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Is America smart enough? In his new book, Hive Mind: How Your Nation’s IQ Matters So Much More Than Your Own, economist Garett Jones explores the important role of national IQ in creating national prosperity. I recently sat down with him to discuss how exactly a country’s cognitive firepower translates into a better economy — and what we can do about it, if anything.

Jones is the BB&T Professor for the Study of Capitalism at The Mercatus Center, and associate professor at George Mason University. He has worked on Capitol Hill, and has contributed to C-Span’s Washington Journal, the Washington Post, The Wall Street Journal, Bloomberg Business Week, Fox Business, and theNew York Times. He holds a BA from Brigham Young University, a MPA in Public Affairs from Cornell University, a MA in Political Science from UC-Berkeley, and a PhD in Economics from UC-San Diego.

Here are edited excerpts of our conversation, which is available in its entirety via my podcast at Ricochet.

James Pethokoukis: You identify a paradox, as you say, in IQ: knowing a person’s IQ doesn’t tell you a lot about how much money he earns. Yet nations with very high test scores are far more prosperous than those with low test scores.

Jones: Well, part of it comes from the fact that almost nothing predicts any individual person’s wages that well. People are diverse. But when it comes to IQ in particular, an average person’s IQ has only a moderate relationship with that person’s wages.

IQ tests are usually measured in terms of points. Your IQ is measured in terms of IQ points, so in the US we’ll call the average IQ 100 and people at the 97th and 98th percentile will have an IQ of about 130. So one IQ point on average only predicts perhaps 1% higher wages for the typical person. A lot of estimates are actually much smaller than that, perhaps half that.

So if one IQ point is only predicting half a percent higher wages or 1% higher wages, then we’re saying that when people’s IQs differ by 30 points, which is quite a bit, that covers about two-thirds of the U.S. population, the 30 IQ point difference.

But that right there might predict maybe a 30 or 35% wage gap. You have neighbors living on your own street who earn 15% more or 15% less than you and you probably wouldn’t guess who they are. So these kind of moderate differences in wages are what people usually find when it comes to IQ.

Now, one can endlessly debate what is a big difference and what is a small difference. But my real point of comparison is looking at differences across countries. When you look across countries, the difference in IQ scores is about the same range, maybe 30, maybe 35 points, depending on who’s looking at it –if you look between the highest, the richest countries and the poorest countries.

And there, we’re talking about differences in living standards on the order of 800%. We’re talking about huge differences in living standards across countries. So countries differ massively in their living standards, whereas you and your neighbors differ only moderately in living standards.

What would be some examples of high IQ countries and their living standards and what would be the low IQ countries? And how do we even know? Do they give IQ tests across a range of countries or are we looking at other tests as stand-ins for IQ tests?

Well, actually, I start off the book [by] reporting tests that aren’t IQ tests at all, partly because I want to win over my readers by showing them these results are really broad.

A group of psychologists, Rindermann, Sailer and Thompson, did some great work pulling together these international math, science and literacy tests that you hear about in the news every so often. And they standardized them a bit and turned them into what they call cognitive ability scores.

It turns out that these cognitive ability score estimates differ widely across countries. East Asian countries are at the top. You find out that Singapore, elite parts of China, Japan, South Korea, these places tend to be the places that do the best on these tests on average. And the lowest scores on these kinds of tests tend to be found in sub-Saharan Africa. This is also what’s found with IQ tests – that the highest IQ type test scores are in East Asia, the lowest on average are in sub-Saharan Africa.

In chapter two of the book, I present a debate between rival groups of psychologists on this question of whether those test scores, especially in sub-Saharan Africa are reasonable estimates.

And in broad, general terms, the authors from both camps seem to agree. Currently, cognitive skills on average are lowest in sub-Saharan Africa. That’s why it’s important to find ways to raise those cognitive skills.

