Hive Mind

Some people like murder mystery novels. I much prefer intellectual mysteries like that in Garett Jones’ new book Hive Mind: How Your Nation’s IQ Matters So Much More Than Your Own:

Over a decade ago I began my research into how IQ matters for nations. I soon found that the strong link between average IQ and national productivity couldn’t be explained with just the conventional finding that IQ predicts higher wages. IQ apparently mattered far more for nations than for individuals. In my early work, I estimated that IQ mattered about six times more for nations than for individuals: your nation’s IQ mattered so much more than your own. That puzzle, that paradox of IQ, is what set me on my intellectual journey. …

I’ll lay out five major channels for how IQ can pay off more for nations than for you as an individual:

1. High-scoring people tend to save more, and some of that savings stays in their home country. More savings mean more machines, more computers, more technology to work with, which helps make everyone in the nation more productive.
2. High-scoring groups tend to be more cooperative. And cooperation is a key ingredient for building higher-quality governments and more productive businesses.
3. High-scoring groups are more likely to support market-oriented policies, a key to national prosperity. People who do well on standardized tests also tend to be better at remembering information, and informed voters are an important ingredient for good government.
4. High-scoring groups will tend to be more successful at using highly productive team-based technology. With these “weakest link” technologies, one misstep can destroy the product’s value, so getting high-quality workers together is crucial. Think about computer chips, summer blockbuster films, cooperative mega-mergers.
5. The human tendency to conform, at least a little, creates a fifth channel that multiplies the effect of the other four: the imitation channel, the peer effect channel. Even a small tendency to conform, to act just a little bit like those around us, too try to fit in, tends to quietly shape our behavior. If you have cooperative, patient, well-informed neighbors, that probably makes you a bit more cooperative, patient, and well-informed.

Of course, test scores don’t explain everything about the wealth of nations: I’m only claiming that IQ-type scores explain about half of everything across countries – and much less within a country.

The question of why IQ matters more for nations than individuals does indeed seem quite important, and quite puzzling, and Jones is to be praised for his readable and informative book calling it to our attention. And the five explanations Jones offers are indeed, as he claims, channels by which each of us benefits from the IQ of the people around us.

However (you knew that was coming, right?), when we benefit from the IQ of people nearby who are within the scope of shared social institutions, then institution access prices can reflect these benefits. For example, employers can pay more for a smart employee who is not only more productive personally, but also raises the productivity of co-workers. Landlords can offer lower rents to people that other renters want to be near. Stores can offer discounts to customers that other customers like nearby when they are shopping. And clubs can offer discounts to entice memberships from those with which others like to associate.

So simple economic theory leads us to expect that the benefits that smart people give to others nearby, within these shared priced-entry institutions, will be reflected in their incomes. Specifically, people can plausibly pay more to live, club, shop, and work near and influenced by others who are more patient, cooperative, informed, and reliable. So these local benefits of smart associates do not plausibly explain the difference between how individual and national IQ correlate with income.

To explain this key difference (a factor of six!) we need big market or government failures. These could result if:

  1. Small social institutions such as firms, clubs, malls, and rental housing suffer some severe and as yet unidentified market failures which prevent them from favoring the smart.
  2. Benefits from the smart span such long social distances that they are not encompassed by shared social institutions with low enough transaction costs to allow deals to favor the smart. Maybe, for example, large metropolitan areas just can’t make effective deals on policies to favor attracting the smart, and pushing away the stupid.
  3. Governments with structures that fail to prevent the stupid and impatient from greatly influencing government policy. Such prevention might happen via restricting the franchise in democracies, by auctioning governance to a highest bidder, or via institutions like futarchy tied to long-term outcomes.

This third explanation seems by far the most plausible to me, especially via the government impatience channel. After all, while the stupid might be persuaded to see a benefit in adopting government institutions that give more influence to the smart, the impatient may just not see much benefit from their point of view in having a more patient government.

Adopting this as my tentative explanation, I must admit to now being more nervous about allowing more impatient and stupid immigrants, though as Bryan Caplan points out, that still allows for taking on billions of smart immigrants. But even if I’m now mildly more reluctant to take on certain kinds of immigrants, I’ll blame that mainly on our poor governance institutions, which give too much weight to the stupid and the impatient.

