20 ms·

The plateauing of cognitive ability among top earners

190 points by luu 4y ago

mizzao 4y ago
The idea that salary is a measure of self-worth is an unfortunate lie that our modern society perpetuates.
- mtlmtlmtlmtl 4y ago
  [flagged]
  - dang 4y ago
    "Please don't sneer, including at the rest of the community." It's reliably a marker of bad comments and worse threads. https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html (The GP comment was heavily upvoted btw, which doesn't seem surprising at all.)
    - mtlmtlmtlmtl 4y ago
      My apologies. (To be fair it was downvoted when I replied to it)
- jcampbell1 4y ago
  No one thinks it is a measure of self-worth, but an approximation of the value the work creates for others. Some people do feel having the marketplace value their labor and effort provides a sense of self-worth. Wanting to feel valued by family, friends, and the marketplace is normal.
  - pompouNsIGGER 4y ago
    [dead]
  - AdrianB1 4y ago
    No. With D&I, in many corporations wages are heavily correlated with gender and race more than the value of the work. In the opposite direction, with the equality part pf DIE the brilliant engineer and the mediocre-at-best HR paper-pusher are paid the same. Wage correlation with worth assumes strong, measurable meritocracy, it is not the case for most of the times, but very visible in the past decade. Anecdotal evidence, see the recent TikTok and related Youtube videos about people "working" in Big Tech doing mostly eating, some leisure work, some meaningless meetings and then team parties. You will struggle to find the work value of that, but the salaries are way above US median wage.
- xyzelement 4y ago
  Your salary (or other income) is a proxy for value you generate by your efforts and more importantly, your ability to support your family and causes that are important to you.
distantsounds 4y ago
oddly this doesn't take into account my extremely low IQ friends who mined a bunch of bitcoin early on
- r2_pilot 4y ago
  Anyone can buy tulips in the beginning, even accidently.
  - cassepipe 4y ago
    Maybe of interest to you: https://www.youtube.com/watch?v=ChSUvdU_Sbk https://www.youtube.com/watch?v=ChSUvdU_Sbk
    - r2_pilot 4y ago
      Apologies, I appreciate your effort but I honestly do not care whatsoever about cryptocurrency and feel like I am subjected to a neverending ad champaign. I evaluated it very early on (a couple of months into bc launch), decided it did not sufficiently cover my 3 main purposes of a currency, and promptly removed all software (and any future regret, unless bc somehow gets to be worth $100mil/satoshi...) from my system.
      - cassepipe 4y ago
        Huuh this video is not about cryptocurrency... It's about being dumb but still getting rich out of luck.
        r2_pilot 4y ago
        Ah. That is also something I probably won't have to worry about too much. Thanks for the additional summary, that improves the probability I will watch it.
- hiwadaocathliqm 4y ago
  You jest, but maybe you can be too smart. If you can see through an unwise scheme you may not invest in it, even though you would be able to offload your investment on someone else later if you had...
madaxe_again 4y ago
This study looks only at Swedish men who served in the military, which as the authors observe may well introduce a bias. They also note that a possibility is that higher cognitive ability individuals may more frequently opt for worse paying but prestigious roles, such as academia. I buy it, but I think there’s another factor today, which is that many higher cognitive ability individuals simply are not in the job market, as they are either entrepreneurs or have deployed their abilities to not have to work, which is easier now than ever before. Given that they look only at wage and self-employed income, this would explain a bias - for instance, my income in these categories is £0, and I’m no slouch.
- sublinear 4y ago
  How does chasing prestige or avoiding work indicate "higher cognitive ability"?
  - Avicebron 4y ago
    Or, how does one define "prestige"?
    - harvey9 4y ago
      A professorship can be prestigious while paying less than the professor might be able to earn in industry.
  - Nevermark 4y ago
    The relationship of "higher cognitive ability" -> prestige and work avoidance, is not the same as the relationship from "prestige and avoiding work" -> "higher cognitive ability. If you turn around the direction of implication, you are not talking about the same thing. But more to point, smart people may avoid jobs by arranging high return passive (non-work/job) income, such as from investments, royalties, etc. Lots of smart people go into fields like mathematics where the work is interesting, success is rewarded with visibility in the field, and sometimes the public, but the pay is nothing like being a CEO.
  - 4y ago
metacritic12 4y ago
It's not a surprise that cognitive ability (the paper seems to define it as relatively close to classical IQ) is not highly correlated with earning ability or even value production for society. I would argue that a much better correlant of both production value and capture value is conscientiousness, or vaguely synonymously, hardworking, diligent, etc. A brilliant world observer who tweets their witty one-liners all day produces probably less value than a hard working, average cognitive ability, house painter.
- maegul 4y ago
  I’d add that there’s also somewhat of a random evolutionary walk in the way an individual’s intrinsic qualities end up aligning (or not) with the skills, values, temperaments and opportunities of their environment. Even how they match the needs and values of their historical time and culture can matter. This is beyond just plane nature-nurture, but stressing the importance of random “right place right time” dynamics across the whole “production value” process. If you’re intrinsically capable but never quite work out what you “want to do” or what works for you, for example, no matter how conscientious or committed, you will easily find yourself not as “productive” as those who’ve taken clearer paths.
  - bnralt 4y ago
    It's a good point. Also being slotted into the proper path when your capabilities are still forming and you know very little about the world. I know a lot of extremely smart and capable people that ended up stuck in dead end jobs because they were pursuing the wrong thing as a young adult (often, their "dreams"), and by the time they realized it no one was interested in giving them a chance to prove themselves in another field. Some eventually lucked out and were at the right place and time where someone gave them the opportunity, and were eventually able to minimum wage jobs to high-paying executive jobs in the span of a few years. Others never got that shot and were stuck where they were. I've heard people lament that they worry about all the Einsteins out there who will never be able to reach their potential because they're plowing fields in underdeveloped countries. But in our own society it's likely that most Einsteins would never make it out of the patent office.