Are IQ tests really telling us something extraordinarily useful about people’s cognitive ability? And if there are multiple abilities, don’t we have to look different kinds of IQ tests? Or is there one standard test?

That’s actually one of my favorite bits in chapter one — which people can read for free on the Stanford University Press website if they like. I actually discuss the debate about emotional intelligence or social intelligence. It turns out that IQ is a pretty good predictor of emotional intelligence.

Part of what this comes from is the fact that cognitive skills predict cognitive skills. People who are better on the math parts of an IQ test tend to be better at the verbal parts of IQ tests. So our parents and grandparents often told us that life is fair and things balance out in the end. That’s not true when it comes to cognitive skills.

I refer to this as the Da Vinci effect in the book – the idea that when you’re excellent in one area, that’s a reasonable predictor that you’re at least above average in other areas. This is the most – perhaps the most robust finding in all of cognitive psychology – skills predict skills, weaknesses predict weaknesses, not perfectly but moderately.

That’s part of the reason why psychologists and economists alike, when we want to find somebody’s average cognitive skill set, you just give them one test, and that can be an OK stand-in, not a perfect stand-in, but an OK stand-in for their broader set of skills. Economists are used to using these shortcuts. I mean, if you’re using this crummy number called GDP per person to try to say whether a country’s rich or poor, I mean, that’s terrible. But it’s something we all do and we’re used to it on a regular basis.

Certainly if you went to college, you may have taken the SAT test. Is that a kind of IQ test?

I’d say for people who’ve been to a decent American high school or someone who had something like that experience, then an SAT is a moderately good IQ test. It appears perhaps that the older versions of the SAT were more like an IQ test and now they’re a little bit less like one. They’re a little bit more like an achievement test.

But still, if I know your SAT score and I know that you’re somebody who went to a sort of somewhat adequate American high school, I can do a much better than average job predicting your IQ score on a much fancier, more sophisticated IQ test.

We’re also looking at nations with different test scores and how prosperous or perhaps poor they are. And nations with high test scores are far more prosperous than nations with low test scores.

Yes.

Might it be because economic development comes first, that nations get prosperous and that raises the test scores? Do we understand that causality properly?

This is not a question of reverse causation. It’s really a question of joint causation. So it’s a lot like the relationship between health and income across countries. We all know that if you get healthier, you probably can do more work. But we all suspect that if your nation becomes richer, especially if you’re looking at the poorest nations, if your nation becomes richer, people get healthier. So health causes the productivity, productivity causes health. We’re used to this idea of join causation.

The heart of my book is arguing that a substantial portion of the relationship between IQ and prosperity is group IQ causing group prosperity. So I certainly believe, and I provide evidence in chapter three, that whereas nations get richer, they get healthier, and as they get healthier, people’s brains develop because the brain is just a part of the body.

Looking at how improving test scores or how higher test scores translates into a more prosperous nation, what are the channels we’re talking about?

I sum it up in the introduction actually, the five channels of the hive mind. Smarter people on average are more patient and if people are more patient, they save more, and that means there’s more capital within your country to fund purchases of homes, computers, office buildings, factories.

The second channel is that smarter groups are more cooperative. There’s a variety of experimental and non-experimental research suggesting that smarter groups cooperate more. And a whole lot of the problem of politics and a whole lot of the problem of corporate organization is getting people to collaborate, getting people to think win-win.

The third channel is that smarter groups tend to be better informed voters. There’s moderate evidence that they tend to be slightly more laissez-faire, slightly more pro-market in their attitudes. Smarter people are more likely to see the invisible hand, I think. And they just tend to be better informed.

One way to discipline your government is to just remember what’s happened over the last couple of years. Better informed voters are important, and IQ tests are one useful proxy for picking up whether your voters are informed.

The fourth is that a lot of modern productivity is working on these delicate projects, team tasks, where if one thing goes wrong, the whole project can literally blow up. There’s a great model by Michael Kremer of Harvard showing how in settings like this, skills will have massive payoffs to the group and open up vast new technologies. So small differences in test scores, small differences in cognitive skills could lead to vast effects on productivity.

