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Posted By: kmbunday Innumeracy in Gifted Education Advocacy - 04/08/13 10:09 PM
Two examples of innumeracy in books for parents about gifted children:

1) "Unfortunately, highly gifted children (those in the 95th percentile) only occur in approximately 1 out of 1,000 preschoolers, and profoundly gifted children (those in the 99.9th percentile) are as rare as 1 in 10,000 preschoolers."

Huh? What part of the definition of "percentile" do you not understand?

2) "In our mushrooming populace, over 3 million Americans and approximately 70 million global citizens are highly gifted or beyond (99.9th percentile)."

The current population of the United States is 313,914,040 (according to Google, today) so the correct number of persons at the 99.9th percentile must be one order of magnitude smaller, that is about 313,914. And similarly for the world population.

Note the difference between the two popular books in their percentile definitions of "highly gifted," showing that that is not a term with a standardized meaning in scholarly research. (Note too that IQ tests never report percentile scores any higher than 99.9th percentile, as error in rank ordering at that end of the scale makes it very unlikely that even that percentile rank can be assigned reliably to test-takers.)

With friends like this, advocates of better education for gifted young people hardly need enemies.
That is just appalling. Have you read Innumeracy by John Allen Paulos? Great read.
Posted By: aquinas Re: Innumeracy in Gifted Education Advocacy - 04/09/13 02:18 AM
I wonder if "preschoolers" in the first example refers to preschool aged children enrolled in a preschool. It would imply that the gifted are underrepresented massively in schools if that's the case, with most HG+ preschoolers in a home setting. That's one explanation that might reconcile the discrepancy, however unlikely.

Though, I think your interpretation of innumeracy is the more likely explanation for the baffling numbers!
Posted By: Val Re: Innumeracy in Gifted Education Advocacy - 04/09/13 04:22 AM
Can you give titles/links on Amazon.com for the books?
Posted By: SiaSL Re: Innumeracy in Gifted Education Advocacy - 04/09/13 06:20 AM
Not the OP, but Google gives me The Everything Parent's Guide to Raising a Gifted Child by Sarah Robbins for the first quote (p125) and Giftedness 101 by Linda Silverman (p87) for the second.

Amusingly enough links to the page with quoted materials in Google Books came as #2 results for both searches. The #1 result points to this thread. I have no idea what the DA uses for SEO but Google just laps it up...
Posted By: SiaSL Re: Innumeracy in Gifted Education Advocacy - 04/09/13 06:24 AM
Aquinas, in my area of the US (which I think qualifies as a super ZIP) the kids who hit K and formal schooling without having gone to some form of preschool are pretty much the lowest income/parental education/parental motivation.

But then the fanciest/most expensive preschools don't do academics...
Siasl your post sums up my experience of socio economics and preschool where I live - the wealthiest children all go, but to preschools attached to high end private schools that are private schools that don't do academics...

As for the quotes, that's appalling.
Posted By: Val Re: Innumeracy in Gifted Education Advocacy - 04/09/13 06:48 PM
Originally Posted by moomin
Percentile is the proportion of a population above which a given score ranks, percentage is the proportion correct on a given assessment. While the above quote is nonsense, saying that 1 in 1000 test takers score at 95 percent or higher on a given assessment would be totally fine.

Not that I really think that this is what the author means...


Suffice it to say, slippery math like this shows up in an alarming proportion of social science and education research. It always makes my eyes cross a little, but often the author believes that the statistic is expressed correctly... even when it flies in the face of mathematical good sense.

In this case, I think the author was clueless. I searched for "percentile" in the book and didn't find anything about a particular test for giftedness having a score of 95% being at the 99.9th percentile. Also, here's a quote about bell curves from page 5 of that book (available on Google Books):

Quote
Three standard deviations to either side would represent 99.5 percent [of the population]. Four standard deviations ...would show a representation of the middle 99.7 percent.


Err...think that's 99.99something, not 99.7.
Posted By: aquinas Re: Innumeracy in Gifted Education Advocacy - 04/09/13 09:47 PM
Siasl & Mumtothree,

Interesting and unsurprising, though giftedness doesn't imply high SES, or vice-versa, though.

My post was just a cheeky jab at how obviously incorrect the stats probably are with a straw man hypothesis.
Originally Posted by aquinas
Interesting and unsurprising, though giftedness doesn't imply high SES, or vice-versa, though.

Statistically, it does. On average, intelligent people are more productive, earn more, and have smarter children.
Originally Posted by Val
Quote
Three standard deviations to either side would represent 99.5 percent [of the population]. Four standard deviations ...would show a representation of the middle 99.7 percent.


Err...think that's 99.99something, not 99.7.


99.9936 But I bet it's not exactly a normal distribution that far out on the tail, anyway.
Posted By: Val Re: Innumeracy in Gifted Education Advocacy - 04/09/13 10:56 PM
Originally Posted by ElizabethN
Originally Posted by Val
Err...think that's 99.99something, not 99.7.


99.9936 But I bet it's not exactly a normal distribution that far out on the tail, anyway.

Agreed, but people with IQs of 160 and 40 are almost certainly nowhere as common as the 99.7% number implies.
Posted By: puffin Re: Innumeracy in Gifted Education Advocacy - 04/10/13 08:07 AM
Originally Posted by Bostonian
Originally Posted by aquinas
Interesting and unsurprising, though giftedness doesn't imply high SES, or vice-versa, though.

Statistically, it does. On average, intelligent people are more productive, earn more, and have smarter children.

But intelligent people end up single parents, suffer I'll health and get made redundant just like anyone else. And rampant idealism, existential depression and having been damaged by not having your needs met all of your childhood can lead to low income too.
Posted By: madeinuk Re: Innumeracy in Gifted Education Advocacy - 04/10/13 10:45 AM
Originally Posted by Bostonian
Originally Posted by aquinas
Interesting and unsurprising, though giftedness doesn't imply high SES, or vice-versa, though.

Statistically, it does. On average, intelligent people are more productive, earn more, and have smarter children.


I would love to see the recent studies that support this. I do understand that America was once (1950-1970s) a more meritocratic society thanks to the GI bill but nowadays I get the sense that the access to high SES occupations is restricted to a few high achievers (on tests that have a strong correlation with intelligence/strong work ethic) and a lot of non high achieving members of select populations. I desperately want to be proved wrong here so some recent studies showing that things are still meritocratic in the USA would help.
Posted By: Dude Re: Innumeracy in Gifted Education Advocacy - 04/10/13 01:59 PM
Originally Posted by Bostonian
Originally Posted by aquinas
Interesting and unsurprising, though giftedness doesn't imply high SES, or vice-versa, though.

Statistically, it does. On average, intelligent people are more productive, earn more, and have smarter children.

But we're talking about the tail end of the bell curve, so "on average" is meaningless in this context. Optimal earnings generally coincides with optimal intelligence, in the 110-125 range.

This forum abounds with information about how top intelligence and top earnings don't go hand in hand (various studies, personal stories, etc.), so I can't help but wonder why you'd continue making this argument. In an environment filled with gifted parents who are trying to find low-cost testers and stuck arguing with public school systems, it's actually quite offensive.
Originally Posted by Dude
Originally Posted by Bostonian
Originally Posted by aquinas
Interesting and unsurprising, though giftedness doesn't imply high SES, or vice-versa, though.

Statistically, it does. On average, intelligent people are more productive, earn more, and have smarter children.

But we're talking about the tail end of the bell curve, so "on average" is meaningless in this context.

It's not, because the number of children with IQ >= 130 from a certain group depends on the average IQ of children in the group. If the average IQ of children of college gradutes is 115, a much higher fraction of them will be gifted than the children of parents who did not go beyond high school. In other words, the entire distribution of IQ in some groups is shifted toward the right, and in other groups shifted toward the left, which has implications for the incidence of giftedness.