bottled_poe 4y ago
Seems aligned with what Maslow pyramid of needs predicts. I.e. above a certain safety net, the individual places more value on internal fulfilment rather than external perception of worth.
- Simon_O_Rourke 4y ago
  There's the theory that above a very high net worth, the accrual of additional wealth is a pure ego thing. Competition with other billionaires etc. as to who gets up the Forbes rich list.
- dangwhy 4y ago
  > I.e. above a certain safety net How do you calculate this though. Seems kind of meaningless if no one really knows what that number is for them.
jononomo 4y ago
Extremely high cognitive ability allows a person to find success in life without taking on as much risk. In my opinion this explains why the highest earners and most successful individuals with the most prestigious jobs are drawn from the ranks of those with B+ cognitive ability rather than A+ cognitive ability. The A+ people don’t need to swing for the fences as much, which means they’re less likely to end up with home runs. They’re happy with getting the triples, which makes a lot of sense.
- cj 4y ago
  I agree with this sentiment. Although possibly a better way to frame it is to say “people who feel like they have something to prove” are more likely to swing for the fences and succeed. That also likely (roughly) correlates with cognitive ability.
- pompouNsIGGER 4y ago
  [dead]
im3w1l 4y ago
Makes sense to me. You need to be "smart enough" to make lots of money. Among those that clear that bar it's the one with the better connections, better manners, or better looks or better conscientiousness or any other number of factors that does the best.
hliyan 4y ago
This seems to be related to this recent article on luck: https://news.ycombinator.com/item?id=34609167 https://news.ycombinator.com/item?id=34609167 Much like in the universe, it seems as if random fluctuations in an otherwise uniform (playing) field results in the accrual of cumulative advantages that soon become exponential without the need for additional energy input. In other words: to covert $100 into $120 is work; to convert $100 million to $120 million is inevitable (author unknown).
- zeroonetwothree 4y ago
  You could say the same about converting $120 million into $100 million
solatic 4y ago
Implicit is the presumption that the smartest people optimize for wealth, or that the smartest people are good at optimizing for wealth. Outside of Wall Street, "smart" people - academics, doctors, lawyers, engineers, etc. - are just as likely to make bad personal finance decisions and/or to stay in labor (rather than management) positions for most of their careers (leave aside the dual-track IC/management ladder at a relatively small handful of companies). People don't bother to max out their earning potential because, after you earn enough to meet your needs, it quite frankly doesn't matter anymore compared to other means of personal fulfillment. This is besides the point that the ranks of upper management are typically filled with people who are socially/politically smart, and not necessarily STEM-style smart; the cognitive ability of whom may or may not be adequately captured by this study.
- SnowHill9902 4y ago
  Are they really smart then? You are using a straw man fallacy by redefining who’s smart.
  - alistairSH 4y ago
    The study apparently used some flavor of IQ test, which already makes assumptions about what “smart” means. And is who “really smart then”? I knew plenty of people in college who were of similar general IQ as me but chose career paths specifically to maximize income (finance, largely). And I knew plenty who were smarter than me who went into fields such as education or PT/exercise science because that’s what they wanted to do. So it doesn’t surprise me in the least that IQ correlates with high income to a point, but beyond that point other factors (largely desire to be wealthy) play a larger role.
  - deleted 4y ago
    [deleted]
  - groestl 4y ago
    Maybe you're thinking of No true Scotsman? https://en.wikipedia.org/wiki/No_true_Scotsman https://en.wikipedia.org/wiki/No_true_Scotsman
ahupp 4y ago
This is great data. I think the figures, particularly fig 3, tell the clearest story here. Wage percentile is monotonic in cognitive ability between the 10th and 95th percentile of income. You could imagine that in the top percentiles other factors start to dominate; e.g maybe the likelihood of someone being both top 5pct in cognition and contentiousness is low, and the latter starts to be weighted more heavily at the extremes.
Krisjohn 4y ago
Billionaires not a billion times smarter than someone with a dollar to their name, news at 11.
adverbly 4y ago
Here is one wacky theory behind the drop at high levels: maybe this is mostly a function of which jobs require certain cognitive levels, and how much those jobs pay. For example, there are quite a few jobs that pay well which require above average abilities such as management, engineering, medicine, law. But arguably there are jobs that have higher requirements such as theoretical scientists, mathematicians, university professors, philosophers. Those jobs that have the highest requirements actually pay less than the ones with slightly lower requirements. So maybe what is happening here is that people are more likely to end up with a job that utilizes their unique abilities, but at some point that has and negative impact on outcomes. For a while I have been on the opinion that we waste the talents of the top 0.1 percent of thinkers by having them debate in the ivory ivory tower while they could be doing a lot more in the real world by going into management, politics, or engineering. But what do I know: maybe 9 dimensional math about strings will prove highly practical some day and add more value than another Da Vinci (who was very involved in practical problems).
- tropsis 4y ago
  It's also a matter of personal preference and individual skills. A person who is capable of 9 dimensional math about strings might not be able to do well anything else, or might not want to do anything else.
  - adverbly 4y ago
    > might not be able to do well anything else, or might not want to do anything else. To some extent, this may be a failure of the educational system. A good number of high intellect folks are not actually challenged, and so they end up thinking that if they're not good at something right away, it's not worth their time or effort. Perhaps what you're describing is actually the mechanism behind why people would tend to go for careers that match their unique abilities rather than those that have the best outcomes. For example, consider somebody who would make an amazing doctor. However, if you kept their doctor skills the same but made them really good at some obscure skill which was socially highly regarded and paid well - but in both cases lower than they could do as a doctor - they might decide not to be a doctor.
