Economics Detective Radio

Garett Jones is Associate Professor of Economics and BB&T Professor for the Study of Capitalism at the Mercatus Center, George Mason University. His book, Hive Mind: How Your Nation's IQ Matters so Much More than Your Own is the subject of this episode. The book deals with an empirical puzzle: IQ is a weak predictor for earnings. We all know high-IQ people who live paycheque to paycheque, and lower IQ people who succeed brilliantly. And yet, when we look at the relationship between nations' average IQ scores and their incomes, the relationship is strong. Nations with the highest average IQ scores are eight times wealthier than nations with the lowest IQ scores. How can we resolve this apparent contradiction? Garett documents five main channels for the spillover effects of IQ: 1. Smarter people are more patient, they save more and build up more capital. When economists test people's patience, high-IQ people tend to be more willing to wait for a larger amount of money in the future rather than taking a sma