There is a strong correlation – and causation – between IQ and national wealth. At times there are outliers, such as China (although it is rapidly losing its outlier status). This might be evidence that policy, despite being affected by national IQ, can be an important force in determining national wealth at a point.
In the discussion about the global financial crisis and its continuing permutations, most of the focus is on policy. Given the difficulty in changing mean national IQ, this is reasonable. But how does IQ operate as an underlying factor during the crisis? On average, can we expect the higher IQ nations to develop better policy responses? As this crisis plays out, does national wealth becomes more or less correlated with IQ?
The trigger for this question was a comment in the in the footnotes of Nigel Barber’s article on uncertainty and religious belief (which I blogged on recently):
The reviewer claimed that Lynn and Vanhanen (2002) had very clearly demonstrated that economic development is a consequence of average intelligence. Yet these are correlational data and cannot be used to establish a causal relationship. Lynn and Vanhanen are merely arguing that IQ causes economic development. Their perspective cannot accommodate the fact that Ireland was briefly one of the wealthiest countries of Europe or that African economies are currently growing faster than the United States despite relatively lower IQ scores in each case.
I presume Barber is referring to the often reported mean Irish IQ of approximately 93, the lowest in Western Europe. “Briefly” might the key word. Are we now seeing an outlier return to a level of national income closer to that predicted by national IQ? While certain Irish government policies created an economic boom, the financial crisis exposed the lack of foundation to that growth. Further, the policy decisions during the crisis now underlie much of the Irish government debt problem.
More generally, does a crisis of the type playing out push national income closer to what might be predicted from national IQ? Does higher trust between high-IQ people cushion the shock? Do high-IQ populations support better policy decisions in the crunch? Are bubbles of the type that propelled Ireland to the top of the wealth list exposed? There will be exceptions and it may not hold in the very short-term during moments of panic or gross uncertainty, but my instinct is that on average this crisis will reduce the aberrations, particularly for those countries achieving national income above what their national IQ might suggest.
Once the crisis washes through, this argument should be testable (noting that my Irish example is a single anecdotal piece of evidence). This is something to mark down as a future project.