SnowHill9902 4y ago
They key here is that you can be as intelligent as you want, but don’t be a dork. It’s a U-shaped curve where if you really are highly intelligent you can actually teach yourself how to not be a dork and come out of the other side both intelligent and smooth.
windowshopping 4y ago
> The top 1 per cent even score slightly worse on cognitive ability than those in the income strata right below them. We observe a similar but less pronounced plateauing of ability at high occupational prestige. Idk this seems unsurprising to me. Basically implies that sheer intelligence can get you near the top, but the people at the absolute top had additional traits that pushed them beyond.
- NotYourLawyer 4y ago
  Or that the smartest people optimize for something other than pure income.
spoonjim 4y ago
Actually surprised that there is this much of a correlation. Making money and being smart to me have always seemed only lightly related, like height and basketball skill. Many dumber people than me I know making much more than I am, and many smarter people making much less.
- pretendscholar 4y ago
  Height and basketball skill are very highly correlated especially at the higher end. Something like 25 percent of 7 ft tall men between the ages of 20 and 40 are in the nba.
conorcleary 4y ago
imho, top earners who focus on earning before learning, stop yearning?
finolex1 4y ago
If a job requires that you run 100m in 12 seconds, your local champion runner can do it as well as Usain Bolt. Most jobs might be like that in terms of the cognitive ability required for success. Beyond that, other differentiating factors may play a stronger role (social skills, diligence, etc.), as well as pure luck (being on the right team at the right time).
stuaxo 4y ago
Given that the majority of wealth is inherited, how smart you are doesn't need to be related at all.
- sokoloff 4y ago
  Citation needed. The references that I looked for suggested that around 30-40% of wealth is inherited. No citation that I found suggested that it was a majority. Do you have any sources that I could additionally review to support the majority claim?
  - ResearchCode 4y ago
    That's in the US. Old money in Europe is older than US as a country.
    - est31 4y ago
      That older-than-USA money exists, but it is still a minority: 80% of inherited fortunes in Europe were younger than four generations (120-ish years). https://www.famcap.com/2016/05/2016-5-17-wealthspike-europe-where-its-all-about-inherited-wealth-family-businesses/ https://www.famcap.com/2016/05/2016-5-17-wealthspike-europe-... Edit: there has also been the absolutism movement which effectively removed control from large fractions of lower nobility over their lands, requiring them to be in the royal palace. There was also the german mediatization at the start of the 19th century where the holdings of lower noble families got integrated into larger units. Those larger units, as well as their holdings, then got turned into democracies in the 20th century.
- BurningFrog 4y ago
  The past was poor. There isn't enough old wealth for this to even be possibly true.
pcrh 4y ago
An important aspect of these findings that might be overlooked is the relatively low level of income at which the association of cognitive ability and earnings plateau. In Figs 3 and 4 the plateau starts at about SEK 600,000, or US$ 57,000. This is below what most people would consider "top earners". So in essence, and as I remember from previous reports, there isn't a very strong correlation of intelligence and earnings at the _very_ top levels, say the top 0.5% of earners. I also find the tight, almost monotonic association nevertheless shown to be a bit suspect. Very few traits have such a tight association. Even genetic variation and a trait such as height doesn't have such a strong association.
Temporary_31337 4y ago
Clearly the top earners have enough congnitive ability to put themselves in a position to be paid well. In some ways any paper that doesn’t arrive at that obvious conclusion has got its syllogisms wrong.
fwlr 4y ago
It’s tempting to theorise why this might be, but it’s most likely just a simple statistical feature inherent to correlations themselves. I’ve heard it called “the tails come apart” - in a scatter plot of two correlated variables, the highest y value will not have the rightmost x value, and the rightmost x value will not have the highest y value. Ellipses don’t come to a sharp point at their tips, if you overlay them on a square the tips bulge out past the edges of the square. This diagram might help http://images.lesswrong.com/t3_km6_3.png http://images.lesswrong.com/t3_km6_3.png There’s more explanation on the page that diagram comes from, it even talks about this case of intelligence and wealth. https://www.lesswrong.com/posts/dC7mP5nSwvpL65Qu5/why-the-tails-come-apart https://www.lesswrong.com/posts/dC7mP5nSwvpL65Qu5/why-the-ta...
- ProjectArcturis 4y ago
  Very insightful, thanks for sharing. It's always nice to add another tool to the mental toolbox.
- wyager 4y ago
  Also, intelligence maybe lets you pick out a pareto isosurface in job-space, of which money is only one dimension. At higher isosurfaces, the relative value of money shrinks, because material needs are met, because of the sublinearity of utility-vs-money, etc. If you condition on people who make $X+/-eps per year (fixing one dimension in the optimization space), probably there will still be a strong correlation between intelligence and other desirable factors (status, fulfillment, etc).
- pcrh 4y ago
  Interesting, that might explain the fairly low level of income at which cognitive ability and income correlated in the OP (under US$ 57K).
psychphysic 4y ago
I feel much less sharp once I passed 30. Hangovers also started to last days. Learning new stuff that requires precision also seems harder - like syntax. Even though I feel like I'm much smarter when it comes to fuzzy processes like judging a good idea or programming language. Dementia runs in my family... But I think I'm too young for that and it's just what happens when you're not 25 anymore.
- t344344 4y ago
  Liver gave in. Look into fasting...
- zeroonetwothree 4y ago
  Maybe cut back on the drinking and your cognitive performance will improve
- thebigspacefuck 4y ago
  There’s nothing magic about the number 30, but a sedentary lifestyle, poor sleep, diet, and stress will all start to take their toll.
- someNameIG 4y ago
