IQ and the Wealth of Nations
Encyclopedia
IQ and the Wealth of Nations is a controversial 2002 book by Dr. Richard Lynn
Richard Lynn
Richard Lynn is a British Professor Emeritus of Psychology at the University of Ulster who is known for his views on racial and ethnic differences. Lynn argues that there are hereditary differences in intelligence based on race and sex....

, Professor Emeritus of Psychology at the University of Ulster
University of Ulster
The University of Ulster is a multi-campus, co-educational university located in Northern Ireland. It is the largest single university in Ireland, discounting the federal National University of Ireland...

, Northern Ireland
Northern Ireland
Northern Ireland is one of the four countries of the United Kingdom. Situated in the north-east of the island of Ireland, it shares a border with the Republic of Ireland to the south and west...

, and Dr. Tatu Vanhanen
Tatu Vanhanen
Tatu Vanhanen is a Professor Emeritus of Political Science at the University of Tampere in Tampere, Finland...

, Professor Emeritus of Political Science at the University of Tampere
University of Tampere
The University of Tampere is a university in Tampere, Finland. It has 15,400 degree students and 2,100 employees. It was originally founded in 1925 in Helsinki as a Civic College , and from 1930 onwards it was known as a School of Social Sciences...

, Tampere
Tampere
Tampere is a city in southern Finland. It is the most populous inland city in any of the Nordic countries. The city has a population of , growing to approximately 300,000 people in the conurbation and over 340,000 in the metropolitan area. Tampere is the third most-populous municipality in...

, Finland
Finland
Finland , officially the Republic of Finland, is a Nordic country situated in the Fennoscandian region of Northern Europe. It is bordered by Sweden in the west, Norway in the north and Russia in the east, while Estonia lies to its south across the Gulf of Finland.Around 5.4 million people reside...

. The book argues that differences in national income (in the form of per capita
Per capita
Per capita is a Latin prepositional phrase: per and capita . The phrase thus means "by heads" or "for each head", i.e. per individual or per person...

 gross domestic product
Gross domestic product
Gross domestic product refers to the market value of all final goods and services produced within a country in a given period. GDP per capita is often considered an indicator of a country's standard of living....

) correlate
Correlation
In statistics, dependence refers to any statistical relationship between two random variables or two sets of data. Correlation refers to any of a broad class of statistical relationships involving dependence....

 with differences in the average national intelligence quotient
Intelligence quotient
An intelligence quotient, or IQ, is a score derived from one of several different standardized tests designed to assess intelligence. When modern IQ tests are constructed, the mean score within an age group is set to 100 and the standard deviation to 15...

 (IQ). The authors further argue that differences in average national IQs is one important factor, but not the only one, contributing to differences in national wealth
National wealth
National wealth also net wealth , national net worth, gross national wealth , and total national wealth is the total sum value of monetary assets minus liabilities of a given nation, also National wealth” refers to the total value of wealth possessed by the citizens of a nation at a set point in...

 and rates of economic growth
Economic growth
In economics, economic growth is defined as the increasing capacity of the economy to satisfy the wants of goods and services of the members of society. Economic growth is enabled by increases in productivity, which lowers the inputs for a given amount of output. Lowered costs increase demand...

. Critical responses have included questioning the methodology and incomplete data as well as the conclusions. The 2006 book IQ and Global Inequality
IQ and Global Inequality
IQ and Global Inequality is a 2006 book by psychologist Richard Lynn and political scientist Tatu Vanhanen. IQ and Global Inequality is follow-up to their 2002 book IQ and the Wealth of Nations, an expansion of the argument that international differences in current economic development are due in...

is a follow-up to IQ and the Wealth of Nations by the same authors. Several other data sets of estimated average national cognitive ability exist as explained in nations and intelligence
Nations and intelligence
The relationship between nations and intelligence has been researched from various aspects. Estimates of average national cognitive abilities have been done in several literature reviews of worldwide IQ testing and of international student assessment studies. Especially the IQ data collections...

.

Outline

The book includes the authors' calculation of average IQ scores for 81 countries, based on their analysis of published reports. It reports their observation that national IQ correlates
Pearson product-moment correlation coefficient
In statistics, the Pearson product-moment correlation coefficient is a measure of the correlation between two variables X and Y, giving a value between +1 and −1 inclusive...

 with gross domestic product
Gross domestic product
Gross domestic product refers to the market value of all final goods and services produced within a country in a given period. GDP per capita is often considered an indicator of a country's standard of living....

 per capita at 0.82, and with the rate of economic growth from 1950–1990 at 0.64.