Posted By: Dude Re: Innumeracy in Gifted Education Advocacy - 04/10/13 03:11 PM
Originally Posted by Bostonian
It's not, because the number of children with IQ >= 130 from a certain group depends on the average IQ of children in the group. If the average IQ of children of college gradutes is 115, a much higher fraction of them will be gifted than the children of parents who did not go beyond high school. In other words, the entire distribution of IQ in some groups is shifted toward the right, and in other groups shifted toward the left, which has implications for the incidence of giftedness.

This argument is a solid demonstration of innumeracy. Whether the gifted population in your sample is 1 in 50 or, let's say, 1 in 10, the group still isn't large enough to significantly influence averages.

Also, you're now excluding gifted people who don't graduate college.
Originally Posted by Dude
Originally Posted by Bostonian
It's not, because the number of children with IQ >= 130 from a certain group depends on the average IQ of children in the group. If the average IQ of children of college gradutes is 115, a much higher fraction of them will be gifted than the children of parents who did not go beyond high school. In other words, the entire distribution of IQ in some groups is shifted toward the right, and in other groups shifted toward the left, which has implications for the incidence of giftedness.

This argument is a solid demonstration of innumeracy. Whether the gifted population in your sample is 1 in 50 or, let's say, 1 in 10, the group still isn't large enough to significantly influence averages.
.

I think the argument is correct. If variables X and Y are drawn from normal distributions with SD = 15, but the E[X] = 115 and E[Y] = 100, there is a much higher probability that X >= 130 than that Y >= 130.

If you define "very tall" as a height of 6ft 6in or more, there are many more very tall men than women because men are taller and their distribution of heights is shifted to the right relative to the distribution of female heights. Do you think the children of parents who both dropped out of high school are as smart on average as the children of parents who both earned college degrees? Unless you do, you should not be surprised if a smaller fraction of the former group than the latter one have IQs >= 130.

Posted By: Dude Re: Innumeracy in Gifted Education Advocacy - 04/10/13 06:35 PM
Your argument relies on the following assumptions:

1) That averages have anything useful to say about statistical outliers.
2) That educational attainment is solely related to ability, and is therefore a useful proxy for intelligence.

As for the first assumption, 1 in 10 is still a "much higher proportion" than 1 in 50, but my argument still holds.

As for the second, high tuition, helicopter parenting, and a public school system designed to serve the bright-but-not-gifted population are all well-documented socioeconomic influences on educational attainment that have nothing whatsoever to do with ability.
Posted By: kmbunday Re: Innumeracy in Gifted Education Advocacy - 04/11/13 02:08 AM
The issue of socioeconomic status (and social mobility) in relation to IQ is an empirical issue, and it is investigated empirically from time to time. An old article that I somehow missed at the time of publication, but which I coincidentally saw while searching for something else a few days ago, mentions some of the other influences on socioeconomic status besides IQ (that is, "controlling for IQ") in one study sample.

http://www.newscientist.com/article/dn11711-smarter-people-are-no-better-off.html

What I find most innumerate about most popular literature on gifted education is the complete lack of discussion of error in IQ testing. On that issue, allow me to quote Lewis Terman, the developer of the Stanford-Binet IQ test.

"The reader should not lose sight of the fact that a test with even a high reliability yields scores which have an appreciable probable error. The probable error in terms of mental age is of course larger with older than with young children because of the increasing spread of mental age as we go from younger to older groups. For this reason it has been customary to express the P.E. [probable error] of a Binet score in terms of I.Q., since the spread of Binet I.Q.'s is fairly constant from age to age. However, when our correlation arrays [between Form L and Form M] were plotted for separate age groups they were all discovered to be distinctly fan-shaped. Figure 3 is typical of the arrays at every age level.

"From Figure 3 it becomes clear that the probable error of an I.Q. score is not a constant amount, but a variable which increases as I.Q. increases. It has frequently been noted in the literature that gifted subjects show greater I.Q. fluctuation than do clinical cases with low I.Q.'s . . . . we now see that this trend is inherent in the I.Q. technique itself, and might have been predicted on logical grounds." (Terman & Merrill, 1937, p. 44)

It's still true today that the error of IQ scoring is greatest in the range high above the median IQ. So particular test-takers will flip rank order with each other if each takes more than one IQ test. And that's why to talk about the "highly gifted" as a lifelong category one belongs to is just flat wrong from the get-go. But, yes, there is a whole lot of innumeracy in gifted education advocacy, which grates on my nerves, as I read John Paulos's book on that subject back when it was first published.
Good link, kmbunday, it's nice to know Terman was aware of the problem with the wagging tail.

To illustrate part of this numerical problem with an IQ, SB5 used a normative sample of 4800 people. Which gives about a 50% chance of the sample including 1 person with an IQ of 150 or above. And to make the sample even more hardly relevant for HG+ kids, it includes a full range of ages from 2 to 85.
Quote
On average, intelligent people are more productive

How are you defining "productive"?

What is your proof of this claim?
Originally Posted by ultramarina
Quote
On average, intelligent people are more productive

How are you defining "productive"?

What is your proof of this claim?

Intelligence would not be so highly valued if it did not make people more productive. Here is a paper documenting my assertion.

http://www.unc.edu/~nielsen/soci708/cdocs/Schmidt_Hunter_2004.pdf
General Mental Ability in the World of Work: Occupational Attainment
and Job Performance
Frank L. Schmidt
University of Iowa
John Hunter
Michigan State University
The psychological construct of general mental ability (GMA), introduced by C. Spearman (1904) nearly
100 years ago, has enjoyed a resurgence of interest and attention in recent decades. This article presents
the research evidence that GMA predicts both occupational level attained and performance within one’s
chosen occupation and does so better than any other ability, trait, or disposition and better than job
experience. The sizes of these relationships with GMA are also larger than most found in psychological
research. Evidence is presented that weighted combinations of specific aptitudes tailored to individual
jobs do not predict job performance better than GMA alone, disconfirming specific aptitude theory. A
theory of job performance is described that explicates the central role of GMA in the world of work.
These findings support Spearman’s proposition that GMA is of critical importance in human affairs
Having looked at that study, it seems that by "productivity," you mean "job performance as rated by supervisors." Not the same thing, in my book! wink
Posted By: aquinas Re: Innumeracy in Gifted Education Advocacy - 04/11/13 07:50 PM
I think this paper harkens us back to earlier points made in this thread about the danger of making inferences in the tails of statistical distributions from statistics derived about the sample mean. The highest median "IQ" for a profession is 128, and ranges for all the professions included capture the ~140+ spectrum at the upper end.

Aquinas spitballing...

If I may, can I please restate what I think your underlying (unspoken) thought process is? I come from an economics and business background, so human capital theory is dear to my heart.

I get where you're coming from. From your posts, it sounds like you're attributing an aggregate theory of diminishing marginal returns to human capital to a specific subset of the population, namely gifties. But, the correlations and concavity of earnings in ability (loosely proxies by educational attainment and/or profession) from that literature are derived from the broad calibration sample. They carry no meaning for particular population subsets because they weren't derived *in entirety* from those subsets.

