Life is an IQ test

[IanC]

Lots of people here disagree with me that intelligence is an important factor in day to day life, or that intelligence is one of the driving forces in earning money and accruing wealth.

here is yet another study showing how intelligence shows its influence in almost any area that is researched.

Cognitive Abilities and Household Financial Decision Making
Sumit Agarwala and Bhashkar Mazumder


We analyze the impact of cognitive skills on two specific examples of consumer financial decisions where suboptimal behavior is well defined: first, the use of a credit card for a transaction after making a balance transfer on the account, and second, cases where individuals are penalized for inaccurate estimation of the value of one’s home on home equity loan or line of credit application. We match individuals from the US military for whom we have detailed test scores from the Armed Services Vocational Aptitude Battery test (ASVAB), to administrative datasets of retail credit from a large financial institution. Our results show that consumers with higher overall composite test scores, and specifically those with higher math scores, are substantially less likely to make a financial mistake. Importantly no such effects are found for verbal or for most other component scores.

.....

Credit card holders frequently receive offers to transfer account balances on their current cards to a new card. Borrowers pay substantially lower APRs on the balances transferred to the new card for a sixto-nine-month period (a “teaser” rate). However, new purchases on the new card have high APRs. The catch is that payments on the new card first pay down the (low interest) transferred balances, and only subsequently pay down the (high interest) debt accumulated from new purchases.

The optimal strategy during the teaser-rate period, is for the borrower to only make new purchases on the old credit card and to make all payments to the old card. To be clear, this implies that the borrower should make no new purchases with the new card to which balances have been transferred (unless she has already repaid her transferred balances on that card). Some borrowers will identify this optimal strategy immediately and will not make any new purchases using the new card. Some borrowers may not initially identify the optimal strategy, but will discover it after one or more pay cycles as they observe their (surprisingly) high interest charges. Those borrowers will make purchases for one or more months, then have what we refer to as a “eureka” moment, after which they will implement the optimal strategy. Some borrowers will never identify the optimal strategy.

http://cfs.wisc.edu/Files/Working%20Papers/Agarwal-1.pdf

 

[editec]

Life is an IQ test.

You work hard keep your nose to the grindstone, study before investing and you get you financial house in order and then if you LUCKY and don't get killed by some unexpected event or disease, you can feel supior to those who either didn't work hard enough, are stupid or who were just unlucky.

I have to tell yas that I am especially proud of having been smart enough to have been born in the USA to relatively middle class parents.

Yup, I have a lot to be proud of, don't I?

I am constantly amazed at how stupid people were who chose to be born in Haiti.

What were they thinking?!

 

[midcan5]

LOL IanC, do you only know three, maybe four people? That is so ridiculous it defies the law of credibility. Consider only that serial killers are usually high IQ and you start to hope dumbness prevails.

"Opinion is ultimately determined by the feelings, and not by the intellect." Herbert Spencer

 

[IanC]

Life is an IQ test.

You work hard keep your nose to the grindstone, study before investing and you get you financial house in order and then if you LUCKY and don't get killed by some unexpected event or disease, you can feel supior to those who either didn't work hard enough, are stupid or who were just unlucky.

I have to tell yas that I am especially proud of having been smart enough to have been born in the USA to relatively middle class parents.

Yup, I have a lot to be proud of, don't I?

I am constantly amazed at how stupid people were who chose to be born in Haiti.

What were they thinking?!

speak up, don't be so wishy-washy. if you disagree, say it. if you think the accidents and coincidences of life are so overwhelming that character and intelligence are futile gestures towards Fate just say so.

 

[IanC]

LOL IanC, do you only know three, maybe four people? That is so ridiculous it defies the law of credibility. Consider only that serial killers are usually high IQ and you start to hope dumbness prevails.

"Opinion is ultimately determined by the feelings, and not by the intellect." Herbert Spencer

Well I certainly don't know any serial killers. But I do know that I make probably hundreds of decisions everyday. Being able to make quick and generally better choices adds up. Its like having a tailwind at my back pushing me forward. Dull people face a headwind that hold them back.