The authors believe that average IQ differences between nations are due to both gene
Gene
A gene is a molecular unit of heredity of a living organism. It is a name given to some stretches of DNA and RNA that code for a type of protein or for an RNA chain that has a function in the organism. Living beings depend on genes, as they specify all proteins and functional RNA chains...

tic and environmental factors. They also believe that low GDP can cause low IQ, just as low IQ can cause low GDP. (See: Positive feedback
Positive feedback
Positive feedback is a process in which the effects of a small disturbance on a system include an increase in the magnitude of the perturbation. That is, A produces more of B which in turn produces more of A. In contrast, a system that responds to a perturbation in a way that reduces its effect is...

)

The authors write that it is the ethical responsibility of rich, high-IQ nations to financially assist poor, low-IQ nations, as it is the responsibility of rich citizens to assist the poor.

National IQ estimates

Central to the book's thesis is a tabulation of what Lynn and Vanhanen believe to be the average IQs of the world's nations. Rather than do their own IQ studies (a potentially massive project), the authors average and adjust existing studies.

For 104 of the 185 nations, no studies were available. In those cases, the authors have used an estimated value by taking averages of the IQs of neighboring or comparable nations. For example, the authors arrived at a figure of 84 for El Salvador by averaging their calculations of 79 for Guatemala and 88 for Colombia. Including those estimated IQs, the correlation of IQ and GDP is 0.62.

To obtain a figure for South Africa, the authors averaged IQ studies done on different ethnic groups, resulting in a figure of 72. The figures for Colombia, Peru, and Singapore were arrived at in a similar manner.

In some cases, the IQ of a country is estimated by averaging the IQs of countries that are not actually neighbors of the country in question. For example, Kyrgyzstan
Kyrgyzstan
Kyrgyzstan , officially the Kyrgyz Republic is one of the world's six independent Turkic states . Located in Central Asia, landlocked and mountainous, Kyrgyzstan is bordered by Kazakhstan to the north, Uzbekistan to the west, Tajikistan to the southwest and China to the east...

's IQ is estimated by averaging the IQs of Iran and Turkey, neither of which is close to Kyrgyzstan—China, which is a geographic neighbor, is not counted as such by Lynn and Vanhanen. This is presumably because the ethnic groups of the area speak Iranian and Turkic languages, but do not include Chinese.

To account for the Flynn effect
Flynn effect
The Flynn effect is the name given to a substantial and long-sustained increase in intelligence test scores measured in many parts of the world. When intelligence quotient tests are initially standardized using a sample of test-takers, by convention the average of the test results is set to 100...

 (an increase in IQ scores over time), the authors adjusted the results of older studies upward by a number of points.

Special cases

In several cases the actual GDP did not correspond with that predicted by IQ. In these cases, the authors argued that differences in GDP were caused by differences in natural resources and whether the nation used a "planned
Planned economy
A planned economy is an economic system in which decisions regarding production and investment are embodied in a plan formulated by a central authority, usually by a government agency...

" or "market" economy
Market economy
A market economy is an economy in which the prices of goods and services are determined in a free price system. This is often contrasted with a state-directed or planned economy. Market economies can range from hypothetically pure laissez-faire variants to an assortment of real-world mixed...

.

One example of this was Qatar
Qatar
Qatar , also known as the State of Qatar or locally Dawlat Qaṭar, is a sovereign Arab state, located in the Middle East, occupying the small Qatar Peninsula on the northeasterly coast of the much larger Arabian Peninsula. Its sole land border is with Saudi Arabia to the south, with the rest of its...

, whose IQ was estimated by Lynn and Vanhanen to be about 78, yet had a disproportionately high per capita GDP of roughly USD $17,000. The authors explain Qatar's disproportionately high GDP by its high petroleum
Petroleum
Petroleum or crude oil is a naturally occurring, flammable liquid consisting of a complex mixture of hydrocarbons of various molecular weights and other liquid organic compounds, that are found in geologic formations beneath the Earth's surface. Petroleum is recovered mostly through oil drilling...

 resources. Similarly, the authors think that large resources of diamond
Diamond
In mineralogy, diamond is an allotrope of carbon, where the carbon atoms are arranged in a variation of the face-centered cubic crystal structure called a diamond lattice. Diamond is less stable than graphite, but the conversion rate from diamond to graphite is negligible at ambient conditions...

s explain the economic growth of the African nation Botswana
Botswana
Botswana, officially the Republic of Botswana , is a landlocked country located in Southern Africa. The citizens are referred to as "Batswana" . Formerly the British protectorate of Bechuanaland, Botswana adopted its new name after becoming independent within the Commonwealth on 30 September 1966...

, the fastest in the world for several decades.

The authors argued that the People's Republic of China
People's Republic of China
China , officially the People's Republic of China , is the most populous country in the world, with over 1.3 billion citizens. Located in East Asia, the country covers approximately 9.6 million square kilometres...

