The O-Ring Sector and the Foolproof Sector: An Explanation for Cross-Country Income Differences

Jones, Garett

doi:10.2139/ssrn.1515857

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IQ and National Productivity

Jones¹

2011

The New Palgrave Dictionary of Economics

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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. Crosscountry 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.

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