If You Are So Rich, Why Aren't You Smart?
8/28/09 6:04 PM
Grasping Reality with Both Hands The Semi-Daily Journal of Economist Brad DeLong: A Fair, Balanced, Reality-Based, and More than Two-Handed Look at the World J. Bradford DeLong, Department of Economics, U.C. Berkeley #3880, Berkeley, CA 94720-3880; 925 708 0467; delong@econ.berkeley.edu. Weblog Home Page Weblog Archives Econ 115: 20th Century Economic History Econ 211: Economic History Seminar Economics Should-Reads Political Economy Should-Reads Politics and Elections Should-Reads Hot on Google Blogsearch Hot on Google Brad DeLong's Egregious Moderation August 28, 2009
If You Are So Rich, Why Aren't You Smart? A correspondent emails me a link to http://gregmankiw.blogspot.com/2009/08/least-surprisingcorrelation-of-all.html... Greg Mankiw looks at:
http://delong.typepad.com/sdj/2009/08/if-you-are-so-rich-why-arent-you-smart.html
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If You Are So Rich, Why Aren't You Smart?
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And says: The Least Surprising Correlation of All Time: [S]o what? This fact tells us nothing about the causal impact of income on test scores.... Suppose we were to graph average SAT scores by the number of bathrooms a student has in his or her family home. That curve would also likely slope upward.... But it would be a mistake to conclude that installing an extra toilet raises yours kids' SAT scores. It would be interesting to see the above graph reproduced for adopted children only. I bet that the curve would be a lot flatter. And he drops it there. But merely saying that correlation is not always causation and dropping the issue is, I think, profoundly unhelpful--and shows a... lack of work ethic as well. Off the top of my head... IIRC, the age-adjusted correlation between log income and IQ is 0.4: take someone with a log income higher by one standard deviation than average--these days someone with a middle-ageadjusted family income of $100,000-$120,000 rather than $60,000-$80,000--and their IQ is likely to be 0.4 standard deviations (6 points) above average. The individual heritability of IQ is about 0.5: take an individual with a IQ 6 points above average and their children will be expected to have an IQ 3 points above average. SAT scores have a mean of 500, a standard deviation of 100, and a high but not a perfect (0.7) correlation with IQ. http://delong.typepad.com/sdj/2009/08/if-you-are-so-rich-why-arent-you-smart.html
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If You Are So Rich, Why Aren't You Smart?
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So if we compare people whose parents have an income of $100,000-$120,000 to those with an income of $60,000-$80,000 we would expect to see 1 x 0.4 x 0.5 x 0.7 x 100 = 14 points. The actual jump in the graph Mankiw refers to is twice as large. The rule of thumb, I think, is that half of the income-test score correlation is due to the correlation of your test scores with your parents' IQ; and half of the income-test score correlation is coing purely from the advantages provided by that component of wealth uncorrelated with your parents' (genetic and environmental!) IQ. The curve is less steep, but there is definitely a "what" here to be thought about. The masters at explaining this, of course, are (Googles) Samuel Bowles and Herbert Gintis, "The Inheritance of Inequality" http://www.umass.edu/preferen/gintis/intergen.pdf... UPDATE: Conor Clarke reminds me of Christiane Capron and Michael Duyme (1989), "Assessment of Effects of Socio-Economic Status on IQ: A Full Cross-Fostering Study," Nature http://www.nature.com/nature/journal/v340/n6234/pdf/340552a0.pdf: "changes in IQ resulting from changes in postnatal environment are of similar magnitude and exhibit the same general trend independently of the SES of the adopted children's biological paretnts." RECOMMENDED (5.0) by 4 people like you [How?] You might like:
links for 2009-08-28 (this site) Survey: Folks not too satisfied with nonprofit websites (Donor Power Blog) 2 more recommended posts Âť Brad DeLong on August 28, 2009 at 09:13 AM in Economics, Economics: Inequality, Economics: Labor, Philosophy: Moral, Political Economy, Science: Cognitive | Permalink TrackBack TrackBack URL for this entry: http://www.typepad.com/services/trackback/6a00e551f0800388340120a581b565970c Listed below are links to weblogs that reference If You Are So Rich, Why Aren't You Smart?:
Comments You can follow this conversation by subscribing to the comment feed for this post. Why are you multiplying by .7? The correlation is not the slope of the fit. Posted by: Drew Miller | August 28, 2009 at 09:32 AM Sorry, that last comment was halfway through my thought - just because a person's IQ score doesn't fully correlate with their SAT score, doesn't mean that the difference is environmental. If being good at tests is partially genetic but not perfectly measured by IQ, (a reasonable claim I think) then your method would obviously undervalue the genetic aspect of this. That said, don't put me on the side of the master-racers. I think the adopted vs biological studies are pretty clear. Posted by: Drew Miller | August 28, 2009 at 09:44 AM
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If You Are So Rich, Why Aren't You Smart?
