscovered Jew

        August 12, 2014 at 6:39 PM

    • It’s possible for someone with an IQ of 150 to be homeless.

      It’s probably NOT possible for someone with an IQ of 100 to become an internet billionaire, but it’s within the realm of possibility for someone with an average IQ to become super-rich from real-estate type activities. David Siegel, for example, doesn’t strike me as that smart, and his wife Jackie is a gold-digging moron which shows that a sexy woman with below-average IQ can become a super-rich through marriage.

      Lion of the Blogosphere

      August 12, 2014 at 8:56 AM

  2. LotB,

    On the other hand, the chart clearly shows the benefit if someone with only average intelligence manages to get even any random college degree, because that causes their income to rise from $320/week (barely more than minimum wage) to $503/week.

    The minimum wage in 1992 was 4.25. 4.25 times 40 equals 170. 320 is 88% more than 170. “88% more” is much closer to “double” than it is to “barely more than minimum wage.”

    You can’t remember the titanic shift of marginalism that followed Marx (and the execrable Labor Theory of Value) and you can’t even read your own chart or think about inflation, etc.

    Are you OK, LotB? You’re really slipping here.

    runindogs

    August 12, 2014 at 9:30 AM

  3. OT re value transfer: Lion what do you think of the attempts to get fast-food chains to be more accountable for their franchisees’ shady wage practices?

    http://thinkprogress.org/economy/2014/08/12/3470106/jimmy-johns-wage-theft/

    Fiddlesticks

    August 12, 2014 at 9:49 AM

    • I believe that the franchisor should be legally liable because their name is on the business and most customers and even the employees do not realize that the franchise is an independently owned business.

      Heck, I should know better, but even I think of all McDonalds as being the same restaurant and not individually owned and operated restaurants. (This is intentionally enforced conformity and what McDonalds WANTS.)

      Lion of the Blogosphere

      August 12, 2014 at 9:59 AM

      • LotB,

        Do you and your Marxist groupies not even care about your giant errors of history and arithmetic?

        If you honestly, truly, and ACTUALLY BELIEVE the insane idea that high school graduates were almost all making minimum wage in 1992 (instead of almost double that), then it’s no wonder that you’re views are so consistently backward and pro-Marx. You have to have a somewhat clear understanding of REALITY to have reasonable policy prescriptions.

        Isn’t this obvious even to a Marxist ideologue? Don’t facts matter at all?

        runindogs

        August 12, 2014 at 10:40 AM

      • I don’t have any groupies, and you are using “Marxist” as a meaningless synonym for “really really bad” the same way that liberals throw around the word “racist.”

        And most of what Marx wrote has nothing to do with what modern-day liberals believe. Marx would probably vote Republican.

        Lion of the Blogosphere

        August 12, 2014 at 1:17 PM

      • LotB,

        I think that the reason you refuse to address my helpful criticism is because you ACTUALLY BELIEVE that wages are held up by the minimum wage. You saw what you wanted to see (which agreed with your Malthusian and Marxist worldview) and just went with it.

        runindogs

        August 12, 2014 at 10:43 AM

      • There is plenty of emperical evidence that when minimum wage was increased, people who used to make the old minimum wage got a salary increase to the new minimum wage, so yes wages went up for the people that the law was designed to help.

        Lion of the Blogosphere

        August 12, 2014 at 1:19 PM

      • Correct, your typical McDonalds in Manhattan has a 99% black staff. The ones in Phoenix would be mostly White. The different racial demographics give you a different dining experience.

        JS

        August 12, 2014 at 11:35 AM

      • LotB,

        because that causes their income to rise from $320/week (barely more than minimum wage) to $503/week

        When you wrote the above, what were you thinking the minimum wage was and how by how many hours did you multiply it?

        runindogs

        August 12, 2014 at 3:23 PM

      • You are vastly overthinking the sentence.

        Lion of the Blogosphere

        August 12, 2014 at 3:25 PM

      • LotB,

        You are vastly overthinking the sentence.

        It’s the difference between HS graduates making almost double the minimum wage and making barely more than the minimum wage. Since you want more federal intrusion in the labor market, I can see why you won’t make a correction to your post. It’s in your interest to fool as many Americans as possible about labor markets. Your on team Marx.

        runindogs

        August 12, 2014 at 3:48 PM

      • I would consider $3/hour to be barely any money, so someone making $3/hour more than the minimum wage is making barely more than the minimum wage. Like I said you are overthinking the sentence.

        I’m on the team of truth. I didn’t write anything in my post proposing “more federal intrusion in the labor market.”

        Lion of the Blogosphere

        August 12, 2014 at 4:12 PM

      • LotB,

        I would consider $3/hour to be barely any money, so someone making $3/hour more than the minimum wage is making barely more than the minimum wage. Like I said you are overthinking the sentence.