  I'm 35, I have not noticed any drop in my ability to learn new things now compared to even my early 20s.
  - psychphysic 4y ago
    Candle that burns twice as bright...
  - therealdrag0 4y ago
    I wonder if it’s not a trick of perception tho. When you’re young things feel exciting and you have more time to soak them up, often being required by school to do so. When you’re old you get less excited and you have other things pulling at your attention and you are less susceptible to be goaded into long study hours. So Hour for hour and energy for energy has your ability to learn dropped? Or has your ability to get into the learning mode dropped? The outcome might be the same but worth reflecting on.
deleted 4y ago
[deleted]
yafbum 4y ago
I worked for managers with outstanding cognitive ability, and for others who were certainly smart but not as much. The ones with high cognitive ability didn't necessarily make the best business leaders - they had so much cognitive bandwidth that they got nerd sniped into deep dives on every aspect of the business, and although they were familiar with the whole business operation, they didn't do the important stuff well - making decisions, making money. The ones who didn't have as much cognitive firepower knew how to prioritize, I suspect out of necessity, and made clearer, more effective decisions instead of getting in the weeds.
- phendrenad2 4y ago
  Thank you for mentioning "nerd sniping", which I had forgotten about. That is the perfect explanation for the effect I was trying to come up with a way to explain. All of the smartest people I know get stuck solving hard problems that don't actually matter. And people let them go do it because who's going to stop the genius? And heck, maybe they'll square that circle.
rxyz 4y ago
All that means is you don't have to be the smartest, just smart enough.
jhp123 4y ago
I think this may be the "George W. effect". People want a leader who is smart and capable but also relatable. A large group gravitates towards leaders who are at about the 80th percentile. Many of the top paying jobs are business leadership. I think this is rational because it's very hard to tell when someone two sigma more intelligent than you is BSing you. You often can't follow their train of thought, you have to take it on trust.
zeroonetwothree 4y ago
Intelligent people are smart enough to realize that money isn’t the most important thing.
- dangwhy 4y ago
  Its hard to prove this because money can be measured and compared while fulfillment is nebulous and hard to pin down. So a person arguing that money is the most important thing will always win the argument because examples and proof are plenty.
steve76 4y ago
[dead]
LouisSayers 4y ago
An old flatmate of mine was a Mckinsey consultant and in Aus was on something like $240k per year salary. I thought this sounded pretty good compared to my $140k as a software engineer but then I realised he was putting in a lot more hours. It makes me think, how many hours could you sustain developing software vs doing consultant work? I know for me personally the amount of actual hours coding per day isn't all that much - my brain simply gets tired (depending on the type of coding). Perhaps if you're doing really brain intensive work you simply can't work as much as someone that does less intensive work, and if we accounted for the hours worked by each perhaps the difference wouldn't even be that much (especially if we price in say 1.5x pay for overtime)?
- thebigspacefuck 4y ago
  Doesn’t it seem like the more you’re paid in this industry the less time you spend actually coding?
  - LouisSayers 4y ago
    Yes that seems true in general although in my experience you don't necessarily end up working more hours in a technical role even though your cognitive intensity required may be less (as your experience increases and you end up in more meetings etc).
sandstrom 4y ago
It seems like this study considers income from work, but not income from capital. In Sweden, the marginal tax rate for work has hovered around 70% for the past decades. Taxes on capital around 30%. https://www.ekonomifakta.se/Fakta/Skatter/Skatt-pa-arbete/marginalskatt-historiskt/ https://www.ekonomifakta.se/Fakta/Skatter/Skatt-pa-arbete/ma... Anyone who isn't stupid (and study considers IQ, after all) would move their income from work to capital. There are several ways, for example starting a company. Even stuff that's basically a job, like high-paid people finance and law, would have a setup that have them earn their primarily as income from capital. Unless this study has considered this, I'd say that they are missing a lot of people at the far end of the income spectrum. https://www.scb.se/hitta-statistik/artiklar/2018/stor-del-av-kapitalinkomsterna-gar-till-hushallen-med-hogst-inkomster/ https://www.scb.se/hitta-statistik/artiklar/2018/stor-del-av... https://www.scb.se/hitta-statistik/artiklar/2022/svenskarnas-kapitalinkomster-ojamnt-fordelade/ https://www.scb.se/hitta-statistik/artiklar/2022/svenskarnas...
dasil003 4y ago
This makes sense intuitively because the bulk of very high paying jobs are in large companies where responsibilities are diffuse and opportunities to leverage the brilliance out outlier geniuses are few and far between. Good leadership needs decent cognitive ability to process a high volume of inbound information and maintain a sufficiently accurate mental map of what's happening, but IQ has diminishing returns as the bottleneck really becomes high-bandwidth communication and coordination across a large org structure. In this environment, EQ is more important since a higher IQ only helps local decision making. Cascading those decisions and the reasoning behind them is entirely its own skill, grossly constrained by the attention span and background context of the diverse set of people receiving the message. At the end of the day, understanding and influencing people will get you much further than IQ alone. Combining both with enough experience and domain expertise to sniff out bullshit is the holy grail.
thethirdone 4y ago
I think Figure 3C [0] is best thing to discuss here. It is very interesting to me that from like from 1% to 10% wage percentile cognitive ability goes down very consistently. It is not clear what societal effect would cause this. My best guess is that among the people without the intelligence to completely pull themselves into the middle class, the smartest find ways of coping without necessarily making more money. On the opposite side, from 95% to 100% cognitive ability also goes down, but not as consistently. My best guess for this effect would be people with connections / generational wealth are capable of squeezing out more qualified candidates. 0: https://academic.oup.com/view-large/figure/393964189/jcac076_fig3.jpg https://academic.oup.com/view-large/figure/393964189/jcac076...