P.S. I’m aware that Jones has a formal model wherein a certain kind of nation-IQ correlation is larger than a certain kind of individual-IQ correlation. The model has two industries, one where reliability matters greatly, and one where it matters much less, and two kinds of workers, a set of identical and very reliable workers and another set of less reliable workers who vary in their reliability. Only the identical very reliable workers work in the industry where reliability matters a lot, but some of these workers also work in the industry where reliability matters less, and within that second industry, there is only a weak correlation between reliability and wages. But if we compare nations that differ in the value of the high identical reliability among the workers in the industry where reliability matters, we’ll see that national income varies greatly with this reliability parameter. Yes this is a valid formal model, but it seems fragile and I doubt it robustly generalizes well to more complex situations; I just don’t think it works as a robust account of why national IQ matters more than individual IQ for wages.

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  • vaniver

    “So simple economic theory leads us to expect that the benefits that smart people give to others nearby, within these shared priced-entry institutions, will be reflected in their incomes. Specifically, people can plausibly pay more to live, club, shop, and work near and influenced by others who are more patient, cooperative, informed, and reliable. So these local benefits of smart associates do not plausibly explain the difference between how individual and national IQ correlate with income.

    To explain this key difference (a factor of six!) we need big market or government failures.”

    What difference did you expect? It’s not clear to me whether a factor of six is high or low, given the frictional costs involved in transactions involving externalities. How much of the value it creates does a tech startup capture, for example?

    As another example of how intelligence has second-order effects, I don’t think the underlying data could reflect status transactions, which seem to have less frictional costs than cash transactions for the sort of ways in which smart people benefit those immediately around them. If a less intelligent friend asks me for advice, I get satisfaction out of it and they get a better decision, and we both walk away happier. That sort of thing will show up in the income statistics as a benefit for my friend but not for me, even though it was mutually beneficial.

  • Dave Lindbergh

    Wouldn’t we expect immigrants, by the very fact of making the investment to immigrate, to be more patient (and likely smarter) than the average person who doesn’t immigrate?

    • Lord

      But less than that of those already there or immigration would be in the opposite direction.

      • Dave Lindbergh

        How do you figure?

        Even if “national IQ” is the ONLY component of a country’s attractiveness to immigrants (that’s not being claimed), that’s only a statement about the aggregate of the source nation.

        It tells us nothing about the *immigrants* from countries with lower “national IQ”.

  • Daniel Carrier

    Why are you assuming that it’s the high IQ that causes the success of the country? Maybe it’s that rich countries result in more people going to school and getting higher IQs.

    • Dave Lindbergh

      Because, by definition, IQ is the subcomponent of intellectual ability that is not a function of education or experience.

      • Michael Terry

        Oh, I thought he was joking.

      • http://juridicalcoherence.blogspot.com/ Stephen Diamond

        From the Amazon review: “Jones makes the case that, through better nutrition and schooling, we
        can raise IQ, thereby fostering higher savings rates, more productive
        teams, and more effective bureaucracies.”

      • http://twan.home.fmf.nl Twan van Laarhoven

        If that is the definition of IQ, the IQ tests are measuring something a bit different. Because education does have some (perhaps small) effect on IQ scores.

        Besides education, there is also the effect of health and nutrition on IQ. So the situation could be that rich countries have good nutrition, health, and education, and few wars, together leading to a higher IQ.

      • Daniel Carrier

        What’s the word for that number they give you when you take an IQ test? That’s what the study was looking at and that’s what I was talking about. The subcomponent of intellectual ability that is not a function of education or experience is interesting for theory, but has little practical application since there’s no way to test for it.

    • http://juridicalcoherence.blogspot.com/ Stephen Diamond

      The issue isn’t what causes high IQ but why is national IQ much more highly correlated with income (etc.) than individual IQ.

      • Daniel Carrier

        And maybe it’s because rich nations emphasize education more than poor ones. Education is a signalling game, and the country has to be rich to get it going.

      • dmytryl

        Could be just a result of averaging individual differences.

        E.g. suppose you had 2 million laboratory mice, and you had one million on normal diet and half on a slightly nutrient deficient diet, and you correlated maze performance to diet.