        I’m on the team of truth. I didn’t write anything in my post proposing “more federal intrusion in the labor market.”

        Again, the chart is from 22 years ago. Have you heard of this thing called inflation? It means that money loses value over time.

        Why can’t you show your arithmetic?

        You’ve written many times about increasing fed intrusion in the labor market. Example: you were and are a strong proponent of Opapacare, which forces employers to pay for laborer’s health insurance at 30 hours of work per week or to pay a large penalty. This is blatant intrusion in the labor market, with predictable results.

        runindogs

        August 12, 2014 at 5:19 PM

      • Mind expanding a little on your liability argument? The obligation is not obvious to me and you didn’t explain your position.

        Nobody should be liable for the actions of an independent operator where that operator is, in fact, operating independently. The article is notably vague (probably because the allegations are also vague) suggesting that somehow (by magic perhaps?) a corporate sponsored computer monitoring system working in real time operates to ‘encourage’ record keeping fraud by franchisees. Oh really? By such logic erasers on pencils might encourage fraud. Typically, such systems are management tools nothing more. It is what the manager chooses to do with them that constitutes fraud, not the tool itself.

        That this particular iteration of the NLRB has gone innovative and found a violation in one instance is further cause for suspicion.

        Curle

        August 12, 2014 at 8:40 PM

      • Franchisees are not “independent operators” but rather they are presenting themselves to the public as if they are the franchisor. Hey, no one is forcing McDonalds to allow franchisees to use it’s brand image.

        Lion of the Blogosphere

        August 12, 2014 at 9:02 PM

  4. I think the fact Steve Hsu shows four different cognitive levels and that, in each one, those with more education earn progressively more shows there is a correlation between education and income. But, as people like to say, correlation doesn’t imply causation. The reason people with more education make more money may be that, within each cognitive level, the smartest people were more likely to have more education and not the education itself. You’d have to look at intelligence directly to know.

    This kind of reminds me of the egalitarian ‘battle cry’ of using the phrase “equally qualified” to “prove” that any gap in education, employment or earnings has to be the result of “discrimination”. Basically, they say that if two groups have the same degree and years of experience then they must be “equally qualified.” But that’s only true if they had the same test scores (read “IQ”) to start with. If one group is receiving affirmative action and additional monies in the form of financial aid, need based grants, race based scholarships, etc then they weren’t equally qualified before they got the degree. Getting the degree certainly didn’t raise their IQ. Just like in the case of Steve Hsu’s chart, you’d have to look at IQ to know.

    destructure

    August 12, 2014 at 1:55 PM

  5. “On the other hand, the chart clearly shows the benefit if someone with only average intelligence manages to get even any random college degree, because that causes their income to rise from $320/week (barely more than minimum wage) to $503/week.”

    Those who get college degrees are self-selected: They want to better themselves and are willing to invest time and money for it. Those character traits, independent of the effect of a college degree, seem likely to lead to better job performance/ higher pay/ more advancement .

    That said, a degree certainly helps as there are many jobs with bright-line degree requirements.

    anon

    August 12, 2014 at 4:23 PM

  6. I’m gonna tell Steve Hsu on you

    Lion of Judah

    August 12, 2014 at 5:32 PM

  7. Look at this

    http://www.gnxp.com/blog/2008/09/college-is-still-best-pay-off.php

    More evidence for the position that IQ affects income even after controlling for education. Of course you can claim all you want that the earlier graph doesn’t specify by subject or major or college or whatever, but I’m willing to bet that even after controlling for those things IQ still has a significant impact.

    Lion of Judah

    August 12, 2014 at 5:34 PM

    • Of course it probably matters most for those with grad degrees…

      Lion of Judah

      August 12, 2014 at 5:35 PM

  8. What do the lowest quintiles signify? Below average IQ? If one needs an average IQ (or better around 110-15) to successfully graduate from 4y-college, how do so many with clearly below average manage to graduate? There is only so much one can do with rote learning and hard work (and I suppose there are also correlations between the ability to memorize things quickly and IQ).

    I have my suspicions about predictions for highly intelligent (more than two SD out), because they are so few and other factors (like personality, creativity etc.) get more important. (We do not know whether Einstein would have scored as high as the guy with presumeably 195 IQ who lives in a wooden shack, I could well imagine that Von Neumann was more intelligent than Einstein, but Einstein was still a more important scientist and both are an entirely different league from most Mensa or Prometheus persons with high scores who are having decent carreers, but no really belonging to the top 100 scientists of our day.)

    But how can one graduate from college with IQ 85? Can you do this with sports in the US?

    nomen nescio

    August 13, 2014 at 4:00 AM


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