190 points by luu 4y ago

mizzao 4y ago

The idea that salary is a measure of self-worth is an unfortunate lie that our modern society perpetuates.

mtlmtlmtlmtl 4y ago
[flagged]
- dang 4y ago
  "Please don't sneer, including at the rest of the community." It's reliably a marker of bad comments and worse threads. https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html (The GP comment was heavily upvoted btw, which doesn't seem surprising at all.)
  - mtlmtlmtlmtl 4y ago
    My apologies. (To be fair it was downvoted when I replied to it)
jcampbell1 4y ago
No one thinks it is a measure of self-worth, but an approximation of the value the work creates for others. Some people do feel having the marketplace value their labor and effort provides a sense of self-worth. Wanting to feel valued by family, friends, and the marketplace is normal.
- pompouNsIGGER 4y ago
  [dead]
- AdrianB1 4y ago
  No. With D&I, in many corporations wages are heavily correlated with gender and race more than the value of the work. In the opposite direction, with the equality part pf DIE the brilliant engineer and the mediocre-at-best HR paper-pusher are paid the same. Wage correlation with worth assumes strong, measurable meritocracy, it is not the case for most of the times, but very visible in the past decade. Anecdotal evidence, see the recent TikTok and related Youtube videos about people "working" in Big Tech doing mostly eating, some leisure work, some meaningless meetings and then team parties. You will struggle to find the work value of that, but the salaries are way above US median wage.
xyzelement 4y ago
Your salary (or other income) is a proxy for value you generate by your efforts and more importantly, your ability to support your family and causes that are important to you.

distantsounds 4y ago

oddly this doesn't take into account my extremely low IQ friends who mined a bunch of bitcoin early on

r2_pilot 4y ago
Anyone can buy tulips in the beginning, even accidently.
- cassepipe 4y ago
  Maybe of interest to you: https://www.youtube.com/watch?v=ChSUvdU_Sbk https://www.youtube.com/watch?v=ChSUvdU_Sbk
  - r2_pilot 4y ago
    Apologies, I appreciate your effort but I honestly do not care whatsoever about cryptocurrency and feel like I am subjected to a neverending ad champaign. I evaluated it very early on (a couple of months into bc launch), decided it did not sufficiently cover my 3 main purposes of a currency, and promptly removed all software (and any future regret, unless bc somehow gets to be worth $100mil/satoshi...) from my system.
    - cassepipe 4y ago
      Huuh this video is not about cryptocurrency... It's about being dumb but still getting rich out of luck.
      - r2_pilot 4y ago
        Ah. That is also something I probably won't have to worry about too much. Thanks for the additional summary, that improves the probability I will watch it.
hiwadaocathliqm 4y ago
You jest, but maybe you can be too smart. If you can see through an unwise scheme you may not invest in it, even though you would be able to offload your investment on someone else later if you had...

madaxe_again 4y ago

This study looks only at Swedish men who served in the military, which as the authors observe may well introduce a bias. They also note that a possibility is that higher cognitive ability individuals may more frequently opt for worse paying but prestigious roles, such as academia. I buy it, but I think there’s another factor today, which is that many higher cognitive ability individuals simply are not in the job market, as they are either entrepreneurs or have deployed their abilities to not have to work, which is easier now than ever before. Given that they look only at wage and self-employed income, this would explain a bias - for instance, my income in these categories is £0, and I’m no slouch.

sublinear 4y ago
How does chasing prestige or avoiding work indicate "higher cognitive ability"?
- Avicebron 4y ago
  Or, how does one define "prestige"?
  - harvey9 4y ago
    A professorship can be prestigious while paying less than the professor might be able to earn in industry.
- Nevermark 4y ago
  The relationship of "higher cognitive ability" -> prestige and work avoidance, is not the same as the relationship from "prestige and avoiding work" -> "higher cognitive ability. If you turn around the direction of implication, you are not talking about the same thing. But more to point, smart people may avoid jobs by arranging high return passive (non-work/job) income, such as from investments, royalties, etc. Lots of smart people go into fields like mathematics where the work is interesting, success is rewarded with visibility in the field, and sometimes the public, but the pay is nothing like being a CEO.
- 4y ago

metacritic12 4y ago

It's not a surprise that cognitive ability (the paper seems to define it as relatively close to classical IQ) is not highly correlated with earning ability or even value production for society. I would argue that a much better correlant of both production value and capture value is conscientiousness, or vaguely synonymously, hardworking, diligent, etc. A brilliant world observer who tweets their witty one-liners all day produces probably less value than a hard working, average cognitive ability, house painter.

maegul 4y ago
I’d add that there’s also somewhat of a random evolutionary walk in the way an individual’s intrinsic qualities end up aligning (or not) with the skills, values, temperaments and opportunities of their environment. Even how they match the needs and values of their historical time and culture can matter. This is beyond just plane nature-nurture, but stressing the importance of random “right place right time” dynamics across the whole “production value” process. If you’re intrinsically capable but never quite work out what you “want to do” or what works for you, for example, no matter how conscientious or committed, you will easily find yourself not as “productive” as those who’ve taken clearer paths.
- bnralt 4y ago
  It's a good point. Also being slotted into the proper path when your capabilities are still forming and you know very little about the world. I know a lot of extremely smart and capable people that ended up stuck in dead end jobs because they were pursuing the wrong thing as a young adult (often, their "dreams"), and by the time they realized it no one was interested in giving them a chance to prove themselves in another field. Some eventually lucked out and were at the right place and time where someone gave them the opportunity, and were eventually able to minimum wage jobs to high-paying executive jobs in the span of a few years. Others never got that shot and were stuck where they were. I've heard people lament that they worry about all the Einsteins out there who will never be able to reach their potential because they're plowing fields in underdeveloped countries. But in our own society it's likely that most Einsteins would never make it out of the patent office.

bottled_poe 4y ago

Seems aligned with what Maslow pyramid of needs predicts. I.e. above a certain safety net, the individual places more value on internal fulfilment rather than external perception of worth.