ETA: Per ultramarina's point, I've had average job evaluations by an old boss who didn't understand my work. I wouldn't say perceived productivity is a good proxy for actual productivity, especially when the group of interest is one whose expected ability outstrips the average ability of managers.
Posted By: kmbunday Re: Innumeracy in Gifted Education Advocacy - 04/11/13 09:17 PM
Here's a link to a FAQ about company hiring procedures that includes a reference to the Schmidt and Hunter paper, along with more recent literature.

https://news.ycombinator.com/item?id=4613543

Note that because most companies do NOT hire on the basis of IQ (especially so in the United States), it is often not the case that the highest-paid persons are the smartest persons, even in the same company and the same job classification. There are definite individual advantages to having higher rather than lower IQ, and the secular increase in IQ scores over the last century

http://www.psychometrics.cam.ac.uk/news.13.htm

has probably been good for all the countries that have enjoyed it, but that's not at all to say that IQ cannot be swamped by other factors in setting the income of particular families, especially the younger members of those families whose well being is influenced by the choices of their elders.
Originally Posted by kmbunday
The issue of socioeconomic status (and social mobility) in relation to IQ is an empirical issue, and it is investigated empirically from time to time. An old article that I somehow missed at the time of publication, but which I coincidentally saw while searching for something else a few days ago, mentions some of the other influences on socioeconomic status besides IQ (that is, "controlling for IQ") in one study sample.

http://www.newscientist.com/article/dn11711-smarter-people-are-no-better-off.html

That article confirms my assertion that IQ and income are positively correlated:

Quote
On the surface, Zagorsky's analysis confirms the findings of previous studies linking higher intelligence with higher income. "Each point increase in IQ test scores is associated with $202 to $616 more income per year," he says. For example, a person with a score of 130 (in the top 2%, in terms of IQ) might earn about $12,000 more per year than someone with an average IQ score of about 100.

On the surface, people with higher intelligence scores also had greater wealth. The median net worth for people with an IQ of 120 was almost $128,000 compared with $58,000 for those with an IQ of 100.

But when Zagorsky controlled for other factors - such as divorce, years spent in school, type of work and inheritance - he found no link between IQ and net worth. In fact, people with a slightly above-average IQ of 105 , had an average net worth higher than those who were just a bit smarter, with a score of 110.
Finding no link between IQ and wealth (rather than income) when controlling for educational attainment and type of work is not very meaningful, because IQ is a major determining factor of educational attainment and the type of work one does.
Yes, if you have a drop out of high school and work your whole life in a low-skilled job, you probably won't be wealthy, but high-IQ people tend not to be high school dropouts working their whole lives at low-skilled jobs.
Originally Posted by kmbunday
Here's a link to a FAQ about company hiring procedures that includes a reference to the Schmidt and Hunter paper, along with more recent literature.

https://news.ycombinator.com/item?id=4613543

Note that because most companies do NOT hire on the basis of IQ (especially so in the United States), it is often not the case that the highest-paid persons are the smartest persons, even in the same company and the same job classification.

Some management consulting and financial firms ask candidates for SAT scores, a proxy for IQ. The most prestigious colleges stay that way by using the SAT/ACT filter. The most prestigious law schools use the LSAT, and law firms that hire only from certain law schools are using the LSAT filter. Companies that require candidates to have a bachelor's degree are screening for IQ and persistence. So do companies that require a high school diploma, at a lower level. The U.S. military, a big employer, screens out the bottom 1/3 of the IQ distribution using the AFQT:

http://isteve.blogspot.com/2013/04/almost-100-million-people-arent-smart.html
Almost 100 million people aren't smart enough to enlist in the military
by Steve Sailer
April 10, 2013 .
Posted By: Dude Re: Innumeracy in Gifted Education Advocacy - 04/15/13 02:08 PM
Originally Posted by Bostonian
Finding no link between IQ and wealth (rather than income) when controlling for educational attainment and type of work is not very meaningful, because IQ is a major determining factor of educational attainment and the type of work one does.

No. The finding is HIGHLY illuminating, because it shows that individuals with divergent IQs but similar SES backgrounds make the same amount. This shows that SES matters more than IQ. You're just ignoring this because it's inconvenient to your argument, and repeating an assumption you have been unable to support.

It's not like we needed a study, though, because this point is self-evident on this site. Raising high-IQ children is EXPENSIVE, and failure to provide certain interventions can set these children up for failure. For a family that can't afford the investments in time and resources...
Posted By: JonLaw Re: Innumeracy in Gifted Education Advocacy - 04/15/13 02:27 PM
Originally Posted by Dude
No. The finding is HIGHLY illuminating, because it shows that individuals with divergent IQs but similar SES backgrounds make the same amount. This shows that SES matters more than IQ. You're just ignoring this because it's inconvenient to your argument, and repeating an assumption you have been unable to support.

Career track matters more than IQ.

Ideally, you want to be a dermatologist and you don't need to have a top 2% I.Q. to be a dermatologist.

I'm filing this under "things that are obvious."
Posted By: Val Re: Innumeracy in Gifted Education Advocacy - 04/15/13 02:38 PM
Before controlling for different factors, the article compares people with IQs of 100 with people with IQs of 120 or 130, and finds a pretty big difference. Then, after the controlling, it compares people with IQs of 105 with people with IQs of 110 and draws a conclusion. Seems like a cheat to me.

The article doesn't cite the original, so I'll have to search for it.

ETA: true, you don't need an IQ of 130 to become a dermatologist, but that doesn't mean you'll get there with an IQ OF 98, either. Doctors' IQs, as a group, are higher than average (google it).
Originally Posted by JonLaw
Career track matters more than IQ.

Ideally, you want to be a dermatologist and you don't need to have a top 2% I.Q. to be a dermatologist.

I'm filing this under "things that are obvious."

To become a dermatologist, you need to graduate from college with good grades overall and good grades in science courses, including calculus, physics, general and organic chemistry, and biology, and you need good scores on the MCAT. Then you need to
complete medical school and pass the USMLE (I think) with good enough grades and scores to get accepted into a dermatology residency, which is highly competitive.

These are highly g-loaded accomplishments. I would not be surprised if they did signify that someone was in the top 2% of the intelligence distribution.
Posted By: JonLaw Re: Innumeracy in Gifted Education Advocacy - 04/15/13 03:04 PM
Originally Posted by Bostonian
To become a dermatologist, you need to graduate from college with good grades overall and good grades in science courses, including calculus, physics, general and organic chemistry, and biology, and you need good scores on the MCAT.

No, you just need enough money to pay for D.O. school.

In fact, I just looked up the local well-compensated dermatologist I was thinking of (who is not the sharpest tool in the shed) and lo, and behold, I found that he has a D.O. degree.
Posted By: JonLaw Re: Innumeracy in Gifted Education Advocacy - 04/15/13 03:07 PM
Originally Posted by Val
ETA: true, you don't need an IQ of 130 to become a dermatologist, but that doesn't mean you'll get there with an IQ OF 98, either. Doctors' IQs, as a group, are higher than average (google it).

The IQ range from 10th percentile is 105.

I got into an argument with my brother in law about this very issue.

Me: "You don't have to be particularly intelligent to be a doctor."

Him: "Yes you do!"

Me: "My point is that the 10th percentile is 105, with the 50th being 120."

Him: "That sounds about right."

Me: "Then you don't have to be exceptionally intelligent."
Posted By: Val Re: Innumeracy in Gifted Education Advocacy - 04/15/13 03:15 PM
Originally Posted by JonLaw
"My point is that the 10th percentile is 105, with the 50th being 120."

You're splitting hairs here (and where did you get this information?). How well do dumb doctors do as a group?

Plus, if you're right about the 50th percentile, average IQs are apparently 20 points higher, which supports the argument that MD IQs are higher.

I found the study. It was published in the journal Intelligence. The author found a positive correlation between higher IQ and average income that apparently did not go away when he controlled for stuff. But it will be necessary to read the entire article.
Posted By: JonLaw Re: Innumeracy in Gifted Education Advocacy - 04/15/13 03:29 PM
Originally Posted by Val
Plus, if you're right about the 50th percentile, average IQs are apparently 20 points higher, which supports the argument that MD IQs are higher.

I'm not arguing that they aren't higher than the average person.

The point was that to get on that career track with higher earnings, there's certainly no requirement to be in the top 2% of I.Q. distribution; but you need to get on the right track to collect your cash prizes.