's per capita GDP of roughly USD $4,500 could be explained by its use of a communist economic system
Economic system
An economic system is the combination of the various agencies, entities that provide the economic structure that defines the social community. These agencies are joined by lines of trade and exchange along which goods, money etc. are continuously flowing. An example of such a system for a closed...

 for much of its recent history
Economy of the People's Republic of China
The People's Republic of China ranks since 2010 as the world's second largest economy after the United States. It has been the world's fastest-growing major economy, with consistent growth rates of around 10% over the past 30 years. China is also the largest exporter and second largest importer of...

. The authors also predicted that communist nations whom they believe have comparatively higher IQs, including the PRC, Vietnam, and North Korea
North Korea
The Democratic People’s Republic of Korea , , is a country in East Asia, occupying the northern half of the Korean Peninsula. Its capital and largest city is Pyongyang. The Korean Demilitarized Zone serves as the buffer zone between North Korea and South Korea...

, can be expected to gain GDP by moving from centrally-planned to market economic systems, while predicting continued poverty for African nations. Recent trends in the economy of the People's Republic of China
Economy of the People's Republic of China
The People's Republic of China ranks since 2010 as the world's second largest economy after the United States. It has been the world's fastest-growing major economy, with consistent growth rates of around 10% over the past 30 years. China is also the largest exporter and second largest importer of...

 and Vietnam
Vietnam
Vietnam – sometimes spelled Viet Nam , officially the Socialist Republic of Vietnam – is the easternmost country on the Indochina Peninsula in Southeast Asia. It is bordered by China to the north, Laos to the northwest, Cambodia to the southwest, and the South China Sea –...

 seem to confirm this prediction, as China's GDP has grown rapidly since introducing market reforms. South Korea
South Korea
The Republic of Korea , , is a sovereign state in East Asia, located on the southern portion of the Korean Peninsula. It is neighbored by the People's Republic of China to the west, Japan to the east, North Korea to the north, and the East China Sea and Republic of China to the south...

 has a higher average IQ and a market economy. However, South Korea still has a lower GDP/Capita than many Western nations (but relatively high overall), but South Korean economic reform started in the early 1960s and it is one of the fastest growing economies in the world. Still, South Korea went from amongst the poorest nations in the world to an advanced economy by recording one of the fastest growth rates in the world. Despite a supposedly higher average IQ and a market economy since the Meiji Restoration
Meiji Restoration
The , also known as the Meiji Ishin, Revolution, Reform or Renewal, was a chain of events that restored imperial rule to Japan in 1868...

 in 1867, Japan
Japan
Japan is an island nation in East Asia. Located in the Pacific Ocean, it lies to the east of the Sea of Japan, China, North Korea, South Korea and Russia, stretching from the Sea of Okhotsk in the north to the East China Sea and Taiwan in the south...

 still has a lower GDP/Capita than many Western nations.

Reception and impact

Several negative reviews of the book have been published in the scholarly literature. Susan Barnett and Wendy Williams wrote that "we see an edifice built on layer upon layer of arbitrary assumptions and selective data manipulation. The data on which the entire book is based are of questionable validity and are used in ways that cannot be justified." They also wrote that cross country comparisons are "virtually meaningless."

Richardson (2004) argued, citing the Flynn effect
Flynn effect
The Flynn effect is the name given to a substantial and long-sustained increase in intelligence test scores measured in many parts of the world. When intelligence quotient tests are initially standardized using a sample of test-takers, by convention the average of the test results is set to 100...

 as the best evidence, that Lynn has the causal connection backwards and suggested that "the average IQ of a population is simply an index of the size of its middle class, both of which are results of industrial development". The review concludes that "This is not so much science, then, as a social crusade." A review by MR Palairet criticized the book's methodology, particularly the imprecise estimates of GDP and the fact that IQ data was only available for 81 of the 185 countries studied. However, the review concluded that the book was "a powerful challenge to economic historians and development economists", and that its conclusions were in great need of further analysis.

By economists

In a book review in the Journal of Economic Literature
Journal of Economic Literature
The Journal of Economic Literature is a peer-reviewed academic journal on economy published by the American Economic Association. It was established in 1963 as the Journal of Economic Abstracts. As a review journal, it mainly features essays and reviews of recent economic theories...

, a journal of the American Economic Association
American Economic Association
The American Economic Association, or AEA, is a learned society in the field of economics, headquartered in Nashville, Tennessee. It publishes one of the most prestigious academic journals in economics: the American Economic Review...

, Thomas J. Nechyba wrote that: "(the book's) sweeping conclusions based on relatively weak statistical evidence and dubious presumptions seem misguided at best and quite dangerous if taken seriously. It is therefore difficult to find much to recommend in this book."

