Sunday, April 23, 2006

IQ and PPP or procreation?

Corruption and economic freedom each provide considerably more insight into the wealth of nations than national IQ does. The individual correlates of the three variables with PPP, all of which are statistically significant, are .82, .75, and .60, respectively (using the most recent figures). When all three are run against PPP in a multiple regression, the correlation only nudges up to .83. Not surprisingly, controlling for corruption virtually eliminates the effect of IQ on a nation's PPP (IQ's P-value becomes .48, meaning it's a cointoss as to whether or not the relationship between IQ and PPP is random, although the questionable relationship still trends in a slightly positive direction, with each additional IQ point leading to a $68 increase in PPP compared to $1,825 when corruption and economic freedom are not considered).

Economic freedom also becomes much less important (P-value of .18), although it is a pretty good proxy for the corruption index (which hones in more on IQ). After controlling for IQ and economic freedom, each point on the Transparency International Corruption Index (scaled with ten being squeaky clean and zero showing absolute corruption) ups PPP just over $3,300, down from $4,300 without controlling for IQ and economic freedom.

Corruption and IQ are inversely correlated of course (with an r of .68). Thus IQ "explains" about 46% of the variance in corruption levels and viceversa. But there's more to do with PPP in the 54% remaining on the corruption side than on the IQ side. It appears, then, that IQ likely helps goad citizens into collectively demanding rectitude in business and politics but that realizing such rectitude is significantly more important than IQ, at least at the national level.

I add the caveat because I suspect globalization is a steroids for corruption and a sedative for national IQ. As MNCs and entrepreneurs increasingly expand overseas, they play a correspondingly larger role in the economic development of the host country. They pour investment in, create local jobs, and help open up external markets. Foreigners with high IQs make dull nations wealthier. If a military junta threatens to take control or lots of grease is required to get the gears to turn, however, the MNCs and other business entities are hesitant to enter. So a lack of corruption lets in smart people who augment the nation's wealth without raising its IQ. IQ is still a powerful force, but the way it's been measured isn't optimal (for PPP anyway). The UAE epitomizes this (found here):

In the UAE as a whole, with a total population of 2.5m, nationals are outnumbered seven to one by mainly non-Arab aliens: 1.2m Indians, 600,000 Pakistanis, 100,000 Iranians and contributions from dozens of other nations, including 50,000 Britons. In Dubai, nationals fall to a mere 8% out of a million-plus.
The IQ tests Lynn and Vanhanen used span a long period of time. Presumably, the test results were not found by testing foreigners. How much, then, does the IQ of the natives matter in the UAE? By letting in big corporations full of sharp people, the UAE is doing more for its PPP than taking a magic pill to boost its IQ from an estimated 83 to a Russian 96 would do if the pill's side effects included Russia's level of corruption and state control.

The UAE, as a quasi-corporate-owned state, is an extreme example, but globalization is trending us toward more of them. In a critique of Lynn and Vanhanen pointed out to me by John Bolton, we see that IQ correlated with PPP at .76 in 1998 while economic freedom correlated with IQ at only .68. Recall from above that those correlations have now basically swapped positions. I haven't found corruption data for 1998, but I suspect its correlation with PPP has increased over the same time period that the link between IQ and PPP has been attenuated.

The second paranthetical caveat is due to the variables for which a nation's IQ definitely can shed some enlightenment--making babies and dying. Births per woman correlates with IQ at .81. Life expectancy correlates with IQ at an astounding .85. Economic well-being and the number of doctors per capita don't hold a candle to IQ. The correlation between both of these together and life expectancy is only .72. When IQ is controlled for, PPP loses statistical significance and doctors per capita loses 80% of its correlation strength. This is, incidentally, the highest single variable correlation with national IQ I've yet seen--are there any others that are stronger?

Taking births and life expectancy together yields a correlation with IQ of .88. Controlling for one does not eliminate the statistical significance of the other. My theories on why:

-Smart people take better care of themselves. They are more likely to engage in healthy eating habits, exercise regularly, and get enough sleep, less likely to partake of behaviors they know to be damaging, etc. Seeking out this information and understanding it takes some level of intelligence. And because the benefits are long-term in nature, duller people are less likely to engage in them.