Simon_O_Rourke 4y ago
There's the theory that above a very high net worth, the accrual of additional wealth is a pure ego thing. Competition with other billionaires etc. as to who gets up the Forbes rich list.
dangwhy 4y ago
> I.e. above a certain safety net How do you calculate this though. Seems kind of meaningless if no one really knows what that number is for them.

jononomo 4y ago

Extremely high cognitive ability allows a person to find success in life without taking on as much risk. In my opinion this explains why the highest earners and most successful individuals with the most prestigious jobs are drawn from the ranks of those with B+ cognitive ability rather than A+ cognitive ability. The A+ people don’t need to swing for the fences as much, which means they’re less likely to end up with home runs. They’re happy with getting the triples, which makes a lot of sense.

cj 4y ago
I agree with this sentiment. Although possibly a better way to frame it is to say “people who feel like they have something to prove” are more likely to swing for the fences and succeed. That also likely (roughly) correlates with cognitive ability.
pompouNsIGGER 4y ago
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im3w1l 4y ago

Makes sense to me. You need to be "smart enough" to make lots of money. Among those that clear that bar it's the one with the better connections, better manners, or better looks or better conscientiousness or any other number of factors that does the best.

hliyan 4y ago

This seems to be related to this recent article on luck: https://news.ycombinator.com/item?id=34609167 https://news.ycombinator.com/item?id=34609167 Much like in the universe, it seems as if random fluctuations in an otherwise uniform (playing) field results in the accrual of cumulative advantages that soon become exponential without the need for additional energy input. In other words: to covert $100 into $120 is work; to convert $100 million to $120 million is inevitable (author unknown).

zeroonetwothree 4y ago
You could say the same about converting $120 million into $100 million

solatic 4y ago

Implicit is the presumption that the smartest people optimize for wealth, or that the smartest people are good at optimizing for wealth. Outside of Wall Street, "smart" people - academics, doctors, lawyers, engineers, etc. - are just as likely to make bad personal finance decisions and/or to stay in labor (rather than management) positions for most of their careers (leave aside the dual-track IC/management ladder at a relatively small handful of companies). People don't bother to max out their earning potential because, after you earn enough to meet your needs, it quite frankly doesn't matter anymore compared to other means of personal fulfillment. This is besides the point that the ranks of upper management are typically filled with people who are socially/politically smart, and not necessarily STEM-style smart; the cognitive ability of whom may or may not be adequately captured by this study.

SnowHill9902 4y ago
Are they really smart then? You are using a straw man fallacy by redefining who’s smart.
- alistairSH 4y ago
  The study apparently used some flavor of IQ test, which already makes assumptions about what “smart” means. And is who “really smart then”? I knew plenty of people in college who were of similar general IQ as me but chose career paths specifically to maximize income (finance, largely). And I knew plenty who were smarter than me who went into fields such as education or PT/exercise science because that’s what they wanted to do. So it doesn’t surprise me in the least that IQ correlates with high income to a point, but beyond that point other factors (largely desire to be wealthy) play a larger role.
- deleted 4y ago
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- groestl 4y ago
  Maybe you're thinking of No true Scotsman? https://en.wikipedia.org/wiki/No_true_Scotsman https://en.wikipedia.org/wiki/No_true_Scotsman

ahupp 4y ago

This is great data. I think the figures, particularly fig 3, tell the clearest story here. Wage percentile is monotonic in cognitive ability between the 10th and 95th percentile of income. You could imagine that in the top percentiles other factors start to dominate; e.g maybe the likelihood of someone being both top 5pct in cognition and contentiousness is low, and the latter starts to be weighted more heavily at the extremes.

Krisjohn 4y ago

Billionaires not a billion times smarter than someone with a dollar to their name, news at 11.

adverbly 4y ago

Here is one wacky theory behind the drop at high levels: maybe this is mostly a function of which jobs require certain cognitive levels, and how much those jobs pay. For example, there are quite a few jobs that pay well which require above average abilities such as management, engineering, medicine, law. But arguably there are jobs that have higher requirements such as theoretical scientists, mathematicians, university professors, philosophers. Those jobs that have the highest requirements actually pay less than the ones with slightly lower requirements. So maybe what is happening here is that people are more likely to end up with a job that utilizes their unique abilities, but at some point that has and negative impact on outcomes. For a while I have been on the opinion that we waste the talents of the top 0.1 percent of thinkers by having them debate in the ivory ivory tower while they could be doing a lot more in the real world by going into management, politics, or engineering. But what do I know: maybe 9 dimensional math about strings will prove highly practical some day and add more value than another Da Vinci (who was very involved in practical problems).

tropsis 4y ago
It's also a matter of personal preference and individual skills. A person who is capable of 9 dimensional math about strings might not be able to do well anything else, or might not want to do anything else.
- adverbly 4y ago
  > might not be able to do well anything else, or might not want to do anything else. To some extent, this may be a failure of the educational system. A good number of high intellect folks are not actually challenged, and so they end up thinking that if they're not good at something right away, it's not worth their time or effort. Perhaps what you're describing is actually the mechanism behind why people would tend to go for careers that match their unique abilities rather than those that have the best outcomes. For example, consider somebody who would make an amazing doctor. However, if you kept their doctor skills the same but made them really good at some obscure skill which was socially highly regarded and paid well - but in both cases lower than they could do as a doctor - they might decide not to be a doctor.

