The disovery of the connection between IQ and per capita income by country was ground-breaking. But there is another correlate of national IQ, and it's even stronger than per capita income: The correlation between IQ and number of births per woman. The correlation is, not surprisingly, inverse. Running the numbers yields an r of .81 (r-squared of .65--see chart below).
I haven't read Vanhanen's and Lynn's tome, but I understand that the r for IQ and PPP was found to be .73. Taking the same IQ scores and running them against the most recent PPP estimates yields an r of .60 (r-squared of .36)--moderated, perhaps due to the recession a few years back and the abrupt climb in oil prices that have bumped up the PPP in the moderately low IQ Middle East, but still significant. So IQ "explains" about one-third of national per capita income and two-thirds of fecundity. One notable difference in the correlations between IQ and PPP versus IQ and births is that East Asia doesn't conspicuously outly in the latter like it does in the former. Babes from Hong Kong average less than a single birth (.95 per woman)--and the place is also the IQ apex (107).
We are taking a deleterious dive. Liberalized economies open up opportunities for careers, travelling, education, birth control, economic independence for women, etc. Making babies has always been an option, but now more than ever there's more desirable alternatives for sharper people. Wealth is tied to IQ, but the correlation between PPP and fecundity is considerably weaker (r of .55, r-squared .30) than it is between IQ and fecundity. The driver appears to be IQ. Women in countries with abundant natural resources but moderate IQs (Middle East most saliently) do not have as much cerebration to keep them from having babies. Religiosity, independent of IQ, is probably correlated with having kids as well.
What to do to counter this trend?
-Higher IQ countries attract migrants from places less cognitively endowed. The correlation coefficient for net migration rate and IQ is a positive .40 (r-squared .16) if countries with a rate listed as zero are excluded (this is only a rough approximation. I cannot find much data on migration rates. Searching online I've only been able to find data parroting what's on the CIA's site, which lists lots of places as having no net migration/emigration even though they clearly do (like Zimbabwe for example)). Stopping the flow will lower the cost of living, bump up wages, and make public schooling more attractive.
-Invest in research to extend productivity as people age. Median age and IQ correlates positively at a very high .85. That is, 72% of the median age in a country can be explained by looking at that country's average IQ. Put in another way, every 1.17 point increase in IQ ups the median age by a year. The planet's up-and-comers have lower IQs. The older folks have the brains. Okay, that's pretty crass but generally true. At least when nation to nation comparisons are made. The Flynn effect is (hopefully) counterbalancing this to some degree, but it may be abating.
-Create incentives for people of moderate affluence to have more children. France has taken a few baby steps in this direction. The US tax code, unfortunately, punishes the fertile wealthy by phasing out exemptions and dependent credits and by the existence of the AMT.
-Spend aid money on birth control in the third world. A family member of mine worked in the diplomatic core of the State Department for several years. In Bangladesh he was involved in a program that distributed birth control devices. The program targeted the most impoverished areas. Critics lambast this sort of strategy as for being eugenic (that's inherently an evil thing for those of you who do not see why this counts as criticism!). But it helps realize a putative goal of the left: Closing the wealth gap.
-Watch Idiocracy. At least you'll be able to approach the future with tongue-in-cheek!
++Addition++John Bolton makes an excellent observation. Fecundity might be a better explanation for disparities in PPP than IQ is. IQ and births are decent proxies for one another. So which one is effecting PPP?
IQ is the primary causal factor. Its correlation with PPP withstands controlling for births per woman, but births per woman loses statistical significance as correlated with PPP when IQ is controlled for.
Here's how it breaks down: When IQ and PPP are correlated (without births controlled for), there is statistical significance factor of less than 0.001% with a correlation coefficient of .60. Each IQ point corresponds with a $653 boost in PPP.
When births and PPP are correlated (without IQ controlled for), the relationship is over 99.99% assured with a correlation coefficient of .55. Every baby costs $5,052 in PPP.
The slightly attenuated correlation coefficient for births versus IQ suggests the latter is the more powerful "determinate" of PPP. But we need to control for each of the variables. When births are controlled for, IQ remains statistically significant at about a 99.5% confidence level. Each IQ point now means a $485 boost in PPP.
When IQ is controlled for, births fall outside even an 80% confidence level (P-value of .78--meaning there's a 22% chance that the relationship is random. (The P-value is basically the same as the statistical significance factor, except the former relates to a multiple regression). In this less reliable relationship, each baby costs $1,752 in PPP.
So births per woman is a close proxy for IQ, and IQ is correlated with PPP. The corollary is, then, that births are correlated with PPP as well, although the correlation coefficient is not as strong as it is with IQ (.60 vs .55). When we control for births in the equation, IQ weakens a little but retains explanatory power (95% CI is the gold standard). However, when we control for IQ, births become only a third as powerful, and unreliable at that.
A rough reverse-syllogism: A couple comprised of two 130 IQers can afford to have a few children and still be considerably wealthier than a childless couple comprised of two 70 IQers. Having children does lower the economic power per family member, but IQ more than compensates for this cost. The dependents are net liabilities until they're no longer striplings. Lynn and Vanhanen should have (did?) considered this.
The most interesting (and tragic) aspect of the analysis is how few children the sharp nations are having (recall the correlation coefficient of .81). While IQ and PPP got the headline, the relationship between IQ and births is less tenuous--it appears to be rock-solid (I'm going to test it with some controls in near future).
Also, I humbly offer the data I'm working with to anyone who is interested (Email me if you are). It is in excel. More alacritous minds may find something my pile of mush is missing.