I used google to find that info. There's some chart with all the professions floating around out there, where M.D.'s are the highest I.Q. of all the professions.
Posted By: JonLaw Re: Innumeracy in Gifted Education Advocacy - 04/15/13 03:35 PM
OK, so top 1% of income in the United States is about $380,000 per year (per NYT).

My guess is that those people generally aren't in the top 1% of I.Q. distribution.
Posted By: Val Re: Innumeracy in Gifted Education Advocacy - 04/15/13 03:40 PM
You're missing the point (or maybe obfuscating it? smile ).

The point is that higher IQ tends to translate to higher earnings. No one claimed that the top 1% of IQ = top 1% of income.
Originally Posted by Dude
Originally Posted by Bostonian
Finding no link between IQ and wealth (rather than income) when controlling for educational attainment and type of work is not very meaningful, because IQ is a major determining factor of educational attainment and the type of work one does.

No. The finding is HIGHLY illuminating, because it shows that individuals with divergent IQs but similar SES backgrounds make the same amount. This shows that SES matters more than IQ. You're just ignoring this because it's inconvenient to your argument, and repeating an assumption you have been unable to support.

It's not like we needed a study, though, because this point is self-evident on this site. Raising high-IQ children is EXPENSIVE, and failure to provide certain interventions can set these children up for failure. For a family that can't afford the investments in time and resources...

I think that this confuses "raising a high-IQ child" with "grooming for material success."

It's not necessarily "expensive" to enrich a PG child. Even living in a non-urban, fairly blue-collar environment, there are libraries, the internet, and homeschooling opportunities, open source resources, etc.

But it is expensive to TigerParent. What costs so much, ironically, are those things that appeal not solely to PG children and their parents, but the things which are also trappings of high SES: private music lessons, travel, competitions, golf/polo/fencing/rowing/horses, designer camps/classes, etc.

I'm not dismissing the value of those things. Well, maybe I am arguing the value of those things-- from a purely monetary standpoint, I mean. I'm not sure that they do deliver "value" but I see why they are appealing.

I'm just stating that they aren't as strictly necessary as many of us have been conditioned to think.

For example: one can spend thousands each year on just math enrichment/education for a PG 3rd grader. OR... one could spend about $25 USD for Singapore Math's Primary Mathematics (2 full years, even!) and a few hours a week of a parent's time, which is less (by far) than even most standard packages from American textbook producers, and is certainly better quality pedagogically speaking.

Is the larger expense "necessary?" I don't know the answer, but I do know that we chose the $25 route. Maybe we're just 'cheap' that way.


Oh, and correlation fallacy is, I think, what is currently being hashed out here. That is, while many intelligent people CHOOSE high-dollar career tracks, that doesn't mean that those things select for high intelligence or have features that particularly require it. Competition tends, ironically, to select not for HIGHEST intelligence, but for optimal intelligence. This is why physicians tend to cluster around that optimal line.

Anecdote, that. But I have seen a LOT of pre-med, pre-vet, pre-nursing, and pre-pharmacy students. The successful ones tend to be in the upper third cognitively, but beyond that, intelligence seems to lose its predictive power in light of other factors such as personal work ethic, motivation, and yes, SES. Kids who don't have to work a forty hour week seem to do better in those pre-med courses. Who knew, right? whistle



Posted By: Dude Re: Innumeracy in Gifted Education Advocacy - 04/15/13 04:32 PM
Originally Posted by HowlerKarma
Originally Posted by Dude
It's not like we needed a study, though, because this point is self-evident on this site. Raising high-IQ children is EXPENSIVE, and failure to provide certain interventions can set these children up for failure. For a family that can't afford the investments in time and resources...

I think that this confuses "raising a high-IQ child" with "grooming for material success."

It's not necessarily "expensive" to enrich a PG child. Even living in a non-urban, fairly blue-collar environment, there are libraries, the internet, and homeschooling opportunities, open source resources, etc.

But it is expensive to TigerParent. What costs so much, ironically, are those things that appeal not solely to PG children and their parents, but the things which are also trappings of high SES: private music lessons, travel, competitions, golf/polo/fencing/rowing/horses, designer camps/classes, etc.

I'm not dismissing the value of those things. Well, maybe I am arguing the value of those things-- from a purely monetary standpoint, I mean. I'm not sure that they do deliver "value" but I see why they are appealing.

I'm just stating that they aren't as strictly necessary as many of us have been conditioned to think.

For example: one can spend thousands each year on just math enrichment/education for a PG 3rd grader. OR... one could spend about $25 USD for Singapore Math's Primary Mathematics (2 full years, even!) and a few hours a week of a parent's time, which is less (by far) than even most standard packages from American textbook producers, and is certainly better quality pedagogically speaking.

Is the larger expense "necessary?" I don't know the answer, but I do know that we chose the $25 route. Maybe we're just 'cheap' that way.

"Expensive" is a relative term. The median household income in the US is around $52k a year, and that's with a whole lot of two-income families mixed in. For such a family in a non-urban, blue-collar environment, the internet is usually an option, though speeds can be an issue. Library trips are limited by time available. Open source is only an option if you have the technical savvy to support it. And homeschooling, for a two-income family, is a non-starter. Such families may also struggle to find the time and money to take their children to extracurriculars, especially if they have more than one child. This means those lessons of learning to fail and growing from it, of doing something hard and not giving up, can be left out... lessons which can help all children, but are VITAL to gifted ones.

I'm definitely not talking tiger-mom, Yale-prepping here. That's a game I refuse to play, but I still see how much I'm spending on my DD, and how it would be impossible for us to do on the median household income.

In your example above, the $25 Singapore investment is probably not a deal-breaker, but a few hours a week may be.
Posted By: Val Re: Innumeracy in Gifted Education Advocacy - 04/15/13 04:46 PM
Originally Posted by HowlerKarma
Oh, and correlation fallacy is, I think, what is currently being hashed out here. That is, while many intelligent people CHOOSE high-dollar career tracks, that doesn't mean that those things select for high intelligence or have features that particularly require it. Competition tends, ironically, to select not for HIGHEST intelligence, but for optimal intelligence. This is why physicians tend to cluster around that optimal line.

I agree and disagree here.First, the original point was "as IQ goes up, so does average income." The paper we were talking shows that and lists a lot of studies also making that point. The new thing about this paper is that the author also looked at accumulated wealth and financial difficulties and IQ. He used some weird regression analyses to make his corrections, and I haven't figured out what he did yet. But I was right about the summary article having cheated: true, ("uncorrected") accumulated wealth in the IQ 105 group was ~$84K compared to ~$71K in the IQ 110 group. BUT, wealth jumped to $95K in the IQ 115 group and $133K in the IQ 125+ group. So the journalist in New Scientist made really, really misleading statement. (PM me if you want a copy of the paper.)


I disagree with the idea that professions like engineering, medicine, and research don't select for high intelligence. Of course they do! Your IQ has to be higher than average if you're going to get through a degree or two and succeed in these fields. Sure, there are exceptions on both sides. Unmotivated smart people fail and highly motivated average people don't. But the less intelligent people will always be at a disadvantage in these professions.

And the main point is that average IQ is higher and so are average wages.

Yes, there is probably an optimal IQ for a lot of professions. Yes, there are wealthy people with lowish IQs and very smart people working low wage jobs. But those fact are different from that fact that, on average, income and IQ rise together.
Posted By: aquinas Re: Innumeracy in Gifted Education Advocacy - 04/15/13 04:53 PM
Originally Posted by HowlerKarma
Oh, and correlation fallacy is, I think, what is currently being hashed out here. That is, while many intelligent people CHOOSE high-dollar career tracks, that doesn't mean that those things select for high intelligence or have features that particularly require it. Competition tends, ironically, to select not for HIGHEST intelligence, but for optimal intelligence. This is why physicians tend to cluster around that optimal line.

Exactly!