Then the fifth channel that multiplies all the four is the peer effect. The routine finding from sociology, anthropology, econ, is that we tend to be a little bit like. We become a little bit like the people around us. So if you’re surrounded by people who are a little smarter, a little more patient, a little better informed, you yourself are likely to become a little smarter, more patient, better informed. So your peers matter at least a little bit everywhere.

So what is the relationship between your national IQ score and higher GDP growth or higher productivity growth? Is it an income effect or a productivity effect that then creates higher income?

I tend to think of it really as a productivity effect. And the one that I’m most interested in is the institutional effect, the idea that human capital is a key ingredient for building good institutions. Good institutions, countries with low corruption, countries with somewhat competent government, countries that support support markets and competition to a moderate to strong degree. These are policies that are easier to get when you have voters, politicians, bureaucrats who have on average higher cognitive skills.

So that’s one where you can see how once you build a network, once you have a system, once you have a set of institutions in your country that are moderately more laissez faire, moderately less corrupt, you can see how that helps any individual person who wanders into the country.

That makes that a person more productive. A migrant who comes to the US or to France from a much poorer country instantly becomes more productive once he crosses this invisible border. Part of that, not all of it, but part of it comes from as a side effect of human capital.

What explains those vast differences between a low-income country with a lower hive mind collective IQ and the higher income, higher IQ countries? Is it because they’re poor?

Where I tend to focus in the heart of the book is on the experimental evidence and partly the theoretical evidence, the theoretical arguments for why it is that a higher IQ should matter.

Daron Acemoglu, a great economist – he’s going to win a Nobel Prize someday — wrote a great paper once called “Why Not a Political Coase Theorem.” And he was trying to answer the question: why is it that governments find it so hard to bargain to win-win outcomes, where both the entrepreneurs and the government can collaborate? Why are we trapped in a world where there’s occasionally places like North Korea, where there’s one person on the top getting all the pie, but it seems like couldn’t he just cut a deal with the populous where both sides can win, where the masses can get richer and he get richer too?

Part of his story and his model is patience. If politicians are more patient, they’re more willing to wait for the reward. They’re more willing to say, hey, I’m going to let these entrepreneurs invest in a project that may pay off 10, 20 years from now, and I’m just going to tax them a little bit all the time. Instead, many politicians just tend to swoop in and grab all the pie right now.

Since there’s a variety of IQ experiments showing that smarter people tend to be more patient, I argue that countries with smarter politicians, higher IQ politicians, higher IQ bureaucrats on average are going to be more patient. They’ll be telling each other, hey, let’s just – let’s just grow the pie a whole and then just tax these guys, and that’s a better way for us to make money than to just to try to grab it all now.

So that’s one theoretical channel where you have a bunch of literally dozens of experimental studies showing that high IQ people tend to be more patient. And you’ve got a powerful economic theory that explains why you’ll get better politics if your politicians are more patient. I plug those two together and I say, this is part of the reason; not the whole story, part of the reason why high IQ countries tend to have better governments.

What is the United States’ score?

We’re pretty good. Toward the end of the book I have a data appendix, and I only report data from where there are two separate estimates for the country’s test scores. The IQ score for the US is usually about 98, just a little below the UK. And so that’s right around the top 10%, maybe top 15% of the world’s average IQ scores. And the US always outperforms what you’d expect by a variety of measures. The US seems to be just a little bit magical by a lot of estimates.

Agreed. So what explains the fact that we score as high as we do?

That’s a great question. And it’s – let me dodge it in an interesting way by pointing out that by just doing a raw demographic breakdown, it turns out that the highest scoring regions of the world tend to be either in East Asia or its offshoots or northwestern Europe and its outshoots. So for reasons that are still poorly understood, those places tend to have the highest test scores.