SnowHill9902 4y ago

They key here is that you can be as intelligent as you want, but don’t be a dork. It’s a U-shaped curve where if you really are highly intelligent you can actually teach yourself how to not be a dork and come out of the other side both intelligent and smooth.

windowshopping 4y ago

> The top 1 per cent even score slightly worse on cognitive ability than those in the income strata right below them. We observe a similar but less pronounced plateauing of ability at high occupational prestige. Idk this seems unsurprising to me. Basically implies that sheer intelligence can get you near the top, but the people at the absolute top had additional traits that pushed them beyond.

NotYourLawyer 4y ago
Or that the smartest people optimize for something other than pure income.

spoonjim 4y ago

Actually surprised that there is this much of a correlation. Making money and being smart to me have always seemed only lightly related, like height and basketball skill. Many dumber people than me I know making much more than I am, and many smarter people making much less.

pretendscholar 4y ago
Height and basketball skill are very highly correlated especially at the higher end. Something like 25 percent of 7 ft tall men between the ages of 20 and 40 are in the nba.

conorcleary 4y ago

imho, top earners who focus on earning before learning, stop yearning?

finolex1 4y ago

If a job requires that you run 100m in 12 seconds, your local champion runner can do it as well as Usain Bolt. Most jobs might be like that in terms of the cognitive ability required for success. Beyond that, other differentiating factors may play a stronger role (social skills, diligence, etc.), as well as pure luck (being on the right team at the right time).

stuaxo 4y ago

Given that the majority of wealth is inherited, how smart you are doesn't need to be related at all.

sokoloff 4y ago
Citation needed. The references that I looked for suggested that around 30-40% of wealth is inherited. No citation that I found suggested that it was a majority. Do you have any sources that I could additionally review to support the majority claim?
- ResearchCode 4y ago
  That's in the US. Old money in Europe is older than US as a country.
  - est31 4y ago
    That older-than-USA money exists, but it is still a minority: 80% of inherited fortunes in Europe were younger than four generations (120-ish years). https://www.famcap.com/2016/05/2016-5-17-wealthspike-europe-where-its-all-about-inherited-wealth-family-businesses/ https://www.famcap.com/2016/05/2016-5-17-wealthspike-europe-... Edit: there has also been the absolutism movement which effectively removed control from large fractions of lower nobility over their lands, requiring them to be in the royal palace. There was also the german mediatization at the start of the 19th century where the holdings of lower noble families got integrated into larger units. Those larger units, as well as their holdings, then got turned into democracies in the 20th century.
BurningFrog 4y ago
The past was poor. There isn't enough old wealth for this to even be possibly true.

pcrh 4y ago

An important aspect of these findings that might be overlooked is the relatively low level of income at which the association of cognitive ability and earnings plateau. In Figs 3 and 4 the plateau starts at about SEK 600,000, or US$ 57,000. This is below what most people would consider "top earners". So in essence, and as I remember from previous reports, there isn't a very strong correlation of intelligence and earnings at the _very_ top levels, say the top 0.5% of earners. I also find the tight, almost monotonic association nevertheless shown to be a bit suspect. Very few traits have such a tight association. Even genetic variation and a trait such as height doesn't have such a strong association.

Temporary_31337 4y ago

Clearly the top earners have enough congnitive ability to put themselves in a position to be paid well. In some ways any paper that doesn’t arrive at that obvious conclusion has got its syllogisms wrong.

fwlr 4y ago

It’s tempting to theorise why this might be, but it’s most likely just a simple statistical feature inherent to correlations themselves. I’ve heard it called “the tails come apart” - in a scatter plot of two correlated variables, the highest y value will not have the rightmost x value, and the rightmost x value will not have the highest y value. Ellipses don’t come to a sharp point at their tips, if you overlay them on a square the tips bulge out past the edges of the square. This diagram might help http://images.lesswrong.com/t3_km6_3.png http://images.lesswrong.com/t3_km6_3.png There’s more explanation on the page that diagram comes from, it even talks about this case of intelligence and wealth. https://www.lesswrong.com/posts/dC7mP5nSwvpL65Qu5/why-the-tails-come-apart https://www.lesswrong.com/posts/dC7mP5nSwvpL65Qu5/why-the-ta...

ProjectArcturis 4y ago
Very insightful, thanks for sharing. It's always nice to add another tool to the mental toolbox.
wyager 4y ago
Also, intelligence maybe lets you pick out a pareto isosurface in job-space, of which money is only one dimension. At higher isosurfaces, the relative value of money shrinks, because material needs are met, because of the sublinearity of utility-vs-money, etc. If you condition on people who make $X+/-eps per year (fixing one dimension in the optimization space), probably there will still be a strong correlation between intelligence and other desirable factors (status, fulfillment, etc).
pcrh 4y ago
Interesting, that might explain the fairly low level of income at which cognitive ability and income correlated in the OP (under US$ 57K).

psychphysic 4y ago

I feel much less sharp once I passed 30. Hangovers also started to last days. Learning new stuff that requires precision also seems harder - like syntax. Even though I feel like I'm much smarter when it comes to fuzzy processes like judging a good idea or programming language. Dementia runs in my family... But I think I'm too young for that and it's just what happens when you're not 25 anymore.