 

[IanC]

looking at the graph it is easy to see so many of the social pathologies that are given as excuses for racial disparities seem to be intricatedly linked to intelligence.

there was an interesting blurb under the graph at this link

A meta-analysis (Hunter and Hunter, 1984) which pooled validity results across many studies encompassing thousands of workers (32,124 for cognitive ability), reports that the validity of cognitive ability for entry-level jobs is 0.54, larger than any other measure including job tryout (0.44), experience (0.18), interview (0.14), age (−0.01), education (0.10), and biographical inventory (0.37).

and

Some researchers have echoed the popular claim that "in economic terms it appears that the IQ score measures something with decreasing marginal value. It is important to have enough of it, but having lots and lots does not buy you that much." (Detterman and Daniel, 1989)

However, some studies suggest IQ continues to confer large benefits even at very high levels. Ability and performance for jobs are linearly related, such that at all IQ levels, an increase in IQ translates into a concomitant increase in performance (Coward and Sackett, 1990). In an analysis of hundreds of siblings, it was found that IQ has a substantial effect on income independently of family background (Murray, 1998).

 

[editec]

Life is an IQ test.

You work hard keep your nose to the grindstone, study before investing and you get you financial house in order and then if you LUCKY and don't get killed by some unexpected event or disease, you can feel supior to those who either didn't work hard enough, are stupid or who were just unlucky.

I have to tell yas that I am especially proud of having been smart enough to have been born in the USA to relatively middle class parents.

Yup, I have a lot to be proud of, don't I?

I am constantly amazed at how stupid people were who chose to be born in Haiti.

What were they thinking?!

speak up, don't be so wishy-washy. if you disagree, say it. if you think the accidents and coincidences of life are so overwhelming that character and intelligence are futile gestures towards Fate just say so.

I was too subtle?

Okay I think that if IQ were that important then the correlation between IQ and how people do in life would be much stronger than it is.

I think if IQ were the primary determining factor in how well off people were then Asia would never have been a shithole (because on average Asians are smarter than Euros by 10 points) and Europe would never have conquered most of the world. (because MOST of the world has IQs higher on average than most Euros)

I think that attempting to reduce individual fate or collective fates to ONE FACTOR is just dumber than hell,

Clear enough for you?

 

[IanC]

Life is an IQ test.

You work hard keep your nose to the grindstone, study before investing and you get you financial house in order and then if you LUCKY and don't get killed by some unexpected event or disease, you can feel supior to those who either didn't work hard enough, are stupid or who were just unlucky.

I have to tell yas that I am especially proud of having been smart enough to have been born in the USA to relatively middle class parents.

Yup, I have a lot to be proud of, don't I?

I am constantly amazed at how stupid people were who chose to be born in Haiti.

What were they thinking?!

speak up, don't be so wishy-washy. if you disagree, say it. if you think the accidents and coincidences of life are so overwhelming that character and intelligence are futile gestures towards Fate just say so.

I was too subtle?

Okay I think that if IQ were that important then the correlation between IQ and how people do in life would be much stronger than it is.

I think if IQ were the primary determining factor in how well off people were then Asia would never have been a shithole (because on average Asians are smarter than Euros by 10 points) and Europe would never have conquered most of the world. (because MOST of the world has IQs higher on average than most Euros)

I think that attempting to reduce individual fate or collective fates to ONE FACTOR is just dumber than hell,

Clear enough for you?

subtle is fine, but I find people often contest what is inferred.

you say the correlations for intelligence arent high enough. can you give examples of any other factors that are even remotely as high?

I have to disagree with you about most of the world being smarter than Euros. NE asians are the only large group that outscores them, by 5 to 8 points. And that is a significant factor in why they are becoming the world superpower now that they have adopted capitalist trading policies.

I fear you have mistaken what I have said when you build a strawman out of intelligence being the only factor in success. I say it is the single most powerful factor in social outcomes, with amazing predictive ability that increases as the groups that are being analyzed grow in size. For example, SAT scores are ridiculed for having fairly low correlation to freshman grades. But that is ignoring restriction of range issues, as well as the other issues of first year students. SAT correlation is much higher for fourth year scores. And if you look at students in blocks of 25 the correlation is over .5, in blocks of 100 the correlation approaches .9!

I understand your feeling that it is unfair that some individuals benefit from better genetic and cultural legacies but that does not change the fact that those who receive those gifts are typically more successful. Wishful thinking does not change reality. I am sorry that you find me unkind for speaking of logistical facts rather than sociological ideals.

