Monday, 1 November 2010

Higher intelligence associated with "thinking like an economist"

As the world economy dusts itself down and edges towards recovery, a provocative new paper claims that people with higher intelligence are more likely to think like economists. That is, they're more likely to be optimistic about the economy; to recognise the economic advantages of markets free from government interference, and the advantages of foreign trade and foreign workers; and to appreciate the economic benefits of achieving greater productivity with less man-power. The lead author is Bryan Caplan, an economics professor at George Mason University. Past essays by him include 'The 4 Boneheaded Biases of Stupid Voters (And we're all stupid voters.)'

Prior research has established that the more time a person spends in education, the more likely their broad economic views are to match that of the typical economist (pdf). Caplan and his colleague Stephen Miller point out that these studies failed to take into account the influence of intelligence. After all, it's known that people with higher IQ tend to spend longer in education and intelligence itself may also directly influence economic beliefs.

To overcome this problem, Caplan and Miller have focused on answers to the General Social Survey, a massive US poll of national opinions performed every two years. Crucially, it includes questions about the economy and a small test of verbal IQ.

Caplan and Miller's finding is that the link between educational background and 'thinking like an economist' is weakened when IQ is taken into account because IQ is the more important factor associated with economic beliefs. It's a complicated picture because IQ and education may be mutually influential. However, if one assumes that education is unable to raise IQ, but that IQ affects time spent in education, then the researchers said 'the net effect on economic beliefs of intelligence is more than double the net effect of education.' Even if one assumes that education can also affect IQ, 'intelligence still has a larger estimated effect [on economic beliefs],' they said.

Does the link between higher intelligence and 'thinking like an economist' mean that economists are generally right and the public wrong? In answer to this question, Caplan and Miller cite Shane Frederick, a decision-making scholar at Yale's School of Management, who's previously argued that it depends on the type of question. For financial issues, he argued, it pays to emulate those 'with higher cognitive abilities'. However, Frederick noted that 'if one were deciding between an apple or an orange, Einstein's preference for apples seems irrelevant.'

Caplan and Miller say they agree with Frederick about this, before concluding boldly: 'The fact that the beliefs of economists and intelligent non-economists dovetail is another reason to accept the "economists are right, the public is wrong" interpretation of lay-expert belief gaps.'
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ResearchBlogging.orgCaplan, B., and Miller, S. (2010). Intelligence makes people think like economists: Evidence from the General Social Survey. Intelligence, 38 (6), 636-647 DOI: 10.1016/j.intell.2010.09.005

Post written by Christian Jarrett (@psych_writer) for the BPS Research Digest.

15 comments:

Carrie Heningham said...

The term "economist" seems to be synonymous with "free market economist" in this study. That distinction should be made clear. And I believe it is not altogether true. Marx had his own version of economics - he was hardly an intellectual slacker.

Anonymous said...

May be but does Bryan Caplan findings explain his political bias or is it the other way around? :-)

JRQ said...

Actually, one might just as well argue this study shows economists are NOT more likely to be right than the public. There is popular quip about modern economists: They don't like evidence getting in the way of a beautiful theory.

This reminds me of recent work of Keith Stanovitch shows that while high IQ individuals excel at abstract computation, they are not much better than anyone else at overcoming basic cognitive misership and reasoning biases. The chief problem is that when you load an abstract problem down with concrete content, people's knowledge assumptions get in the way of their ability reason accurately about it, regardless of the computational power provided by their IQ.

Anonymous said...

Shocking rubbish.

The entire concept of "economist" as a single-organism is nonsensical, as if they all think exactly alike. This is confirmation bias at its worst, which is why any "real scientist" has to discount the entire realm of macroeconomics more as an art than as a science.

Anonymous said...

@JRQ
More generally : The probability that a certain person be stupid is independent of any other characteristic of that person.

THE OLD GEEZER said...

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Steve Miller said...

Just to respond to Carrie, the original research on "thinking like an economist" used the Survey of Americans and Economists on the Economy. It wasn't a survey of free-market economists. In fact the median economist surveyed was a moderate democrat. The thing about economists is that even ones who aren't "free market" have very different views about markets (and arguably a greater appreciation for them) than the general public.

Anonymous said...

Is this the same guy who, along with professor/economist Don Boureaux, feel that it's ok to leave the average American worker fully exposed to the forces of the world labor market, but who gladly shelter themselves from those same forces via tenure, seniority, and anti-competitive agreements with their public college employers? I guess you're a high intelligently person if you can rationalize free trade for me, but no free trade for thee.

Anonymous said...

Using "verbal IQ" as a proxy for "IQ" is poor methodology to begin with. Verbal IQ is generally affected by the amount of education a person has received.

On the WAIS (the generally accepted gold standard for IQ testing), there are four components that make up FSIQ (full scale IQ). Verbal, which can be affected by education, and also spatial reasoning, working memory, and processing speed, which generally can not be affected.

Verbal IQ and education are strongly correlated because education influences verbal IQ. In fact, this is one of those rare cases where we can say with certainty it is a causal relationship.

Extremely shoddy study design.

Dan said...

Hmm, so an economist conducts some research which (shockingly) concludes that people like him are the best? Wow.

Steve Miller said...

Anonymous is simply wrong, and apparently hasn't read the paper. WORDSUM is a vocabulary subtest from the WAIS. It has a very high correlation overall WAIS score, more than any other subtest. Vocabulary is more g-loaded than even spacial reasoning, and is not strongly or even permanently influenced by education. That's probably why WORDSUM was included in the GSS, because it gives a short but highly g-loaded proxy measure of intelligence.