And the US and Canada tend to be populated, overwhelmingly populated by people who are from northwest Europe with some folks from East Asia. And you can get a rough estimate of the US’s average IQ score just by looking at the weighted average of test scores in northwest Europe, test scores in East Asia, test scores in Latin America. So the US is a composite nation, and our scores seem to reflect that.

We can find ways to raise scores, but that’s the way it looks right now.

Anytime you’re talking about IQ, wondering how much is the environment, how much are genetics, are there ethnic or racial links? Amazingly controversial.

It is, yes.

To what extent did your book delve into those issues? ,

This isn’t a book about where IQ comes from. It’s a book about where your nation’s IQ takes you. So I really did write this book to say: here’s why IQ matters vastly more than you think it does. And it matters more than even a lot of the pro-IQ people think it does.

That’s really where I figured I could add unique value. But in Chapter Three, I do discuss what Jim Flynn has to say about this. So Jim Flynn is the man who discovered what we now call the Flynn Effect.

Jim Flynn’s a philosopher and back in the late ’70s, he got very interested in this debate over whether IQ differences across so-called races were genetic. Flynn himself was a man of the left. He’s been involved in progressive politics his whole life. I’ve been fortunate to meet him twice. He’s a fascinating person.

He read some research by Berkeley’s Arthur Jensen. And Arthur Jensen became convinced that IQ differences across demographic groups, across so-called races, were heavily, not 100%, but heavily genetic in origin. Flynn did something unique. Flynn decided to disagree with Jensen not by calling him names, but by actually constructing an argument.

So Flynn and Jensen created together one of the great intellectual debates of the 20th century. And one of the things Flynn found along the way is that IQ scores have been rising across time across all the rich countries. There’d been scattered data pointing to this before, but people had not really pulled it all together. And he wrote a first paper on this. And the title of it was called “Massive IQ Gains in 14 Nations.” Great paper.

This let people know that there were big increases in IQ across time – too big for anybody to plausibly argue that they were genetic at all. It had to be environment.

People don’t change that fast.

Indeed – people don’t change that fast. People try to run the numbers – no way. And in particular, the IQ gains came on the most – often, not always, but often came on the most abstract parts of the IQ test, the most visual – the most weird visual finding pattern stuff, not stuff you’re learning in school. So it seemed to Flynn –

It’s not just more people were being educated in schools and got better. Is that what you’re saying?

At least not in any kind of direct way at all. Because it’s not the things you’re practicing in school that people seem to be getting better at. Flynn’s made a point of this over the decades. So IQ gains seem to have a very strong environmental component. So Flynn is a man who has fought for decades saying, “I disagree with Arthur Jensen and his genetic story, but I disagree with it on the basis of data and theory, not ideology.”

So that said, he says, “I’ve knocked down a lot of genetic stories across the decades. It would be nice to actually do some serious, rigorous human genome type results to knock this down once and for all.” But he says, if it’s up to American universities, this research will never get done. And he personally is convinced that the average American professor who works in this area is convinced there are genetic differences in IQ across races. And that’s the reason the research will never get done. They’re afraid of what they’ll find.

So what I think about this topic isn’t nearly as interesting as what Jim Flynn thinks the average American professor thinks about this topic. So Flynn is a man who, again, a man of the left, who thinks these differences are overwhelmingly, perhaps completely environmental in origin. And he thinks that’s an argument for how we should change our way of thinking about IQ. But he himself thinks that a lot of American professors think there’s some uncomfortable findings that will occur if we start doing more research into the genetics of IQ.

So this is about academic freedom, professors worrying about getting tenure and whether it’s worth the heat to do that kind of research.

Thing is that’s incredibly important to make research, to make progress in this area if we’re going to raise IQ scores in the poorest countries. The way science often makes progress is just digging into all of the data for a long time. Maybe it’ll turn out the best interventions are educational. Maybe it’ll turn out the best interventions are in public health. Maybe it’ll turn out the best interventions are medicinal. Are there pills that people should be taking? Who knows? The reason I have to say “who knows” is because there just isn’t very much work in the area. If this were as important as cancer research, we’d have a lot of answers by now.