-As for births per woman, I've expounded a little on this before. Bearing and raising children takes an enormous amont of time. Smarter people are more likely to grasp the commitment required in producing offspring. These smart people have a perpetually growing number of other options that require a prodigious commitment as well. They can blog, day-trade, game, travel, program, learn an endless amount about an endless number of subjects via the internet, etc. Duller people, even with more money, are less likely to be self-starting in these activities and less likely to fully grasp how having children will hamper their ability to partake in the same activities. So the distractions of a high IQ society do not deter them as much from having urchins.

(Human Biodiversity)

19 comments:

Steve Sailer said...

Corruption correlates, I would imagine, with lack of wealth-creation. As a friend from West Africa told me long ago, the big problem there is that the government is the only source of wealth in the country, so all the most financially ambitious people are either in the government or bribing the government.

It's like the Catholic Church in 1500 -- it was the biggest quasi-meritocracy going, so Rome was full of highly financially ambitious men. When you have more "careers open to talent" elsewhere, the Church stops attracting so many of the greedy.

savage said...

Make a society more free and it will become wealthier. Do I dare accuse of being neocon?

Anonymous said...

what is PPP?

crush41 said...

Steve,

And like the Confucian exam system in China stretching back as far as the Han Dynasty.

The inverse correlation between economic growth and corruption is a moderate .28. But poorer countries have more growth potential, which dilutes the relationship somewhat.

Savage,

That's simply what happens. And poorer countries stand to gain most from instituting a transparent, pro-business climate, at least in terms of total economic output.

But that's not to say it is in our best interest. Ending corruption appears to be a solid step in pulling third-world nations out of per capita destitution. Developing countries tend to be unstable like underdeveloped ones but with a much greater impact on global stability (China, India, Iran, Venezuala are where the exciting stuff's happening right?) than the Sudan is going to have. And the MNCs that help give the poorer nations more economic clout risk confiscation as wealth gaps grow and nativist populism blossoms (in a leader like Chavez or Ahmanjihad sort of).

Anon,

Purchasing power parity is a pretty solid way of measuring real buying power (although it's not perfect).

JSBolton said...

Economic freedom and corruption indices are subjective in a way that life expectancy etc. are not. Someone who makes a corruption index, or an economic freedom one is likely to believe that his factor is the causal one. There are a hundred opportunities for importing the variation in the variable to be explained, in an economic freedom index, for example. One of the items on the checklist might be a stock exchange; mighn't this more often be a consequence of per capita income than a cause? Likewise a well-developed legal system, which allows for enforcement of contracts or property titles.

JSBolton said...

Suppose that a simple economic freedom index of the type used formerly, combining two or several overriding factors were used; does any correlation show? Suppose one of these is public expenditure as a percent of total income, and this is multiplied by percent of nationalized industries' share of total production. Combine number of occupations requiring licensure, or the proportion of the legal code devoted to business regulation, so long as you have objective factors which do not require higher per capita income in themselves, there should be expected no great correlation. Rich countries are highly regulated, poor ones use more direct, predatory methods.
Even so, extremes of socialism will no doubt suppress production regardless of quality of population.

Anonymous said...

Crush41: No wonder I'm confused. PPP is a theory. How can something correlate with a theory? It can correlate with a metric, but the PPP implies an ambiguous metric (eg, the Big Mac Index?).

crush41 said...

John,

But if economic freedom is a proxy for the high IQ that's actually creating the increase in PPP, wouldn't you expect IQ to correlate more strongly with PPP than economic freedom or corruption?

Take a look at how the EF index is computed: These methods of measurement, with the exception of banking and finance and to some extent monetary policy, do not appear to be contingent upon a necessarily bright or developed society.

crush41 said...

Anon,

I'm hardpressed to find a better method of measuring real buying power. The Big Mac index does measure something real, but it is less useful than PPP, even though the latter is more theoretical.

The idea of extended market equilibrium is only a theory, but we can correlates lots of useful stuff with it.

Further, if there is a correlation--in this case a very strong one--the variable clearly is showing us something. If wealth measured in PPP correlates with IQ at .60, we would expect a more accurate measure of wealth (whatever that might be) to correlate with IQ at a rate higher than .60.