 

[JW Frogen]

Life is not an IQ test, it is a test of heart.

 

[IanC]

Life is not an IQ test, it is a test of heart.

Care to explain what the 'heart' thingy is, and how it works?

 

[Quantum Windbag]

Lots of people here disagree with me that intelligence is an important factor in day to day life, or that intelligence is one of the driving forces in earning money and accruing wealth.

here is yet another study showing how intelligence shows its influence in almost any area that is researched.

Cognitive Abilities and Household Financial Decision Making
Sumit Agarwala and Bhashkar Mazumder


We analyze the impact of cognitive skills on two specific examples of consumer financial decisions where suboptimal behavior is well defined: first, the use of a credit card for a transaction after making a balance transfer on the account, and second, cases where individuals are penalized for inaccurate estimation of the value of one’s home on home equity loan or line of credit application. We match individuals from the US military for whom we have detailed test scores from the Armed Services Vocational Aptitude Battery test (ASVAB), to administrative datasets of retail credit from a large financial institution. Our results show that consumers with higher overall composite test scores, and specifically those with higher math scores, are substantially less likely to make a financial mistake. Importantly no such effects are found for verbal or for most other component scores.

.....

Credit card holders frequently receive offers to transfer account balances on their current cards to a new card. Borrowers pay substantially lower APRs on the balances transferred to the new card for a sixto-nine-month period (a “teaser” rate). However, new purchases on the new card have high APRs. The catch is that payments on the new card first pay down the (low interest) transferred balances, and only subsequently pay down the (high interest) debt accumulated from new purchases.

The optimal strategy during the teaser-rate period, is for the borrower to only make new purchases on the old credit card and to make all payments to the old card. To be clear, this implies that the borrower should make no new purchases with the new card to which balances have been transferred (unless she has already repaid her transferred balances on that card). Some borrowers will identify this optimal strategy immediately and will not make any new purchases using the new card. Some borrowers may not initially identify the optimal strategy, but will discover it after one or more pay cycles as they observe their (surprisingly) high interest charges. Those borrowers will make purchases for one or more months, then have what we refer to as a “eureka” moment, after which they will implement the optimal strategy. Some borrowers will never identify the optimal strategy.

http://cfs.wisc.edu/Files/Working Papers/Agarwal-1.pdf

People who understand math are less likely to make math mistakes. I hope that whoever paid for this blindingly obvious study is satisfied. Only question I have, what makes you think this has anything to do wtih intelligence?

 

[sangha]

Life is an IQ test.

You work hard keep your nose to the grindstone, study before investing and you get you financial house in order and then if you LUCKY and don't get killed by some unexpected event or disease, you can feel supior to those who either didn't work hard enough, are stupid or who were just unlucky.

I have to tell yas that I am especially proud of having been smart enough to have been born in the USA to relatively middle class parents.

Yup, I have a lot to be proud of, don't I?

I am constantly amazed at how stupid people were who chose to be born in Haiti.

What were they thinking?!

speak up, don't be so wishy-washy. if you disagree, say it. if you think the accidents and coincidences of life are so overwhelming that character and intelligence are futile gestures towards Fate just say so.

Some people have the intelligence needed to understand that there is no magic formula for success. Logic and reason leads us to reject simple minded False Dichotomies like (It's either "character and intelligence is everything" or you believe "accidents and coincidences of life" are overwhelming

Those with intelligence know there are other options and see through your propogandistic false dichotomy.

 

[Sofus]

Lots of people here disagree with me that intelligence is an important factor in day to day life, or that intelligence is one of the driving forces in earning money and accruing wealth.

here is yet another study showing how intelligence shows its influence in almost any area that is researched.

Cognitive Abilities and Household Financial Decision Making
Sumit Agarwala and Bhashkar Mazumder


We analyze the impact of cognitive skills on two specific examples of consumer financial decisions where suboptimal behavior is well defined: first, the use of a credit card for a transaction after making a balance transfer on the account, and second, cases where individuals are penalized for inaccurate estimation of the value of one’s home on home equity loan or line of credit application. We match individuals from the US military for whom we have detailed test scores from the Armed Services Vocational Aptitude Battery test (ASVAB), to administrative datasets of retail credit from a large financial institution. Our results show that consumers with higher overall composite test scores, and specifically those with higher math scores, are substantially less likely to make a financial mistake. Importantly no such effects are found for verbal or for most other component scores.

