Think You're Smarter Than Donald Trump?

May 8, 2007

Share Like Tweet Add Email

The middle class in the U.S. is waning, and not since the Roaring Twenties have the rich been so much richer than everyone else. Yet intelligence doesn't explain it, according to a new report that says IQ has really no relationship to wealth. So the rank-and-file are likely to be just as smart as millionaire CEOs? You don't say.

It's pretty clear that overall wealth does not necessarily equate to talent or even basic business ethics. And it seems pretty safe to assume that it doesn't take a rocket scientist to make a lot of money.

On the matter of the latter assumption, now we have the proof. A recent report concluded that intelligence is not linked to overall wealth.

A nationwide study recently found that people of below-average intelligence were, overall, just about as wealthy as those in similar circumstances but with higher scores on an IQ test.

"Your IQ has really no relationship to your wealth," according to Jay Zagorsky, a research scientist at Ohio State University's Center for Human Resource Research and author of the study.

Although other research has also found the IQ-income link, this is one of the first studies to go beyond income to look at the relationship between intelligence and wealth and financial difficulty, Zagorsky said.

"Financial success for most people means more than just income," the research scientist continued. "You need to build up wealth to help buffer life's storms and to prepare for retirement. You also shouldn't have to worry about being close to or beyond your financial limits."

Past studies have shown that intelligence positively affects income, or the money a person makes per year, as LiveScience recently pointed out. "Individuals with a higher IQ typically have a higher educational attainment and a higher occupational status and that is very well established," said Ruth Spinks, a behavioral and cognitive neuroscientist at the University of Iowa, who was not involved in the latest study.

However, just because someone has a high-paying job doesn't mean he or she is wealthy, which is a measure of the difference between a person's assets and debts.

The study, which has appeared online in the journal Intelligence, was based on data from 7,403 Americans who participated in the National Longitudinal Survey of Youth, which is funded primarily by the U.S. Bureau of Labor Statistics (BLS). Participants completed the Armed Forces Qualification Test (AFQT), a general aptitude test used by the Department of Defense (DOD). Participants also were surveyed about their income, total wealth and three measures of financial difficulty: if they currently have any maxed-out credit cards; if over the past five years they had any instances where they missed paying bills; and whether they ever declared bankruptcy.

(Of course, basic psychology states that there is more than one type of intelligence; some say five, seven or more, in fact. The AFQT score, however, was derived from performance only on the verbal and math subtests of the ASVAB; specifically, word knowledge, paragraph comprehension, arithmetic reasoning and mathematics knowledge, according to Kaplan Test Prep and Admission. But we digress.)

Researchers at the University of California at Berkeley may call it "disinhibited," as Richard Conniff, author of "The Natural History of the Rich," recently addressed in the International Herald Tribune:

Researchers led by the psychologist Dacher Keltner took groups of three ordinary volunteers and randomly put one of them in charge. Each trio had a half-hour to work through a boring social survey. Then a researcher came in and left a plateful of precisely five cookies. The volunteer who had randomly been assigned the power role was also more likely to eat it with his mouth open, spew crumbs and get cookie detritus on his face and on the table.

It goes without saying that people with money typically have more power than those without. And Keltner theorized that "elevated power leads to behavioral disinhibition and reduced vigilance," as he says on his university Web page. Simply put, the UC-Berkeley researchers theorized that getting power causes people to focus so keenly on the potential rewards — such as money, sex, public acclaim or an extra chocolate-chip cookie — that they become insensitive to, or even oblivious to, the people around them.

Of the recent Ohio State University study, participants with higher IQ scores tended to earn higher incomes, with each additional IQ point associated with an income boost of $202-$616 each year. "The results showed a financial sweet spot of sorts that hovered around the average IQ score, for which people had the lowest financial distress," LiveScience noted.

Yet, even though the study's brainiacs earned higher incomes on average, they didn't have the savings to show it. In fact, some higher-IQ people had more problems with maxing out credit cards and missing bill payments.

Compared with people of other industrialized countries, U.S. citizens do not save much money. In fact, 43 percent of all consumers spend $1.22 for every $1 they earn, according to Carl George, chairman of the National CPA Financial Literacy Commission.

And in 2005 and 2006, the national savings rate swung to a negative number for the first time since the Great Depression.

When people make a lot of money, they're able to spend a lot of money. The problem isn't a single extravagant purchase, but a lavish lifestyle in which they spend more than they earn. Even the rich are subject to the fundamental law of wealth. "Real wealth isn't about earning money — it's about keeping money," notes the Get Rich Slowly blog.

So, although Zagorsky's results confirmed research by other scholars that show people with higher IQ scores tend to earn higher incomes, when it came to total wealth and the likelihood of financial difficulties, people of below-average and average intelligence did just fine when compared with the super-intelligent.

(It seems only fitting that some mainstream news coverage of this intelligence-wealth finding is accompanied by a picture of Paris Hilton with the caption, "Paris Hilton ... you do the math.")

"Intelligence is not a factor for explaining wealth. Those with low intelligence should not believe they are handicapped, and those with high intelligence should not believe they have an advantage."

Tell us what you think: Is there a link between wealth and intelligence?

Resources

You Don't Have to Be Smart to Be Rich, Study Finds Ohio State University, April 24, 2007

Not So Smart? You Can Still be Rich! by Jeanna Bryner LiveScience, April 25, 2007

When the rich get stupid by Richard Conniff International Herald Tribune, April 4, 2007

Early Tests Predict Adult IQ by Melinda Wenner LiveScience, April 16, 2007

The Most Important Money Tip by J.D. Roth Get Rich Slowly, July 5, 2006

Dacher Keltner, Ph.D., Stanford University UC Berkeley, Dept. of Psychology

Bankers, experts decry lack of savings by Sherry Slater The Journal Gazette, April 16, 2007

Intelligence not linked to wealth, study shows Agence France-Presse, April 25, 2007

Share Like Tweet Add Email

LIKE THIS ARTICLE? DON’T MISS OUT ON OTHERS! Get Thomasnet’s industry newsletter now

Comments

comments powered by Disqus