And, welcome back HK. smile
Posted By: aquinas Re: Innumeracy in Gifted Education Advocacy - 04/15/13 05:00 PM
As a follow-on to Dude's point, I will just add that homeschooling is potentially the *most* expensive education option for parents, even for affluent families. My husband and I joke about how valuable my 1.5 year old son's brain is already because I'm at home with him. (I mean this in the sense of revealed preference through the opportunity cost of my time.)

If I return to working full time in my profession once my son is school-aged, taking even 5 hours a week to after school my son would be a career limiting move because of the time intensity of the work. To achieve comparable quality of instruction, we'd need a tutor or specialized instruction, which would hit $30k+ in our area...for ONE KINDERGARTENER. It's absurd.
Originally Posted by aquinas
If I return to working full time in my profession once my son is school-aged, taking even 5 hours a week to after school my son would be a career limiting move because of the time intensity of the work.
There are lots of mothers with demanding full-time jobs (includng my wife, a physician) who spend this much time or more either teaching their children themselves after school or chauffering them to lessons. The Tiger Mother herself is a Yale law professor.
Posted By: Dude Re: Innumeracy in Gifted Education Advocacy - 04/15/13 05:27 PM
Originally Posted by Val
First, the original point was "as IQ goes up, so does average income."

...

And the main point is that average IQ is higher and so are average wages.

The original post that started this line of discussion was this:

Originally Posted by Bostonian
Originally Posted by aquinas
Interesting and unsurprising, though giftedness doesn't imply high SES, or vice-versa, though.

Statistically, it does. On average, intelligent people are more productive, earn more, and have smarter children.

So yes, you are correct on your main point. But... context. This was said in direct response to a comment about the correlation of SES and giftedness. So while yes, I agree that higher average intelligence equates to higher average income, the point is we're talking about outliers here... and a group that is poorly studied, IMO.

From your example, for instance:

Originally Posted by Val
But I was right about the summary article having cheated: true, ("uncorrected") accumulated wealth in the IQ 105 group was ~$84K compared to ~$71K in the IQ 110 group. BUT, wealth jumped to $95K in the IQ 115 group and $133K in the IQ 125+ group.

The highest IQ group represented here is 125 and up, but most people put the threshold for gifted at 130 (assuming 15 SD scale), and the range for "optimal intelligence" at around 120-145 on the same scale. These numbers would mostly represent the optimal intelligence group, including many members below what we would term "gifted." So these numbers aren't really useful for our purposes.

For illustration purposes, 125 IQ occurs 1 time in 17, and 130 occurs 1 time in 33. Statistically, then, this suggests that nearly half of the group would not be considered gifted under the standard 130+ definition of the term.
Posted By: JonLaw Re: Innumeracy in Gifted Education Advocacy - 04/15/13 05:40 PM
Originally Posted by Bostonian
[quote=aquinas]There are lots of mothers with demanding full-time jobs (includng my wife, a physician) who spend this much time or more either teaching their children themselves after school or chauffering them to lessons. The Tiger Mother herself is a Yale law professor.

Amy Chua is not a good example to use.

In fact, generally law professors are not good examples to use.

Doctors are much better examples.
Posted By: aquinas Re: Innumeracy in Gifted Education Advocacy - 04/15/13 05:40 PM
Originally Posted by Bostonian
Originally Posted by aquinas
If I return to working full time in my profession once my son is school-aged, taking even 5 hours a week to after school my son would be a career limiting move because of the time intensity of the work.
There are lots of mothers with demanding full-time jobs (includng my wife, a physician) who spend this much time or more either teaching their children themselves after school or chauffering them to lessons. The Tiger Mother herself is a Yale law professor.

Find me one with a 90-hour work week who is ever home when her child is awake and I'll shake her hand.
Originally Posted by Val
Originally Posted by HowlerKarma
Oh, and correlation fallacy is, I think, what is currently being hashed out here. That is, while many intelligent people CHOOSE high-dollar career tracks, that doesn't mean that those things select for high intelligence or have features that particularly require it. Competition tends, ironically, to select not for HIGHEST intelligence, but for optimal intelligence. This is why physicians tend to cluster around that optimal line.

I agree and disagree here.First, the original point was "as IQ goes up, so does average income." The paper we were talking shows that and lists a lot of studies also making that point. The new thing about this paper is that the author also looked at accumulated wealth and financial difficulties and IQ. He used some weird regression analyses to make his corrections, and I haven't figured out what he did yet. But I was right about the summary article having cheated: true, ("uncorrected") accumulated wealth in the IQ 105 group was ~$84K compared to ~$71K in the IQ 110 group. BUT, wealth jumped to $95K in the IQ 115 group and $133K in the IQ 125+ group. So the journalist in New Scientist made really, really misleading statement. (PM me if you want a copy of the paper.)


I disagree with the idea that professions like engineering, medicine, and research don't select for high intelligence. Of course they do! Your IQ has to be higher than average if you're going to get through a degree or two and succeed in these fields. Sure, there are exceptions on both sides. Unmotivated smart people fail and highly motivated average people don't. But the less intelligent people will always be at a disadvantage in these professions.

And the main point is that average IQ is higher and so are average wages.

Yes, there is probably an optimal IQ for a lot of professions. Yes, there are wealthy people with lowish IQs and very smart people working low wage jobs. But those fact are different from that fact that, on average, income and IQ rise together.

And my assertion is, similarly, not exactly identical to this rebuttal's meaning (I think, anyway).

That is, the professor teaching that med student calculus probably has a higher IQ, on average, than those med students s/he is teaching.

But the professor is likely to have a lower income in spite of that.

It's a Venn diagram, not a flow-chart; I guess that is what I mean.

There is definitely a 'sweet spot' where you still relate well to others and have no trouble fitting yourself into their expectations. THAT is what makes money-- often lots of money, assuming that you've had the SES to recognize opportunity when it knocks, and know what to do about it in a social-emotional sense.

But (and again, anecdote) when you examine a group that should select for higher IQ's-- such as the professoriate, or M.D.'s, for example, you do find interesting disparities that reveal what I've suggested here.

Highest IQ medical specialities tend to be those with lowest patient-interaction.

Highest IQ research/field specialties in the professoriate tend to be in theoretical math/physics, and those are definitely not the most lucrative positions-- those are often in engineering disciplines, or biotech.


So there is definitely a general trend, but I'm not sure that the correlation here is directly relatable to the same causative mechanism.

I think that smart people like to live as well as they can. Standard of living dictates making life decisions on the basis of status, but more critically, on earning power.

VERY smart people, however, often make decisions on a paradoxically emotional level-- what "lights their fire" so to speak, which tends to be more esoteric, more demanding, more difficult, more consuming. They gravitate to where they fit in. That may (my own hypothesis) seem MORE important to that group (as IQ rises) than even remuneration does.

But "more cognitive demand" =/= "better remuneration" so it isn't a perfect correlation as you move toward the group that are true outliers. Back to Terman's observations about the wiggly tail.


Posted By: madeinuk Re: Innumeracy in Gifted Education Advocacy - 04/15/13 06:37 PM
Originally Posted by Bostonian
Originally Posted by kmbunday
Here's a link to a FAQ about company hiring procedures that includes a reference to the Schmidt and Hunter paper, along with more recent literature.

https://news.ycombinator.com/item?id=4613543

Note that because most companies do NOT hire on the basis of IQ (especially so in the United States), it is often not the case that the highest-paid persons are the smartest persons, even in the same company and the same job classification.

Some management consulting and financial firms ask candidates for SAT scores, a proxy for IQ. The most prestigious colleges stay that way by using the SAT/ACT filter. The most prestigious law schools use the LSAT, and law firms that hire only from certain law schools are using the LSAT filter. Companies that require candidates to have a bachelor's degree are screening for IQ and persistence. So do companies that require a high school diploma, at a lower level. The U.S. military, a big employer, screens out the bottom 1/3 of the IQ distribution using the AFQT:

http://isteve.blogspot.com/2013/04/almost-100-million-people-arent-smart.html
Almost 100 million people aren't smart enough to enlist in the military
by Steve Sailer
April 10, 2013 .