.....

Credit card holders frequently receive offers to transfer account balances on their current cards to a new card. Borrowers pay substantially lower APRs on the balances transferred to the new card for a sixto-nine-month period (a “teaser” rate). However, new purchases on the new card have high APRs. The catch is that payments on the new card first pay down the (low interest) transferred balances, and only subsequently pay down the (high interest) debt accumulated from new purchases.

The optimal strategy during the teaser-rate period, is for the borrower to only make new purchases on the old credit card and to make all payments to the old card. To be clear, this implies that the borrower should make no new purchases with the new card to which balances have been transferred (unless she has already repaid her transferred balances on that card). Some borrowers will identify this optimal strategy immediately and will not make any new purchases using the new card. Some borrowers may not initially identify the optimal strategy, but will discover it after one or more pay cycles as they observe their (surprisingly) high interest charges. Those borrowers will make purchases for one or more months, then have what we refer to as a “eureka” moment, after which they will implement the optimal strategy. Some borrowers will never identify the optimal strategy.

http://cfs.wisc.edu/Files/Working%20Papers/Agarwal-1.pdf

This is probably why we didn't have to give a stimulus to Wall Street, they are so smart and never make mistakes!

 

[sangha]

looking at the graph it is easy to see so many of the social pathologies that are given as excuses for racial disparities seem to be intricatedly linked to intelligence.

there was an interesting blurb under the graph at this link

A meta-analysis (Hunter and Hunter, 1984) which pooled validity results across many studies encompassing thousands of workers (32,124 for cognitive ability), reports that the validity of cognitive ability for entry-level jobs is 0.54, larger than any other measure including job tryout (0.44), experience (0.18), interview (0.14), age (−0.01), education (0.10), and biographical inventory (0.37).

and

Some researchers have echoed the popular claim that "in economic terms it appears that the IQ score measures something with decreasing marginal value. It is important to have enough of it, but having lots and lots does not buy you that much." (Detterman and Daniel, 1989)

However, some studies suggest IQ continues to confer large benefits even at very high levels. Ability and performance for jobs are linearly related, such that at all IQ levels, an increase in IQ translates into a concomitant increase in performance (Coward and Sackett, 1990). In an analysis of hundreds of siblings, it was found that IQ has a substantial effect on income independently of family background (Murray, 1998).

This idiot is quoting Charles Murray, who wrote The Bell Curve, which was thouroughly discredited. Charles Murray even got the multiplication wrong in his "statistics"

 

[Sofus]

Life is an IQ test.

You work hard keep your nose to the grindstone, study before investing and you get you financial house in order and then if you LUCKY and don't get killed by some unexpected event or disease, you can feel supior to those who either didn't work hard enough, are stupid or who were just unlucky.

I have to tell yas that I am especially proud of having been smart enough to have been born in the USA to relatively middle class parents.

Yup, I have a lot to be proud of, don't I?

I am constantly amazed at how stupid people were who chose to be born in Haiti.

What were they thinking?!

What WERE they thinking!

 

[Sofus]

Life is an IQ test.

You work hard keep your nose to the grindstone, study before investing and you get you financial house in order and then if you LUCKY and don't get killed by some unexpected event or disease, you can feel supior to those who either didn't work hard enough, are stupid or who were just unlucky.

I have to tell yas that I am especially proud of having been smart enough to have been born in the USA to relatively middle class parents.

Yup, I have a lot to be proud of, don't I?

I am constantly amazed at how stupid people were who chose to be born in Haiti.

What were they thinking?!

What WERE they thinking!

I have it on my places to be re-incarnated!

 

[sangha]

speak up, don't be so wishy-washy. if you disagree, say it. if you think the accidents and coincidences of life are so overwhelming that character and intelligence are futile gestures towards Fate just say so.

I was too subtle?

Okay I think that if IQ were that important then the correlation between IQ and how people do in life would be much stronger than it is.