Some experts believe that as the economy becomes more automated, if you have high cognitive capabilities, you’ll do just fine in that kind of economy. If not, you’re not going to do as well. What can we do to raise IQ scores?

Well, if we’re looking at the very recent trends over the last couple of decades, there is not much evidence that there’s been a bigger return to IQ than there used to be. I think there’s moderate evidence that there’s actually an increase in return to personality-type skills.

One of my colleagues one said offhand a line that I think others have said, which is that 90 % of success is staying off the Internet. And I think there’s something to this idea that the return to personality-type measures is probably a lot higher than it used to be. Agreeableness, conscientiousness, especially in certain settings. I’ve looked at the normal statistical results and they don’t find an increase in return to IQ in recent decades. But there’s a couple of studies out there that do find an increase in returns to what they call non-cognitive skills.

I think personality might be mattering more. If the robots are going to take some jobs, they’ll probably be taking a lot of brainy type jobs. But they’re going to be a little behind the times when it comes to personality. And a lot of in-person services are going to depend on personality traits.

But it’s not a huge leap to imagine a US economy in 25 or 50 years, where I’d much rather have a 160 IQ with amazing math skills.

Let me break it down this way. A lot of IQ researchers break down intelligence into two big factors: fluid intelligence and crystallized intelligence. So crystallized intelligence is basically the list of stuff you know, including mental tricks, like learning how to do long division. That’s a form of crystallized intelligence – the set of tricks you use to do division.

Then, there’s fluid intelligence, which is closer to what a lot of psychologists like to think of as intelligence. I think it is James Thompson, the psychologist, who says something like intelligence is what you need when you don’t know what you need. It’s that ability to solve new problems.

So Google and its many spinoffs replace a lot of the need for crystallized intelligence. But the need for fluid intelligence is going to be with us for quite some time. The ability to look at a new, novel situation and figure out what’s going on here.

Some pro-IQ supporters, especially on the Internet, tend to think that there’s this some kind of cutoff where above a certain level IQ matters a lot. Below it, it doesn’t matter very much. And I just don’t find evidence of that. I think that there’s a reason why the market pays for IQ, for higher IQ across the range of the scores. It’s because it’s always good to have somebody around who can just look at an ambiguous situation and figure out what’s going on.

Do IQ scores measure that fluid intelligence? What are they actually measuring?

It really depends on what kind of IQ test you’re taking. The one that economists like to use — because it’s quick to give people — is the Raven’s, which is a visual pattern finding test. You’re giving basically eight elements of a pattern and your job is to complete the pattern through multiple choice. And that is a very strong predictor of your overall fluid intelligence. Whereas, another IQ type test, vocabulary, like a simple vocabulary test, is a crude IQ test, but that’s measuring more crystallized intelligence. There’s a trivia question part of some IQ tests. That’s measuring crystallized intelligence.

So there’re parts of a big IQ test that’ll be weighted toward the fluid and other weighted toward the crystallized. Skills do tend to predict skills, but if I were trying to build a research agenda, I would try to build a research agenda around finding ways to raise fluid intelligence.

So I guess I’d rather live in an economy with a higher number of people with a higher amount of fluid intelligence, and that would make us a higher income, higher prosperity country.

So you’re talking about Singapore then?

OK, Singapore then.

Singapore has average test scores by any measure but they’ve chosen an immigration policy that highly favors high achieving immigrants from around the world… If you’ve got great skills, you can come to Singapore. And the fact that they’ve built their immigration policy around that is something worth thinking about in the future. Quite a few countries have followed these high-skilled policies.