Actually, I think that they dumbed down the SAT, LSAT and AFQT to specifically eliminate the correlation with IQ. I do not believe that the scores NOW, at least, have anything like the correlation with IQ that they did in the 70's.
Posted By: Dude Re: Innumeracy in Gifted Education Advocacy - 04/15/13 07:01 PM
Originally Posted by madeinuk
Actually, I think that they dumbed down the SAT, LSAT and AFQT to specifically eliminate the correlation with IQ. I do not believe that the scores NOW, at least, have anything like the correlation with IQ that they did in the 70's.

My understanding of the SAT is that they eliminated the g-loaded analogy section, and introduced a subjectively-graded essay section, and this led to increased deviation between SAT scores and IQ.

The AFQT has never correlated well to IQ for takers who don't test right out of high school, because it's normed for that population, for obvious reasons. If the same person took the test 10 years later, their score would go down, regardless of any changes in ability.

The way the AFQT is calculated has changed over time as the test has evolved, so you can't compare historical AFQT scores against each other. However, I'm not aware of any changes to the test that make it less likely to parallel IQ scores for its target audience.
Thanks, kcab-- I was shooting from the hip in this instance, comparing only those disciplines for which I am most familiar-- that being STEM fields, and then "humanities" as an indifferentiated genre.

Point remains the same, however. Those fields that draw highest IQ's within subpopulations do not also correspond to best monetary compensation.

An interesting question occurs to me, however, in light of this along with Val's data (from that paper) about wealth and IQ.

Are higher IQ's correlated with better financial management of the income that the family unit does have?

That is, maybe income is averaging only 110K for people with IQ's in that 130+ range, but does wealth also plateau? Or does it rise out of proportion to the income?







Posted By: JonLaw Re: Innumeracy in Gifted Education Advocacy - 04/15/13 07:58 PM
Originally Posted by HowlerKarma
An interesting question occurs to me, however, in light of this along with Val's data (from that paper) about wealth and IQ.

Are higher IQ's correlated with better financial management of the income that the family unit does have?

That is, maybe income is averaging only 110K for people with IQ's in that 130+ range, but does wealth also plateau? Or does it rise out of proportion to the income?

Wealth only depends on the percentage of money that you are saving and the rate of return the savings.

Is now a good time to give you the bad news on how much money that you have to save in order to *ever* retire and not outlive your money?
LOL. No, I think that I've mentioned before that my spouse, Wil. E. Coyote, and myself have worked out our retirement plan...

{disclaimer... I am SO kidding here, but if I didn't, I'd cry. So pthhhhhht.}


Sure. We're going to knock off liquor stores. Either we get away with much-needed cash, or we get nabbed for our crimes, in which case, we get four hots and a cot plus good medical care. Winning!

grin

How's that for a pair of HG+ people thinking creatively?
Posted By: Val Re: Innumeracy in Gifted Education Advocacy - 04/15/13 08:16 PM
Originally Posted by Dude
So while yes, I agree that higher average intelligence equates to higher average income, the point is we're talking about outliers here... and a group that is poorly studied, IMO.


The highest IQ group represented here is 125 and up, but most people put the threshold for gifted at 130 (assuming 15 SD scale), and the range for "optimal intelligence" at around 120-145 on the same scale. These numbers would mostly represent the optimal intelligence group, including many members below what we would term "gifted." So these numbers aren't really useful for our purposes.

Yes, I agree here.

Just read this in the Methods section of the paper: the study didn't report income accurately. If a subject was married, family income was divided by 2. So if I had been in that study, my income would have been inflated and if my husband had been in it, his would have been cut by a lot. Without knowing about income differences or similarities in a marriage, it's basically not possible to report income-by-IQ accurately.

This brings me to something I was thinking about during lunch. People with high IQs and a lot of education have many more options than people with little education and average or below-average IQs.

I think we have a number of people on this board who are examples of this idea. Specifically, a lot of people here can afford to be one-income families. I suspect that this is an easier option for educated people. This option isn't available to a lot of people who aren't educated. In my situation, I was able to turn down a highly paid job last year in favor of a low-paid job. The lucrative position would have made my brain rot. The low-paid job runs on funding I have but is really, really interesting, and I can even afford to hire an RA.
Val, that's more or less what I was also getting at. It's just not always about the money for all people. The assumption here is that "smarter people all pursue the best possible financial compensation for their talents." As soon as that is untrue (and obviously it IS, or nobody would ever work in a STEM field in the public sector), then the correlation becomes flawed at the high end.

So the correlation can't possibly really be that simple at the tails of the distribution-- either of earning power or of IQ, I suspect. Mind-numbingly boring work doesn't pay as poorly as it probably should using this construct, because it SHOULD theoretically only draw persons who truly cannot do any other sort of tasks, and should pay accordingly. Also not exactly true-- most of those people doing "icky" or boring jobs do them because they pay well, not because they cannot do anything else.

I also agree wholeheartedly with the "choices" argument, as well. Our income could be about 180% of what it actually is, even accounting for gender inequity (DH and I both happen to have fairly well-compensated subspecialties within our discipline). Which makes our daughter's education about as expensive as the most obnoxiously over-priced private colleges anywhere on earth, more or less. {sigh}


LOL kcab, I think you're right. At least my parents were a GLORIOUS warning to others there. I haven't made any of the really obvious mistakes that I saw them make, anyway.
Posted By: Val Re: Innumeracy in Gifted Education Advocacy - 04/15/13 09:19 PM
Originally Posted by HowlerKarma
Mind-numbingly boring work doesn't pay as poorly as it probably should using this construct, because it SHOULD theoretically only draw persons who truly cannot do any other sort of tasks, and should pay accordingly. Also not exactly true-- most of those people doing "icky" or boring jobs do them because they pay well, not because they cannot do anything else.

I did highly paid icky work for two years precisely and only because it paid well. But they paid me way more than anyone who was doing the same job precisely because I was faster and better than other people.

I was, quite honestly, happy to turn down more icky work six months ago. Sure, I would have liked the money, but I have enough and would rather have my brain in the condition it's in right now. smile
Originally Posted by Val
I think we have a number of people on this board who are examples of this idea. Specifically, a lot of people here can afford to be one-income families. I suspect that this is an easier option for educated people. This option isn't available to a lot of people who aren't educated.

Looking at http://map.deed.state.mn.us/chameleon/tables/stateranks/Female%20Labor%20Force%20Participation%20Rate,%202010.htm , there appears to be a negative correlation between the education level of a state and female labor participation rate. Places with lots of high-paying jobs for college graduates often have high housing prices that make it hard to
afford a home on one income.

Originally Posted by HowlerKarma
Are higher IQ's correlated with better financial management of the income that the family unit does have?

The working paper

http://mason.gmu.edu/~gjonesb/IITE.pdf
"Will the intelligent inherit the earth?: IQ and time preference in the global economy"
by Garett Jones states that

'Psychologists have known for decades that higher IQ is associated with greater patience, which they often refer to as
lower “delay discounting.”'

and provides references for this assertion.

A paper

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1441512
IQ and Stock Market Participation
Mark Grinblatt
University of California, Los Angeles (UCLA) - Finance Area; Yale University - International Center for Finance; National Bureau of Economic Research (NBER)
Matti Keloharju
Aalto University
Juhani T. Linnainmaa
University of Chicago - Booth School of Business
October 9, 2010
Abstract:
Stock market participation is monotonically related to IQ, controlling for wealth, income, age, and other demographic and occupational information. The high correlation between IQ, measured early in adult life, and participation, exists even among the affluent. Supplemental data from siblings, studied with an instrumental variables approach and regressions that control for family effects, demonstrate that IQ’s influence on participation extends to females and does not arise from omitted familial and non-familial variables. High-IQ investors are more likely to hold mutual funds and larger numbers of stocks, experience lower risk, and earn higher Sharpe ratios. We discuss implications for policy and finance research

suggests that IQ is positively correlated with the ability to invest well.

