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"Being more intelligent does not confer any advantage along two of the three key dimensions of financial success (income, net worth and financial distress)," Zagorsky finds, looking at the data with statistical tests. Income does weakly correspond to intelligence test scores, he finds, where "a one point increase in IQ test scores is related to an income increase of $346 per year. But at most, that same one-point increase in IQ leads to "a net worth increase of at most $83, but probably zero."
Since wealth depends on cumulative income over the years, it is implausible that the slope of wealth vs. IQ is much smaller than annual income vs. IQ. It should be larger. I think the following slope estimates are more plausible. If one SD of IQ corresponds to an income differential of $30K, that is $30K/15 = $2K per IQ point.
I'm occasionally asked about financial returns to cognitive ability. As a rough rule of thumb, judging from the graphs below (obtained here), I would say: On average, an increase of IQ by one SD corresponds to ~ $30k per annum of additional income. (Somewhat less than 1 SD in income; the distribution is far from normal.)
By early middle age, individuals > 90th percentile in IQ have, typically, more than twice the wealth of individuals who are of average IQ.
By early middle age, individuals > 90th percentile in IQ have, typically, more than twice the wealth of individuals who are of average IQ.
Some may say that the top 10% of IQ would be those scoring an FSIQ of about 125 or above. On the normal distribution curve, one would find a preponderance of these individuals clustered toward the low end (near 125), as higher IQs simply occur less frequently. Over time, several articles have indicated that an IQ of 125-130 may be an optimal; Individuals with higher IQ may suffer from lack of intellectual peers, paucity of appropriate academic challenge, and dearth of affirmation, understanding, acceptance, and support.
Since wealth depends on cumulative income over the years, it is implausible that the slope of wealth vs. IQ is much smaller than annual income vs. IQ. It should be larger. I think the following slope estimates are more plausible. If one SD of IQ corresponds to an income differential of $30K, that is $30K/15 = $2K per IQ point.
Not really.
Wealth, if you are talking about baby amounts of savings like $20K per year, depends on the increase in value of your savings, which depends on the interest rate and/or valuation of the stock market and/or your ability to accumulate your own capital in your own enterprise.
Right now, you can expect your $20,000 to grow to about....$20,250 next year, if you bought a nice 30-year treasury. (Are they even selling these new ones of these right now? I can't remember.)
Now, if you decided to buy $20K worth of say, 30 year treasuries in, say, 1990, you would have gotten $20,850 (about).
Because of the magic of exponents, you get $41,900 in 30 years if you bought today by 2045.
However, the 1990 interest rate will get you about $231,000 by 2020.