Writing in the Economic Journal
Economic journal
The Economic Journal is one of the leading scholarly journals of economics. It is published on behalf of the Royal Economic Society by Wiley-Blackwell....

, published on behalf of the Royal Economic Society
Royal Economic Society
The Royal Economic Society is incorporated by a Royal Charter dated 2 December 1902. It is one of the oldest economic associations in the world. Currently it has over 3,300 individual members, of whom 60% live outside the United Kingdom...

, Astrid Oline Ervik states that while the book may be "thought provoking", there is nothing that economists can learn from it. She criticizes the book for a number of reasons; that the authors don't establish cross country comparability and reliability of IQ scores, that they rely on simple bivariate correlations, that they do not consider or control for other hypothesis, and that they confuse correlation with causation. The author states "The arguments put forward in the book to justify such (international IQ) comparisons seem at best vague and unconvincing. At worst, passages in the book appear to be biased and unscientific." and concludes that "the authors fail to present convincing evidence and appear to jump to conclusions." The book was positively reviewed in the journals Journal of Social, Political, and Economic Studies
Journal of Social, Political, and Economic Studies
The Journal of Social, Political, and Economic Studies is a journal published by Scott-Townsend Publishers , that also publishes the Mankind Quarterly...

 and The Oriental Quarterly by Edward M. Miller
Edward M. Miller
Edward McCarthy Miller, Jr. is an American economics professor whose writings on race and intelligence have sparked debates on academic freedom.-Life and career:...

, an economics professor who has published many controversial papers on Race and IQ.

Criticism of data sets

Some criticisms have focused on the limited number of studies upon which the book is based. The IQ figure is based on one study in 34 nations, and two studies in 30 nations. There were actual tests for IQ in 81 nations. In 104 of the world's nations there were no IQ studies at all and IQ was estimated based on IQ in surrounding nations. The limited number of participants in some studies has also been criticized. A test of 108 9-15-year olds in Barbados, of 50 13–16-year olds in Colombia, of 104 5–17-year olds in Ecuador, of 129 6–12-year olds in Egypt, and of 48 10–14-year olds in Equatorial Guinea, all were taken as measures of national IQ.

Denny Borsboom (2006) argues that mainstream contemporary test analysis does not reflect substantial recent developments in the field and "bears an uncanny resemblance to the psychometric state of the art as it existed in the 1950s." For example, it argued that IQ and the Wealth of Nations, in order to show that the tests are unbiased, uses outdated methodology, if anything indicative that test bias exists. Girma Berhanu in an essay review of the book concentrated on the discussion of Ethiopian Jews. The review criticizes the principal assertion of the authors that differences in intelligence attributed to genetics account for the gap between rich and poor countries. Berhanu criticized the book as being based in a "racist, sexist, and antihuman" research tradition and alleged that "the low standards of scholarship evident in the book render it largely irrelevant for modern science".

Impact on psychology

In 2006, Lynn and Vanhanen followed IQ and the Wealth of Nations with their book IQ and Global Inequality, which contained additional data and analyses, but the same general conclusions as the earlier book. Discussing both books, Earl Hunt
Earl Hunt
Earl Hunt is the name of:*Earl B. Hunt, American psychologist and computer scientist*Earl Gladstone Hunt, Jr. , American Methodist pastor and evangelist...

 writes that although Lynn and Vanhanen's methodology and conclusions are questionable, they deserve credit for raising important questions about international IQ comparisons. Hunt writes that Lynn and Vanhanen are correct that national IQs correlate strongly with measures of social well-being, but they are unjustified in their rejection of the idea that national IQs could change as a result of improved education.

Along with the rest of Lynn's work, IQ and the Wealth of Nations has had a large impact on the understanding of human differences, and has served as the basis for many subsequent studies about international comparisons. Studies by Weede and Kämpf and R. E. Dickerson have re-examined Lynn's data and concluded that IQ is an important contributor to national wealth. Whetzel and McDaniel also agree that the book's conclusions about the relationship between IQ, democracy and economic freedom are robust, although they argue that the direction of causality remains uncertain.

Other studies have disputed the strength of the correlation between national IQ and income. In a 2003 re-analysis of the book's statistical methods, sociologist Thomas Volken found no effect of national IQ on growth or income. However, a similar analysis by American economists
Economics
Economics is the social science that analyzes the production, distribution, and consumption of goods and services. The term economics comes from the Ancient Greek from + , hence "rules of the house"...

 Jones and Schneider (2006) showed that IQ is a statistically significant
Statistical significance
In statistics, a result is called statistically significant if it is unlikely to have occurred by chance. The phrase test of significance was coined by Ronald Fisher....

 explanatory variable of economic growth. Hunt and Wittmann have criticized aspects of the book's data and conclusions, but concluded that there is nonetheless a strong correlation between national IQ and prosperity.

External links

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