In general, IQ is positively correlated with good outcomes. Anecdotes and speculation about the tails should not obscure this pattern.
Posted By: JonLaw Re: Innumeracy in Gifted Education Advocacy - 04/16/13 12:57 AM
Originally Posted by Bostonian
Stock market participation is monotonically related to IQ, controlling for wealth, income, age, and other demographic and occupational information. The high correlation between IQ, measured early in adult life, and participation, exists even among the affluent. Supplemental data from siblings, studied with an instrumental variables approach and regressions that control for family effects, demonstrate that IQ’s influence on participation extends to females and does not arise from omitted familial and non-familial variables. High-IQ investors are more likely to hold mutual funds and larger numbers of stocks, experience lower risk, and earn higher Sharpe ratios. We discuss implications for policy and finance research suggests that IQ is positively correlated with the ability to invest well.

Economic analysis and market timing are pretty much my only hobbies.

However, I wouldn't call my performance since 2010 "investing well".
Posted By: aquinas Re: Innumeracy in Gifted Education Advocacy - 04/16/13 01:49 AM
I wonder what the prevalence of technical analysis is among those surveyed.

JonLaw, I know you'll get this.

But more generally, I would want to know how the analysts controlled for the effect of financial advisors and, in cases where outside advisors were consulted, the quality of the advisory services.

Also, with securities markets best modelled as a random walk plus drift, I don't know that stock portfolio performance is really indicative of anything at all to do with intelligence. It's a random variable, per JonLaw's results.
Posted By: Edwin Re: Innumeracy in Gifted Education Advocacy - 04/16/13 01:51 AM
Great discussion, my only goal is that my son’s make enough money to support my wife and me in our retirement. My 10 year old still says he will support us and give us a big house, our 20 year old said he will place us in a home. (I hope it’s a nice one). IQ is just a factor in wealth (cash and assets); it’s an important factor to a degree. Very high IQ may be a detriment at some point, money may not mean as much. Most of the very wealthy took risks that many of us would not take, and many just work harder, or smarter (Not always IQ smarter), some give up things that many of us would not. The price for wealth can be high. If you look overall a low IQ can make it difficult to become wealthy, so the converse may hold some truth. This is mostly anecdotal but I know many HG adults doing very well financially, many gifted, and some average doing very well also. I also know many HG that are not doing so well (Some by choice). (And who defines well anyway?). I think (Like anyone asked) that the subject of wealth and IQ is much broader, then the results on an IQ test that falls apart after 140, and maybe isn’t that good after 130.
Originally Posted by aquinas
Also, with securities markets best modelled as a random walk plus drift, I don't know that stock portfolio performance is really indicative of anything at all to do with intelligence. It's a random variable, per JonLaw's results.


The financial markets are close to being efficient because there are smart people who are paid well to exploit inefficiencies. Hedge fund managers who went to colleges with high SAT scores (and who presumably have higher scores and IQs themselves) earn higher returns:

http://web.ics.purdue.edu/~zhang654/jfqa_manager.pdf
Investing in Talents: Manager Characteristics and Hedge Fund
Performances
Haitao Li, Xiaoyan Zhang, and Rui Zhao∗
June 2009
Investing in Talents: Manager Characteristics and Hedge Fund Performances
Abstract
Using a large sample of hedge fund manager characteristics, we provide one of the
first comprehensive studies on the impact of manager characteristics, such as education
and career concern, on hedge fund performances. We document differential ability among
hedge fund managers in either generating risk-adjusted returns or running hedge fund as a
business. In particular, we find that managers from higher-SAT undergraduate institutes
tend to have higher raw and risk-adjusted returns, more inflows, and take less risks. Unlike
mutual funds, we find a rather symmetric relation between hedge fund flows and past
performance, and that hedge fund flows do not have a significant negative impact on future
performance.
JEL: G23, G11, G12.
Keywords: hedge fund performance, manager characteristics, hedge fund flows.

The same pattern holds for mutual fund managers:

http://www.nber.org/digest/aug97/w5852.html
In Are Some Mutual Fund Managers Better Than Others? Cross-Sectional Patterns in Behavior and Performance (NBER Working Paper No. 5852), Chevalier and Ellison focus on managers, instead of funds: given the high rate of managerial turnover in the mutual funds industry, the distinction between fund performance and manager performance is not a trivial one. They then examine cross-sectional performance, instead of searching for correlations in fund returns over time.

During the time period they study, there is a strong correlation between fund returns and a manager's age, the average SAT score of his or her undergraduate school, and whether he or she holds an MBA.
Posted By: JonLaw Re: Innumeracy in Gifted Education Advocacy - 04/16/13 01:16 PM
Originally Posted by aquinas
Also, with securities markets best modelled as a random walk plus drift, I don't know that stock portfolio performance is really indicative of anything at all to do with intelligence. It's a random variable, per JonLaw's results.

The lesson I learned was "don't short the market during a major QE session."

So, it was pretty non-random.

[Linked Image from hussmanfunds.com]
Posted By: Dude Re: Innumeracy in Gifted Education Advocacy - 04/16/13 03:04 PM
Originally Posted by Bostonian
In general, IQ is positively correlated with good outcomes. Anecdotes and speculation about the tails should not obscure this pattern.

Yes, because that would be inconvenient to your argument.
Posted By: amylou Re: Innumeracy in Gifted Education Advocacy - 04/16/13 03:19 PM
This discussion brings to mind a funny anecdote. Years ago, dh went through a top ranked graduate program in theoretical high energy physics (I think it is safe to say this was a high IQ cohort of students). After they all graduated, some stayed in physics, and some of the ones who didn't went to Wall Street, where they made oodles of money. After one of his friends had done several physics postdocs (i.e., low pay), he contemplated Wall Street. He first asked friends still in physics about those who went to Wall Street, and they told him, yes they're rich, but they're not happy. His next step was to track down the Wall Street physicists themselves and what did he find? "Yes, they're rich, AND they're happy."

On the other hand, there have been a couple of stock market crashes since then, and we've been out of touch, so we don't know the epilogue.
Posted By: aquinas Re: Innumeracy in Gifted Education Advocacy - 04/16/13 05:02 PM
Originally Posted by Bostonian
The financial markets are close to being efficient...

Sounds like you're arguing the semi-strong efficient markets hypothesis. So far I'm nodding in agreement.

Originally Posted by Bostonian
...because there are smart people who are paid well to exploit inefficiencies.

Ehhhh...not really.

Markets are efficient because, otherwise, arbitrage opportunities would exist that investors would trade away. This presence of institutional bankers with market-making capabilities simply means that the process is accelerated because of the trade volumes they can sustain on transactions where retail investors' profits would otherwise be consumed by transaction costs. This is a volume- and specialization-linked advantage, not necessarily an intellectual one.

Also, this line of reasoning appears to be inconsistent with your efficient market values. If you believe that markets are efficient, then you should be advocating for investing in a well-diversified ETF. The article you cite doesn't factor in serial correlation of returns captured by managers outperforming the market, which is problematic, because mean reversion to returns approximating a random walk plus drift is what the literature observes. (See Malkiel, Fama).
Posted By: aquinas Re: Innumeracy in Gifted Education Advocacy - 04/16/13 05:10 PM
Originally Posted by JonLaw
Originally Posted by aquinas
Also, with securities markets best modelled as a random walk plus drift, I don't know that stock portfolio performance is really indicative of anything at all to do with intelligence. It's a random variable, per JonLaw's results.

The lesson I learned was "don't short the market during a major QE session."

So, it was pretty non-random.

