IQ and National Productivity

Abstract

A recent line of research in economics and psychology hypothesizes that differences in national average intelligence, proxied by IQ tests, are important drivers of national economic outcomes. Cross-country regressions, while showing a robust IQ-growth relationship, cannot fully test this hypothesis. Thus, recent work explores the microfoundations of the IQ-productivity relationship. The well-identified psychological relationship between IQ and patience implies higher savings rates and higher folk theoremdriven institutional quality in high average IQ countries. Experiments indicate that intelligence predicts greater pro-social behavior in public goods and prisoner's dilemma games, supporting the hypothesis that high national average IQ causes higher institutional quality. High average IQ countries also have higher savings intensity by a variety of measures. Other possible IQ-productivity channels are discussed, as are possible environmental causes of differences in national average IQ.

Personality, IQ, and lifetime earnings

“…Talented individuals are seen as drivers of long-term growth (Hughes, 1986;Jones, 2011;Murphy et al, 1991). But it is not clear why some highly talented individuals realize their potential and others do not.…”

Has globalization triggered collective impact of national intelligence on economic growth?

“…Jones (2011aJones ( , 2011bJones ( , 2013 extended this logic of Oring-type production technology to explain why a small cross-country difference in IQ is magnified into huge income differences across nations. Accordingly, a variation in the level of cognitive skills might not appear to be particularly significant for an individual's income within a country, but the collective impact of a country's IQ could cumulatively lead to very large productivity divergences across countries because those individuals work in clusters.…”

“…As the IQ-productivity relationship is robust, some other recent studies have established that it is possible to increase per capita national income by raising the impact of IQ on productivity through the O-ring effect of skill complementarities. Accordingly, with diverse levels of IQ distributed within a country, when individual laborers with equivalent levels of cognitive skills work in groups, they are inclined to cooperate through positive assortative matching, resulting in magnified per capita productivity (Jones, 2011a(Jones, , 2011b(Jones, , 2013Kremer, 1993). For this reason, the impact of IQ on productivity is larger at cross-country level than at individual level (e.g., Hanushek & Kimko, 2000;Jones & Schneider, 2010).…”