Sunday, February 19, 2012

Wealth, Income Mobility and Intelligence

There's been a lot bouncing around the blogosphere about income mobility. Steve Hsu rounds up some of the recent work, including this figure relating parental and offspring income in terms of percent of offspring achieving it.

In the second post ever at this blog, I made the argument that Gini didn't matter as much as we might think, because of the Chinese proverb that money never stays in families more than three generations; that is, in capitalist societies income mobility rewards the hard and smart workers and punishes the meatheads. Therefore, we have control over our own worlds and are happy, which is what the point of the system is. I'm following this discussion because when I finally looked up data on mobility, I found that the U.S. is actually less mobile than some of the welfare state societies in Europe. My libertarianism took a necessarily paternalistic turn after that. Always change your mind when there's data!

More interesting is the observation in many of these studies (and Hsu's post) that IQ has diminishing returns to income. What would be very interesting is if this has changed over time. I would expect that an IQ of 130 would be more valuable for making money in 2012 than in 1912.

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