[Linked Image from hussmanfunds.com]

An important lesson. But, then, QE was an unprecedented response to a black swan event.
Posted By: Dude Re: Innumeracy in Gifted Education Advocacy - 04/16/13 05:56 PM
Originally Posted by Bostonian
The financial markets are close to being efficient because there are smart people who are paid well to exploit inefficiencies. Hedge fund managers who went to colleges with high SAT scores (and who presumably have higher scores and IQs themselves) earn higher returns:

Pretty much the only thing hedge fund managers are exploiting are their investors, it seems.

http://www.automaticfinances.com/monkey-stock-picking/

Quote
The long-story short is that, except in a very rare occasion, I’m not knowledgeable enough to beat the market over an extended period of time with my investment choices. And neither are you.

If you’re paying someone to do the job for you, you’re likely not even beating the indexes they’re benchmarking against — and then you have to pay them fees.

http://www.ft.com/cms/s/2/66608056-f287-11e1-86e0-00144feabdc0.html

Quote
Since the beginning of 2010, the {hedge fund} industry has registered net inflows of nearly $150bn from investors. Yet in the same period the average hedge fund has returned just 7.5 per cent – compared with 9.3 per cent for global equities and nearly 15 per cent for global bonds.

http://www.stamfordadvocate.com/new...-pay-stretches-to-10-figures-4436581.php

Quote
Certainly, plenty of hedge fund titans took home billion-dollar paydays last year despite the fact they lagged the big gains in stocks.
Posted By: puffin Re: Innumeracy in Gifted Education Advocacy - 04/21/13 08:42 AM
Originally Posted by SiaSL
Not the OP, but Google gives me The Everything Parent's Guide to Raising a Gifted Child by Sarah Robbins for the first quote (p125) and Giftedness 101 by Linda Silverman (p87) for the second.

Amusingly enough links to the page with quoted materials in Google Books came as #2 results for both searches. The #1 result points to this thread. I have no idea what the DA uses for SEO but Google just laps it up...

Our library just got the everything parent book - unimpressed I must admit and not just with that quote.
Posted By: JonLaw Re: Innumeracy in Gifted Education Advocacy - 04/21/13 01:59 PM
Originally Posted by aquinas
Originally Posted by JonLaw
Originally Posted by aquinas
Also, with securities markets best modelled as a random walk plus drift, I don't know that stock portfolio performance is really indicative of anything at all to do with intelligence. It's a random variable, per JonLaw's results.

The lesson I learned was "don't short the market during a major QE session."

So, it was pretty non-random.

[Linked Image from hussmanfunds.com]

An important lesson. But, then, QE was an unprecedented response to a black swan event.

They weren't reacting to a "black swan" event.

In fact, the collapse of the credit/housing bubble was as far from a "black swan" event as you can get.

When you stuff a financial system chock full of credit that has no business existing in the first place, what you get is what happened.

I mean the dot-com bust just happened. It wasn't like everyone hadn't just lived through a boom and bust.

It was a standard-issue mania, panic, and crash. Classic "white swan".
Posted By: aquinas Re: Innumeracy in Gifted Education Advocacy - 04/21/13 05:28 PM
Originally Posted by JonLaw
Originally Posted by aquinas
Originally Posted by JonLaw
Originally Posted by aquinas
Also, with securities markets best modelled as a random walk plus drift, I don't know that stock portfolio performance is really indicative of anything at all to do with intelligence. It's a random variable, per JonLaw's results.

The lesson I learned was "don't short the market during a major QE session."

So, it was pretty non-random.

[Linked Image from hussmanfunds.com]

An important lesson. But, then, QE was an unprecedented response to a black swan event.

They weren't reacting to a "black swan" event.

In fact, the collapse of the credit/housing bubble was as far from a "black swan" event as you can get.

When you stuff a financial system chock full of credit that has no business existing in the first place, what you get is what happened.

I mean the dot-com bust just happened. It wasn't like everyone hadn't just lived through a boom and bust.

It was a standard-issue mania, panic, and crash. Classic "white swan".
I'm going to say yes and no.

You don't get any disagreement from me about over-extension of credit being obviously problematic. When price is so radically disconnected from fundamentals, it's only a matter of time until a correction occurs. So yes, that's as plain vanilla as theory goes.

But where I would argue a black swan occurred was in the speed of transmission of losses due to an unprecedented, and largely misunderstood, interconnectedness of assets across classes and geographies. While I'll concede that it was actually an endogenous shock, I'd suggest that it still qualifies as a black swan due to the disconnect between expectations and reality on the propagation of the collapse. That was truly unforeseen.

Either way, we're taking this thread pretty far afield. smile
Oh, I dunno.

Seems like the entire premise has circled around the basic disconnect between the numbers (shell) game and, well, reality as most of us know it.

I see the two things as parts of a larger whole, but maybe that is just me.

Dude's commentary re: hedge fund management seems quite a striking example of the phenomenon, actually, as does Jon's assertion of credit extension not reflective of reality.

Bubbles result from this kind of disconnect. That's my hypothesis, anyway. Well, probably not "mine" in any sense that is novel-- pretty sure that people with more expertise than I have also feel that way.


The implications for the original topic of the thread are interesting in light of that, though. Must ponder.
Posted By: JonLaw Re: Innumeracy in Gifted Education Advocacy - 04/22/13 01:35 AM
Originally Posted by HowlerKarma
Seems like the entire premise has circled around the basic disconnect between the numbers (shell) game and, well, reality as most of us know it.

I see the two things as parts of a larger whole, but maybe that is just me.

Dude's commentary re: hedge fund management seems quite a striking example of the phenomenon, actually, as does Jon's assertion of credit extension not reflective of reality.

Bubbles result from this kind of disconnect. That's my hypothesis, anyway. Well, probably not "mine" in any sense that is novel-- pretty sure that people with more expertise than I have also feel that way.


The implications for the original topic of the thread are interesting in light of that, though. Must ponder.

Much of the problem in modern education is quantifying something that doesn't lend itself well to being addressed in that way in the first place.

Posted By: Dude Re: Innumeracy in Gifted Education Advocacy - 04/22/13 02:58 PM
Originally Posted by JonLaw
Much of the problem in modern education is quantifying something that doesn't lend itself well to being addressed in that way in the first place.

Indeed... take in economics. Markets are influenced by mass psychology. A price is an opinion. Yet all these "smart" economists are designing quantum mathematical models to predict their behaviors as if they obeyed rational laws.
Posted By: aquinas Re: Innumeracy in Gifted Education Advocacy - 04/22/13 06:34 PM
Originally Posted by Dude
A price is an opinion.

I like this take.

The problem in markets is that opinions can be rational to the individual with distorted expectations but irrational on an objective basis with full information. But, macro tools based on micro foundations are still predicated on a "representative household". So it's a challenge of aggregating up and adjusting for heterogeneity of expectations and individual characteristics. Human behaviour is hairy...it makes theoretical math and the natural sciences look so elegant by contrast!
Posted By: aquinas Re: Innumeracy in Gifted Education Advocacy - 04/22/13 06:35 PM
Originally Posted by JonLaw
Originally Posted by HowlerKarma
Seems like the entire premise has circled around the basic disconnect between the numbers (shell) game and, well, reality as most of us know it.

I see the two things as parts of a larger whole, but maybe that is just me.

Dude's commentary re: hedge fund management seems quite a striking example of the phenomenon, actually, as does Jon's assertion of credit extension not reflective of reality.

Bubbles result from this kind of disconnect. That's my hypothesis, anyway. Well, probably not "mine" in any sense that is novel-- pretty sure that people with more expertise than I have also feel that way.


The implications for the original topic of the thread are interesting in light of that, though. Must ponder.

Much of the problem in modern education is quantifying something that doesn't lend itself well to being addressed in that way in the first place.

ITA. Must...publish...something..."original".

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