Anonymous said...

1) Would this mean that Hegel, Lenin and Trotsky were idiots? Whether their ‘economics’ can now in retrospect be regarded as right or wrong would not mean they were idiots, in the sense of being low-IQ.

2) What of the idea that ‘intelligence’ has to do with ‘adapting to the circumstances’ in order to survive?

3) What about the need of those seeking higher education, as well as laymen, to ‘fit into a free market world’ in order to get jobs and survive materially? I.e., learning the economic dynamics and principles that have come to dominate in a post-modern era?

4) Economics is very much the province of the governing sector, which is responsible for making political decisions in the interest of sustaining survival for themselves and the society in which they live.
What has that to do with objectively trying to understand the workings of the mind, i.e. the subject of Psychology, not Management?
While psychometrics has never been an exact science, this article treats a ‘small test of verbal IQ’ as reliable and directly related to performance within a sector in which power and influence are principles to be mastered.

5) As for leaving financial issues to those 'with higher cognitive abilities', how is any competing financier going to determine who that would be?

6) Where do the performances of the financial credit houses and banks that preceded the present crisis fit in to this purported ‘link’?

7) References to others like “a decision-making scholar” for support of one’s ‘results’ is not objective report-work. Such kinds of references make the underlying interests of the investigators suspicious.

8) Throwing ‘Einstein’ and ‘irrelevant’ into the same sentence seems more like an effort to mould an emotional association that is compatible with the thrust of the article.

9) Is it coincidental, that this article would tend to strengthen the interests of the Republican, or in any case conservative, wealthier class, in the USA?

10) As a whole, this article seems like an attempt to camouflage personal interests, contrary to his purpose, which he expressed in the paper’s abstract as:
“The paper first tests and decisively rejects the hypothesis that the differences solely reflect economists’ self-serving bias. Then it examines whether economists’ political ideology and party loyalties explain the disagreement...”

11. Regarding the suggestion that lay-men are less ‘optimistic’ than economists, it would be normal (or at least understandable) that a person/people would be wary if not afraid of a force that they have spent little time in trying to understand, even as it may be so very significant to their lives.

** Upon calling up and viewing his homepage, terms such as the following stick out:
Buy my book, now just $12.21; Read my blog; Read my graphic novel; The intellectual autobiography of Bryan Caplan; Photos of me and my family; Caplan in the media; and all sorts of links for casual interests if not just entertainment.
It would seem he is a good publicist for himself. What does all this suggest from the point of view of Psychology?

The article does not seem relevant enough to Psychology for BPS to publish this in their Research Digest.

H. Randall

Anonymous said...

1) Would this mean that Hegel, Lenin and Trotsky were idiots? Whether their ‘economics’ can now in retrospect be regarded as right or wrong would not mean they were idiots, in the sense of being low-IQ.

2) What of the idea that ‘intelligence’ has to do with ‘adapting to the circumstances’ in order to survive?

3) What about the need of those seeking higher education, as well as laymen, to ‘fit into a free market world’ in order to get jobs and survive materially? I.e., learning the economic dynamics and principles that have come to dominate in a post-modern era?

4) Economics is very much the province of the governing sector, which is responsible for making political decisions in the interest of sustaining survival for themselves and the society in which they live.
What has that to do with objectively trying to understand the workings of the mind, i.e. the subject of Psychology, not Management?
While psychometrics has never been an exact science, this article treats a ‘small test of verbal IQ’ as reliable and directly related to performance within a sector in which power and influence are principles to be mastered.

5) As for leaving financial issues to those 'with higher cognitive abilities', how is any competing financier going to determine who that would be?

6) Where do the performances of the financial credit houses and banks that preceded the present crisis fit in to this purported ‘link’?

7) References to others like “a decision-making scholar” for support of one’s ‘results’ is not objective report-work. Such kinds of references make the underlying interests of the investigators suspicious.

8) Throwing ‘Einstein’ and ‘irrelevant’ into the same sentence seems more like an effort to mould an emotional association that is compatible with the thrust of the article.

9) Is it coincidental, that this article would tend to strengthen the interests of the Republican, or in any case conservative, wealthier class, in the USA?

10) As a whole, this article seems like an attempt to camouflage personal interests, contrary to his purpose, which he expressed in the paper’s abstract as:
“The paper first tests and decisively rejects the hypothesis that the differences solely reflect economists’ self-serving bias. Then it examines whether economists’ political ideology and party loyalties explain the disagreement...”

11. Regarding the suggestion that lay-men are less ‘optimistic’ than economists, it would be normal (or at least understandable) that a person/people would be wary if not afraid of a force that they have spent little time in trying to understand, even as it may be so very significant to their lives.

** Upon calling up and viewing his homepage, terms such as the following stick out:
Buy my book, now just $12.21; Read my blog; Read my graphic novel; The intellectual autobiography of Bryan Caplan; Photos of me and my family; Caplan in the media; and all sorts of links for casual interests if not just entertainment.
It would seem he is a good publicist for himself. What does all this suggest from the point of view of Psychology?

For BPS to publish in their Research Digest would seem unwarranted.

H.Randall

roid said...

Shouldn't this study have been conducted by a psychology department?
Not an economics department.

I mean the whole study could be read as "Economists conduct study to confirm hypothesis that they are awesome", it's a little too self-serving.

Anonymous said...

So a high IQ automatically translates to intelligence? IQ is only a small part of intelligence--maybe the study is more clear, but this article sucks.

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