I think if IQ were the primary determining factor in how well off people were then Asia would never have been a shithole (because on average Asians are smarter than Euros by 10 points) and Europe would never have conquered most of the world. (because MOST of the world has IQs higher on average than most Euros)

I think that attempting to reduce individual fate or collective fates to ONE FACTOR is just dumber than hell,

Clear enough for you?

subtle is fine, but I find people often contest what is inferred.

you say the correlations for intelligence arent high enough. can you give examples of any other factors that are even remotely as high?

I have to disagree with you about most of the world being smarter than Euros. NE asians are the only large group that outscores them, by 5 to 8 points. And that is a significant factor in why they are becoming the world superpower now that they have adopted capitalist trading policies.

I fear you have mistaken what I have said when you build a strawman out of intelligence being the only factor in success. I say it is the single most powerful factor in social outcomes, with amazing predictive ability that increases as the groups that are being analyzed grow in size. For example, SAT scores are ridiculed for having fairly low correlation to freshman grades. But that is ignoring restriction of range issues, as well as the other issues of first year students. SAT correlation is much higher for fourth year scores. And if you look at students in blocks of 25 the correlation is over .5, in blocks of 100 the correlation approaches .9!

I understand your feeling that it is unfair that some individuals benefit from better genetic and cultural legacies but that does not change the fact that those who receive those gifts are typically more successful. Wishful thinking does not change reality. I am sorry that you find me unkind for speaking of logistical facts rather than sociological ideals.

I'm not surprised that someone who would quote a liar (ie Charles Murray) would lie himself. After all, if wingnuts didn't lie, they'd have nothing to say

"you say the correlations for intelligence arent high enough."

editec said noting of the sort. You just made it up

And your numbers come from the liar, Charles Murray

 

[IanC]

Life is an IQ test.

You work hard keep your nose to the grindstone, study before investing and you get you financial house in order and then if you LUCKY and don't get killed by some unexpected event or disease, you can feel supior to those who either didn't work hard enough, are stupid or who were just unlucky.

I have to tell yas that I am especially proud of having been smart enough to have been born in the USA to relatively middle class parents.

Yup, I have a lot to be proud of, don't I?

I am constantly amazed at how stupid people were who chose to be born in Haiti.

What were they thinking?!

speak up, don't be so wishy-washy. if you disagree, say it. if you think the accidents and coincidences of life are so overwhelming that character and intelligence are futile gestures towards Fate just say so.

Some people have the intelligence needed to understand that there is no magic formula for success. Logic and reason leads us to reject simple minded False Dichotomies like (It's either "character and intelligence is everything" or you believe "accidents and coincidences of life" are overwhelming

Those with intelligence know there are other options and see through your propogandistic false dichotomy.

No false dichotomy from me. Editec sarcastically said people were stupid to be born in Haiti and I asked him if he thought character and intelligence had no transformative power in people's lives. Why do some succeed despite poor conditions while others fail despite golden opportunities. More to the point, given normal circumstances why are some people more successful than others?

The OP studies a common problem with poor better and best solutions. Intelligence is highly correlated to the answer people choose. A penny saved is two cents earned after taxes but dull people are less likely to look after their money.

I find it inexplicable that so many here refuse to comprehend that day-to-day life is filled with hundreds of decisions that have poor better best answers that are driven by character and intelligence. Being able to think clearly, quickly, correctly and with an eye to future consequences definitely gives an individual an advantage over those with lesser abilities. It is so obvious that I can only assume that those who disagree with the concept just haven't actually given it any thought and are only regurgitating equalitarian dogma.

 

[IanC]

People who understand math are less likely to make math mistakes. I hope that whoever paid for this blindingly obvious study is satisfied. Only question I have, what makes you think this has anything to do wtih intelligence?

you don't consider being able to understand simple math concepts to be part of 'intelligence'? you're grasping at straws

 

[IanC]

A meta-analysis (Hunter and Hunter, 1984) which pooled validity results across many studies encompassing thousands of workers (32,124 for cognitive ability), reports that the validity of cognitive ability for entry-level jobs is 0.54, larger than any other measure including job tryout (0.44), experience (0.18), interview (0.14), age (−0.01), education (0.10), and biographical inventory (0.37).

and

Some researchers have echoed the popular claim that "in economic terms it appears that the IQ score measures something with decreasing marginal value. It is important to have enough of it, but having lots and lots does not buy you that much." (Detterman and Daniel, 1989)

However, some studies suggest IQ continues to confer large benefits even at very high levels. Ability and performance for jobs are linearly related, such that at all IQ levels, an increase in IQ translates into a concomitant increase in performance (Coward and Sackett, 1990). In an analysis of hundreds of siblings, it was found that IQ has a substantial effect on income independently of family background (Murray, 1998).