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Anonymous said...

crush41:
I'm all for anything that works, it's just that, as a PhD economist, I don't know what a "PPP" is other than a theory, and it makes no sense to say something is correlated with "covered interest rate parity" or "weak-form efficient markets". I think this is a semantics issue. What exact "PPP" are you talking about (other than the theory, because that isn't a number, just a relationship)?

crush41 said...

Anon,

It's the best estimate we have of standardized real wealth, computed by looking at what various goods and services are valued at in the US. Of course it is subject to estimates, but it's more accurate than say OER comparisons that are more volatile (and can be manipulated). What do you put in place of GDP (PPP is just GDP per capita)?

As a PhD economist, what metric would you employ to make real wealth comparisons across countries?

Again, that the correlation between PPP and a host of other variables is statistically significant and quite strong suggests it is not meaningless. The more accurate the measure, the stronger those correlations are almost certainly going to be.

JSBolton said...

Exchange rate comparisons have some function, in that the more important of these have to be funded somehow. I believe that the economic freedom causation is real and important, but that it operates over long periods, not so much short ones, and such that its shorter-term effect can easily and propagandistically, be exaggerated, by measuring that which flows from additonal increments of per capita income.

JSBolton said...

I don't know if it's been suggested, but you could have causal influence flowing from large family size to corruption. When you're from a large family, and your parents were also, you're more likely to have needy relatives who will demand that you make government work for them in the corrupt and nepotistic way.
A scholar deploring 19th century corruption 100 years ago, warned against 'politicians with needy friends'. Having multitudes of needy relatives would seem to be even more of an endangerment, in this connection.

crush41 said...

John,

Interesting. Clearly births per woman serve as a proxy for family size, and this inversely correlates with both IQ and corruption (although more strongly with IQ). The nuclear family has certainly been important in the West's advancement over the rest of the world.

I will try and find solid data on family size by country.

JSBolton said...

Temperature, skin color, per capita income, and IQ: An international perspective

Donald I. Templer and Hiroko Arikawa

The impetus for our study was the contention of both Lynn [Lynn, R. (1991). Race differences in intelligence: A global perspective. Mankind Quarterly, 31, 255–296] and Rushton [Rushton, J. P. (1995). Race, evolution and behavior: A life history perspective. New Brunswick, NJ: Transaction; Rushton, J. P. (1997). Race, intelligence, and the brain: The errors and omissions of the revised edition of S.J. Gould's the mismeasure of man. Personality and Individual Differences, 23, 169–180; Rushton, J. P. (2000). Race, evolution, and behavior. A life history perspective (3rd edition). Port Huron: Charles Darwin Research Institute] that persons in colder climates tend to have higher IQs than persons in warmer climates. We correlated mean IQ of 129 countries with per capita income, skin color, and winter and summer temperatures, conceptualizing skin color as a multigenerational reflection of climate. The highest correlations were − 0.92 (rho = − 0.91) for skin color, − 0.71 (rho = − 0.75) for mean high winter temperature, − 0.61 (rho = − 0.68) for mean low winter temperature, and 0.63 (rho = 0.74) for real gross domestic product per capita. The correlations with population of country controlled for are almost identical. Our findings provide strong support for..." this is from Dienekes, end of 12-05.

crush41 said...

John,

What is meant by a multigenerational reflection of climate? That is an incredibly strong correlation, but I'm not sure what it means.

That temperature so strongly correlates with IQ seems to evince what Philippe Rushton has suggested. Having trouble finding average temperatures, I correlated IQ with distance from the equator. It correlates with IQ at .69--not surprising because the two are rough proxies for one another.

JSBolton said...

I think multigenerational means that the correlation is with ancestral, rather, than current, environment.
What hasn't been done, that I know of, is the correlation from skin color to per capita production of countries.
Genetics would be implicated if the correlation were stronger between coloration and per capita output, than that between IQ and production per person.
Alternatively, the left could infer a global, world-historical conspiracy, or unconscious 'conspiracy' to favor nations for investment, according to their national average coloration.

crush41 said...

That's sensible. The stronger correlation between ancestral geography and IQ versus contemporary geography and IQ coming from the movement of northwest Europeans to the US, Australia, Canada, etc and other migratory/foreign market-dominating ethnicities.