So you can import these people? Or you can try to ‘build your own’? Is there a research agenda that governments should be involved in to try to raise perhaps both kinds of intelligence? Raising intelligence across the board and creating an elite race of super intelligent people? I think I read something about China trying to do that.

Realistically, everyone would like their kid to be just a little bit smarter. A lot of people would be willing to do a little bit to make sure their kid is not at the very bottom of the class.

So just imagine a generation of people saying, “What can we do to make sure our kid isn’t at the bottom of the class?” And if you imagine generations of people saying that, that’s a lot of small changes that add up. Even like in science, we could be talking about generations of mild tinkering – nutrition, sending your kids to the right pre-schools… Some of these will work, and some of them won’t work. But if you can find ways to credibly raise skills in small ways across decades, it will show up in politics.

Let the Flynn effect continue to do its work.

But in a way some of the Flynn effect will be human created. People will say “hey, let’s see what interventions we can do to make our kid just a little bit smarter, or at least not at the bottom of the class.” Anywhere in America, people can understand why it would be nice to have some kind of intervention so your kid is not at the bottom of the class. Nobody’s going to object to that on political grounds.

So if someone proposes a medical change and says “we can guarantee your kid will have a 140 IQ,” there will be people enraged. If instead the interventions were, “let’s find a way to make sure your kid will have an IQ no lower than 90…”

Why do you think people would be angry if people thought there were an intervention that would raise a kid’s IQ from 110 to 140?

It sounds weird. I mean, think of how people thought of in-vitro fertilization when it first came around. When something’s new…

If people are pretty worried about whether their kid is going to get into an elite college, it may offset the weirdness factor. More people might be willing to say, “What time is the appointment, Doctor? We can be there at 8 am.”

Yes maybe there’s a lot of people on the Upper East Side that would be willing to push for that, a lot of neighborhoods in Los Angeles, Southern California, Silicon Valley, I can imagine people pushing for it. As long as they don’t have to push for it publically, as long as they don’t have to be the first or second or third person doing it.

Now we are creating our sci-fi screenplay where we have our financial elite and we have the people who will pay whatever it takes to make their kids, well maybe not super-smart, but maybe super weird.

Back in the ‘90s when the internet was coming around, there was a growing concern that there would be a digital divide between the haves and the have-nots, or as they used to call it, the Information Superhighway Haves and the Information Superhighway Have-nots. And I think we know enough now that that has basically collapsed. Most technologies tend to be things that the elites get first, but give it ten, maybe twenty years, and it diffuses everywhere. If not everywhere then just about everywhere, 2/3, or 3/4s, 80 or 90% of the economy.

I went looking for this data recently on smartphones, and smartphones are incredibly diffused through the economy — not so much among the elderly, but the moderately poor and young in America are incredibly likely to have smartphones. It’s mostly a phenomenon of the elderly. Something like that would happen with anything. People are doing it with “super-preschooling” now, and it’ll happen – if medical research pans out- in other areas as well.

It sounds like having policy makers actually think about policies in terms of “Is this a pro-IQ raising sort of policy?” is something we should be doing to more broadly increase American wealth and productivity.

Yes, looking at broad-based measures of human capital. Not years of education. Years of education is terrible measure of human capital. Look at broad-based test scores to get a sense of where a country’s economic future is heading. The policies of places like Canada, Hong Kong, New Zealand, Singapore, these are the kinds of models that should get a serious look.

You mentioned immigration, but also what would be other policies?

I do not know so much what they do in other areas, but those countries do focus on it more or less explicitly with their immigration policy. Also in particular broad-based public health measures.

I think the obsession with years of education really needs to end, and there should be an obsession with broad-based test scores. I think the obsession with years of education really needs to end. And there should be an obsession with broad based test scores. If people don’t want to use IQ scores, that’s fine. But they should at least be looking at broad based test scores, things like the NAEPs, other test scores that the US government is quite happy to report on the Department of Education’s website. These should be the measures we look at. We should be looking a lot less at years of education.