Economics

Does the Intelligence of Populations Determine the Wealth of Nations?

The relationship between national wealth and intelligence

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By Louis Putterman

Just in case you haven’t heard this before, I’ve got some information for you that you might find a bit troubling.  In their 2006 book titled IQ and Global Inequalityintelligence experts Richard Lynn and Tatu Vanhanen report that setting the average measured IQ in the U.K. at 100, people in the U.S. had average IQs of 100 and 98, respectively.  People in the Central African Republic, Mali and Kenya had average IQs of 64, 69 and 72. People in India, Indonesians, and Iraq scored somewhat higher than those in the poorer countries but lower than those in the richer countries: their average IQs were 82, 87, and 87 respectively.

Are country incomes and IQs correlated?  A recent study using a sample of 157 countries finds a high and statistically significant correlation between the two.  One might conclude, then, that it is the lower IQs of their people that explains the lower average incomes of people in the world’s poorer countries. Lynn and Vanhanen evidently think so.

Could this really be true?

Were this the nineteenth century, during which the sun never set on European empires, a cross regional study with findings like this might have been treated as self-evident in the U.K. or U.S.  It would have seemed to provide a moral justification for colonizing powers to maintain their rule over their inferior charges, helping them to advance themselves to the extent possible given their “more meager innate endowments.”

But it’s the twenty-first century, and IQ tests are a modern scientific tool.  Racism has been roundly debunked.  So what gives?

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In a newly published paper titled “Does the intelligence of populations determine the wealth of nations?” Vittorio Daniele, who teaches economics at Magna Graecia University in Catanzaro, Italy, provides an explanation that builds on the Flynn effect.  In a series of studies published over several decades, the New Zealand political scientist J. R. Flynn has famously found that in mostly rich countries in which IQ test data have been available for sufficient periods of time, average IQ scores have been steadily rising.  Some studies also show that at a given point in time, IQ tends to be higher for the young than for the old.

Supposing that each new cohort that is born has greater intellectual potential than the one before it could hardly make sense, if that potential is determined genetically.  Indeed, those living today carry re-combinations of their grandparents’ genes, and if anything people of lower innate intelligence are more, not less likely to survive in today’s more pampered environments, so heritable intelligence should be falling, not rising.

As Daniele argues and most experts agree, is that in recent decades, each cohort is being exposed to more of the kinds of stimuli that build the sort of cognitive traits IQ tests are designed to measure.  If this is true for my children, who were raised in the computer age, versus my parents, who grew up in the age of radio, then we can expect children growing up in the most remote locations or impoverished circumstances in the world’s poorest countries—think of the children of peasant farmers living in homes without electricity and plumbing, perhaps lacking access to newspapers—to be experiencing an environment that is still less generative of these sorts of cognitive skills than the urban American world of my parents’ youth.  Children of the rising middle classes in places like Shenzhen, China or Rio de Janeiro, Brazil, on the other hand, are being exposed to stimuli similar to those of their contemporary American counterparts.  Their inclusion in the tested populations is thus raising their countries’ average IQ test scores year by year.

The latest data support these observations by showing that IQs have been rising steadily in countries experiencing the most rapid economic development during the past few decades.  As a measure of the interaction between intelligence and modern cognitive stimuli that strengthen capacities for rational classification, quantitative reasoning, etc., a population’s average IQ is therefore an indicator of economic modernization and development, not their cause.

To rebut the argument that cross-country differences in IQ reflect differences in inherited capacity for intelligence and that it is those differences that in turn explain differences in income, Daniele shows that between-country differences in average IQs are well predicted by the same factors that predict differences in contemporary incomes—especially, differences in level of development on the eve of the age of European colonialism circa 1500.

Much of the data and explanatory framework borrow from my own work on the determinants of long-run economic growth, discussed in a series of academic articles and in my general audience book The Good, The Bad and The Economy. Interestingly, some of the research reported there also shows that differences in ancestral levels of development circa 1500 help to explain income differences between ethnic groups within given countries, including those between mainly European and mainly African-descended, as well as Hispanic, populations in the United States.  The approach used by Daniele to explain international IQ differences could probably be applied, then, to the inter-ethnic differences in measured IQ that have been seized upon by some to construct pseudo-scientific cases for racial inequality.  Work like Daniele’s will hopefully prove helpful in putting such ideas to rest once and for all.

Published at The Good, The Bad, The Economy.

19 December 2015


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  • Bach Tran

    Certainly, people from these developing countries exhibit higher intelligence than their IQs would supposedly measure. Also, I’ve read that IQs in Ireland were in the mid 80 range in the 1970s, and have since closed with greater development. Same with Italy in the early 1900s, with relative IQs of 70-80 compared to the UK average at the time.

  • Swami Cat

    Garrett Jones just wrote the book the Hive Mind, which argues the opposite position. I have ordered the book but not yet read it. My understanding of the data that I read is that:

    1). The Flynn effect is real, and that as the undeveloped nations develop there IQs will probably rise. This is good,
    2). The Flynn effect in no way explains away the dramatic differences in IQ between nations, indeed, you can track the effects of these populations as they immigrate and the same disparities continue with only mild convergence. This is concerning to those of us who would wish there were no differences between groups.
    3). IQ within a nation is highly predictive of income. This is true within groups (non hispanic whites sorted by IQ) and between groups (the differences between average incomes of Jews, Chinese and Hispanics for example is substantially explained via differences in average intelligence). Again, this is politically incorrect to acknowledge but appears to be empirically true.

    On a more uplifting note, there are two paths to economic development. There are the pioneers, who create it in the first place, and then there are drafters who catch up with the income by borrowing the science, technology and institutions of the pioneers. Catch up is much, much easier. Thus there may be no limit to how high standards of living can rise based upon average intelligence. They will probably just lag. Indeed, drafting is itself a smart strategy.

    • Ricardo Monteiro

      Empirical truths are often mirages that lead to no “water”. Spurious correlations cover magazines and magazines which lead to amazing contradictions such as chocolate is proved to be good for losing weight; and then after a few weeks: chocolate is proved to make you gain weight.

      • Angelika Shaw

        Well said.

  • Omega Centauri

    It seems to me that causation probably runs both ways, i.e. a more intelligent population enhances the economy, and a better economy enhances the intelligence of the next generation. This isn’t an issue amenable to binary logic, proposition A exclusively or proposition B exclusively, but some sort of a blend. If it is in fact that both propositions taken non-exclusively are true, and there is a feedback effect, past economic success leads to a smarter next generation which leads to a still better economy. The reverse spiral towards a dumber poorer population is also possible. If this is the case, providing enough of the right kind of aid such that a given population can enter into a virtuous rather than a destructive cycle would be crucial.

  • Steve

    “…people in the U.S. had average IQs of 100 and 98, respectively.” Is there a country missing here?

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