This idiot is quoting Charles Murray, who wrote The Bell Curve, which was thouroughly discredited. Charles Murray even got the multiplication wrong in his "statistics"[/QUOTE]

The Bell Curve was never discredited, unless you consider name calling to be evidence.

the study you highlighted-

A very large database in the United States contains information about several thousand sibling pairs who have been followed since 1979. To make the analysis as unambiguous as possible, I have limited my sample to brothers and sisters whose parents are in the top 75 per cent of American earners, with a family income in 1978 averaging £40,000 (in today's money).

Families living in poverty, or even close to it, have been excluded. The parents in my sample also stayed together for at least the first seven years of the younger sibling's life.

Each pair consists of one sibling with an IQ in the normal range of 90-110 ,a range that includes 50% of the population. I will call this group the normals. The second sibling in each pair had an IQ either higher than 110, putting him in the top quartile of intelligence (the bright) or lower than 90, putting him in the bottom quartile (the dull). These constraints produced a sample of 710 pairs.

How much difference did IQ make? Earned income is a good place to begin. In 1993, when we took our most recent look at them, members of the sample were aged 28-36. That year, the bright siblings earned almost double the average of the dull: £22,400 compared to £11,800. The normals were in the middle, averaging £16,800.

These differences are sizeable in themselves. They translate into even more drastic differences at the extremes. Suppose we take a salary of £50,000 or more as a sign that someone is an economic success. A bright sibling was six-and-a-half times more likely to have reached that level than one of the dull. Or we may turn to the other extreme, poverty: the dull sibling was five times more likely to fall below the American poverty line than one of the bright. Equality of opportunity did not result in anything like equality of outcome. Another poverty statistic should also give egalitarians food for thought: despite being blessed by an abundance of opportunity, 16.3% of the dull siblings were below the poverty line in 1993. This was slightly higher than America's national poverty rate of 15.1%.

Opportunity, clearly, isn't everything. In modern America, and also, I suspect, in modern Britain, it is better to be born smart and poor than rich and stupid. Another way of making this point is to look at education. It is often taken for granted that parents with money can make sure their children get a college education. The young people in our selected sample came from families that were overwhelmingly likely to support college enthusiastically and have the financial means to help. Yet while 56% of the bright obtained university degrees, this was achieved by only 21% of the normals and a minuscule 2% of the dulls. Parents will have been uniformly supportive, but children are not uniformly able.

The higher prevalence of college degrees partly explains why the bright siblings made so much more money, but education is only part of the story. Even when the analysis is restricted to siblings who left school without going to college, the brights ended up in the more lucrative occupations that do not require a degree, becoming technicians, skilled craftsmen, or starting their own small businesses. The dull siblings were concentrated in menial jobs.

The differences among the siblings go far beyond income. Marriage and children offer the most vivid example. Similar proportions of siblings married, whether normal, bright or dull - but the divorce rate was markedly higher among the dull than among the normal or bright, even after taking length of marriage into account. Demographers will find it gloomily interesting that the average age at which women had their first birth was almost four years younger for the dull siblings than for the bright ones, while the number of children born to dull women averaged 1.9, half a child more than for either the normal or the bright. Most striking of all were the different illegitimacy rates. Of all the first-born children of the normals, 21% were born out of wedlock , about a third lower than the figure for the United States as a whole, presumably reflecting the advantaged backgrounds from which the sibling sample was drawn. Their bright siblings were much lower still, with less than 10% of their babies born illegitimate. Meanwhile, 45% of the first-born of the dull siblings were born outside of marriage.

IQ Will Put You In Your Place

simple stuff from a govt database. I think the original study was done by someone named Li or Lee, who for obvious reasons requested to be left anonymous. Kids from the same background do better if smart, more poorly if dull. not exactly counterintuitive is it?