t344344 4y ago
Liver gave in. Look into fasting...
zeroonetwothree 4y ago
Maybe cut back on the drinking and your cognitive performance will improve
thebigspacefuck 4y ago
There’s nothing magic about the number 30, but a sedentary lifestyle, poor sleep, diet, and stress will all start to take their toll.
someNameIG 4y ago
I'm 35, I have not noticed any drop in my ability to learn new things now compared to even my early 20s.
- psychphysic 4y ago
  Candle that burns twice as bright...
- therealdrag0 4y ago
  I wonder if it’s not a trick of perception tho. When you’re young things feel exciting and you have more time to soak them up, often being required by school to do so. When you’re old you get less excited and you have other things pulling at your attention and you are less susceptible to be goaded into long study hours. So Hour for hour and energy for energy has your ability to learn dropped? Or has your ability to get into the learning mode dropped? The outcome might be the same but worth reflecting on.

deleted 4y ago

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yafbum 4y ago

I worked for managers with outstanding cognitive ability, and for others who were certainly smart but not as much. The ones with high cognitive ability didn't necessarily make the best business leaders - they had so much cognitive bandwidth that they got nerd sniped into deep dives on every aspect of the business, and although they were familiar with the whole business operation, they didn't do the important stuff well - making decisions, making money. The ones who didn't have as much cognitive firepower knew how to prioritize, I suspect out of necessity, and made clearer, more effective decisions instead of getting in the weeds.

phendrenad2 4y ago
Thank you for mentioning "nerd sniping", which I had forgotten about. That is the perfect explanation for the effect I was trying to come up with a way to explain. All of the smartest people I know get stuck solving hard problems that don't actually matter. And people let them go do it because who's going to stop the genius? And heck, maybe they'll square that circle.

rxyz 4y ago

All that means is you don't have to be the smartest, just smart enough.

jhp123 4y ago

I think this may be the "George W. effect". People want a leader who is smart and capable but also relatable. A large group gravitates towards leaders who are at about the 80th percentile. Many of the top paying jobs are business leadership. I think this is rational because it's very hard to tell when someone two sigma more intelligent than you is BSing you. You often can't follow their train of thought, you have to take it on trust.

zeroonetwothree 4y ago

Intelligent people are smart enough to realize that money isn’t the most important thing.

dangwhy 4y ago
Its hard to prove this because money can be measured and compared while fulfillment is nebulous and hard to pin down. So a person arguing that money is the most important thing will always win the argument because examples and proof are plenty.

steve76 4y ago

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LouisSayers 4y ago

An old flatmate of mine was a Mckinsey consultant and in Aus was on something like $240k per year salary. I thought this sounded pretty good compared to my $140k as a software engineer but then I realised he was putting in a lot more hours. It makes me think, how many hours could you sustain developing software vs doing consultant work? I know for me personally the amount of actual hours coding per day isn't all that much - my brain simply gets tired (depending on the type of coding). Perhaps if you're doing really brain intensive work you simply can't work as much as someone that does less intensive work, and if we accounted for the hours worked by each perhaps the difference wouldn't even be that much (especially if we price in say 1.5x pay for overtime)?

thebigspacefuck 4y ago
Doesn’t it seem like the more you’re paid in this industry the less time you spend actually coding?
- LouisSayers 4y ago
  Yes that seems true in general although in my experience you don't necessarily end up working more hours in a technical role even though your cognitive intensity required may be less (as your experience increases and you end up in more meetings etc).

sandstrom 4y ago

It seems like this study considers income from work, but not income from capital. In Sweden, the marginal tax rate for work has hovered around 70% for the past decades. Taxes on capital around 30%. https://www.ekonomifakta.se/Fakta/Skatter/Skatt-pa-arbete/marginalskatt-historiskt/ https://www.ekonomifakta.se/Fakta/Skatter/Skatt-pa-arbete/ma... Anyone who isn't stupid (and study considers IQ, after all) would move their income from work to capital. There are several ways, for example starting a company. Even stuff that's basically a job, like high-paid people finance and law, would have a setup that have them earn their primarily as income from capital. Unless this study has considered this, I'd say that they are missing a lot of people at the far end of the income spectrum. https://www.scb.se/hitta-statistik/artiklar/2018/stor-del-av-kapitalinkomsterna-gar-till-hushallen-med-hogst-inkomster/ https://www.scb.se/hitta-statistik/artiklar/2018/stor-del-av... https://www.scb.se/hitta-statistik/artiklar/2022/svenskarnas-kapitalinkomster-ojamnt-fordelade/ https://www.scb.se/hitta-statistik/artiklar/2022/svenskarnas...

dasil003 4y ago

This makes sense intuitively because the bulk of very high paying jobs are in large companies where responsibilities are diffuse and opportunities to leverage the brilliance out outlier geniuses are few and far between. Good leadership needs decent cognitive ability to process a high volume of inbound information and maintain a sufficiently accurate mental map of what's happening, but IQ has diminishing returns as the bottleneck really becomes high-bandwidth communication and coordination across a large org structure. In this environment, EQ is more important since a higher IQ only helps local decision making. Cascading those decisions and the reasoning behind them is entirely its own skill, grossly constrained by the attention span and background context of the diverse set of people receiving the message. At the end of the day, understanding and influencing people will get you much further than IQ alone. Combining both with enough experience and domain expertise to sniff out bullshit is the holy grail.

thethirdone 4y ago

I think Figure 3C [0] is best thing to discuss here. It is very interesting to me that from like from 1% to 10% wage percentile cognitive ability goes down very consistently. It is not clear what societal effect would cause this. My best guess is that among the people without the intelligence to completely pull themselves into the middle class, the smartest find ways of coping without necessarily making more money. On the opposite side, from 95% to 100% cognitive ability also goes down, but not as consistently. My best guess for this effect would be people with connections / generational wealth are capable of squeezing out more qualified candidates. 0: https://academic.oup.com/view-large/figure/393964189/jcac076_fig3.jpg https://academic.oup.com/view-large/figure/393964189/jcac076...