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But much of the heritability of IQ presumably has to do with environmental factors (nutrition, etc.) which are affected by family income, so you're actually overcounting the IQ aspect. Posted by: Thorfinn | August 28, 2009 at 10:12 AM An ironic posting by an economist who served a president who would be an outlier (at least for critical reading) on his graph. If one had a full scatter plot, and W. was in the data, I wonder how far in the southeast area he would fall. "Bin Laden determined to strike in US," PDB, August 6, 2001. Posted by: ISLM | August 28, 2009 at 10:50 AM Thor - I think it is accounted for by the .5 - IQ is half genetic, half environmental. Posted by: Drew Miller | August 28, 2009 at 11:06 AM Mankiw's comment on this graph is obscene. The number of toilets does not lead to prep schools and SAT training. It's the $$$ the family has access to that leads to more toilets and more training for the kids. Posted by: T.R. Elliott | August 28, 2009 at 11:14 AM Perhaps I’m not interpreting your analysis properly, but if the suggestion is that half of the test score-family income correlation is the result of advantages conferred to children born into wealthier households, then why would we want to point to genetic factors other than IQ (as a standard indicator of intelligence)? Wouldn’t the influence really be fundamentally environmental in nature (access to better schools, better examination preparation, parental pressure)? The Bowles-Ginitis paper you reference points to a number of heritable genetic factors which could conceivably influence the intergenerational transmission of wealth including physical appearance, health, and personality. Intuitively speaking, I’m not certain that one would expect to see high test scores all that closely correlated with any of these features considered in isolation. Then again, maybe the exam’s been changed since I took it… So the question: which genetic factors connected with parents' wealth which are also unconnected with IQ would you point to as conferring specific test-taking advantages? Posted by: J. Edward Brown | August 28, 2009 at 11:46 AM Very nice and thoughtful post. DeLong does the homework, Krugman and Mankiw skip it. Posted by: gappy | August 28, 2009 at 11:47 AM JEB: I'm not sure I fully understand what you're saying (or if you're talking to me or Brad!) but here is my response: 1. I don't think anyone is arguing that an attribute be totally uncorrelated with IQ. Obviously only to the extent that it is uncorrelated could its independent effect on test scores matter, assuming they weren't already controlling for it. 2. I would actually consider health to be a good example here - SATs are taken at specific times, where IQ tests are probably more likely to be worked in around your health needs. If you are more likely to be sick on SAT today you are probably likely to score lower. 3. Personality is a pretty broad concept that could also be applicable. I'm pissy today so I don't try on the test, etc. Posted by: Drew Miller | August 28, 2009 at 12:02 PM Now we just need yet another commenter who takes it from here and produces a chart that corrects for the genetic component to show the actual correlation with income... Posted by: Michael | August 28, 2009 at 12:14 PM I was really just asking Brad for some clarification, but my question might have been unclear. Thanks for pointing it out. So I think that the implication of the last sentence of the post is probably that, generally speaking, there exist environmental or structural factors which would influence performance on an exam like the SATs. Advantages in these areas could be closely tied with family income. This, I think, is a relatively uncontroversial conclusion, and http://delong.typepad.com/sdj/2009/08/if-you-are-so-rich-why-arent-you-smart.html
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If You Are So Rich, Why Aren't You Smart?
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these areas could be closely tied with family income. This, I think, is a relatively uncontroversial conclusion, and probably the one Brad was shooting for. The placement of the parenthetical note was a little cryptic to me, that's all. If the suggestion was that there were other heritable factors connected with the advantages of wealth which weren't IQ but nevertheless impacted test scores, then I'd be curious to know what those are. The paper that Brad references does point to several heritable factors that are associated with wealth (to the extent, of course, that personality has an inherited dimension), but none of those (assuming that their list is exhaustive) would seem to relate to performance on standardized exams. Your point, that genetic factors influencing ability to do well on tests (and I'm thinking that what you're really saying is that IQ is an imperfect measurement of intelligence?), seems good to me. Posted by: J. Edward Brown | August 28, 2009 at 12:37 PM There's a trend I've noted on both ends of the political spectrum to recite "correlation does not demonstrate causation" as if it meant that correlation is not evidence of causation. Sometimes, as here, you see an even stronger form, which might be phrased, "Correlation disproves causation." Posted by: Bloix | August 28, 2009 at 01:38 PM I score over top one percentile in IQ, had high SAT etc. and yet hardly "make" any money at all. (I'm not the only one in Mensa like that, either - it seems to attract many oddballs who can't succeed normally.) It is very difficult for me to connect with employers and get ahead. I admit to a rambling career path but it is very disheartening. Posted by: Neil B ♪ | August 28, 2009 at 01:44 PM Yes, this is definitely a sub-lunar issue. Posted by: nkirsch | August 28, 2009 at 02:38 PM Oh, I thought the parenthetical "(genetic and environmental!)" just meant that the parent's measured IQ is also not merely a factor of their genetics, not that it had any implications for the argument. :-) The point that I was making but don't actually think is important is that Mankiw was arguing about Genetics -> SAT, which Brad proxies with IQ -> SAT. Those aren't the same, and the switch would tend to underestimate the impact of genetics. But anyway, it's not important - obviously the environmental impact of being in a wealthy household have a tremendous influence on one's success in this and other facets of life, and Mankiw's asinine dismissal of the issue is both disturbing given his previous position and unsurprising at this point. Posted by: Drew Miller | August 28, 2009 at 02:40 PM Ravening Hexans have no such distribution, seeing that they are all at the same income level. No SAT's neither. Posted by: nkirsch | August 28, 2009 at 03:32 PM I don't know US statistics about the SAT in detail, but I know Israeli ones; my father runs one of Israel's largest companies preparing people for the local SAT equivalent. There, people average an improvement of 100 points between the diagnostic test they take at the beginning of the course and the one they take at the end, on a 200-800 point scale. In Israel the prep companies have close to 100% market penetration, but in the US they don't. So now the gap presented in the graph shrinks from 120-130 points to 20-30. Yours, Alon Levy. Posted by: Alon Levy | August 28, 2009 at 04:31 PM Mankiw is a wuss for not allowing comments... I stopped reading his blog because I got tired of his personal ads for his textbook. Posted by: jason | August 28, 2009 at 05:38 PM
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