        On an individual level, correlation is going to be fairly weak if the deficient diet is not extremely bad for them – only part of individual variation is result of the diet, the rest depends on randomness arising in reproduction.

        But break up the mice into 200 groups of 10 000 mice, and you’ll have an incredibly strong correlation, simply because you averaged out all other random factors. (The correlation is not the same as the effect size)

  • already overcame

    I have never heard of landlords, stores, or clubs offering discounts to smart conscientious people who are not celebrities.

    • joeteicher

      A good credit score makes a lot of things cheaper.I once lived in an apartment building that based required security deposit on credit score.

  • lump1

    This is the best argument for why attractive countries should use a fair immigration lottery instead of choosing the most meritorious immigrants: Taking only the best would guarantee a brain drain from the emigrant countries, and make those places even more screwed up than they already are, lacking the human resources to get their act together. Several generations of such a policy would severely deplete the talent of all non-wealthy countries, and that sucks for everybody, because such talent-depleted countries will inevitably be the turds in the world’s punchbowl. The Guatemalan who is a programmer in the US was smart enough to have been a doctor back home. Where is she doing more good? If the talented of every generation are recruited out by rich countries, they don’t leave much of a future for those left behind. Jones’s research only reinforces this intuition.

    • http://overcomingbias.com RobinHanson

      It depends of course on whether one is trying to improve the home nation or the world. There might be a conflict between those goals.

      • Rafal Smigrodzki

        There is an additional wrinkle on this issue: The random immigration lottery would at first approximation reduce variance between countries, or in other words, lead to mediocrity worldwide. For an equalist this would be a valuable outcome in itself, however, mediocrity and the absence of excellence is likely to cause a greatly diminished pace of technological progress. Technological progress has a way of spreading benefits well beyond the borders of the nation where it happens first. Thus at second glance, the immigration lottery not only reduces the success of the home country in short term, but also it has a negative impact on the world in the longer term. This is likely to be yet another situation where liberal intuitions lead to unfavorable outcomes.

      • lump1

        I agree and think this tradeoff is real. Rafal is also right that concentrations of talent will accelerate the development of technology, and on balance, this is good for everybody.

        But the way I see the long run, there are two ways this talent divergence can end. There will be a strong demand to leave talent-depleted countries, because they’ve become relative hellholes. Either we succeed in using force to make sure the demand is unsatisfied, in which case we set ourselves up a nasty and unending global tension. In case the walls and fences fail, we will get the inevitable global homogenization of talent, through waves of undigestible immigration into the prosperous countries. But once that homogenization happens, at least there will be some sort of global stability.

        If you’re like me and think that in the long run, walls can’t hold back talent homogenization, you might ask what is the best way for it to go down. I would say it’s to do it while keeping migration to a minimum. Waves of immigrants cause cultural tensions and integration problems. Rich countries should instead use their wealth to give talented people a reason to move to poor countries, and especially, to incentivize homegrown talent to stay. We definitely should be building transportation, water, power and data networks in the poorest places, so that they become tolerable even for people who have the option to leave. We already do this kind of charity in places like Mississippi, but not Moldova or Malawi. The more talent-depleted such places become, the harder it will be to catch them up, which is basically asking for future emigration waves. In effect I’m proposing a hyperaccelerated globalization, or globalization that runs faster than market forces would dictate, with the difference covered by subsidies. It will be painful for North America and Europe, but less painful than the immigration crises that would result from not doing it.

    • dmytryl

      There’s no guarantee that this Guatemalan would’ve been a doctor back home, not any more or less than that this Guatemalan would work on drug discovery in the US that would benefit Guatemala.

      Nor is it particularly different from the situation of him being born in the US in the middle of nowhere and moving to the bay area.

    • John Edwards Cummings

      Why should rich countries waste opportunities and risk their own interest in order to ensure a sustainable future for the poor ones?

  • http://graehl.org/ Jonathan Graehl

    Misreading Jones’ 5 points in RSS as Hanson’s, I came to offer a scathing correction: there’s every reason to expect market failure. I see Hanson has already got this. Smashing insight. Of course immigration should be selective, and I’d go further: whoever agitates for relaxation of high local standards should be asked to leave, unless they can first demonstrate that fractionating walled gardens increases the diaspora’s value instead of dissipating it, enough to compensate for the natural selfish tendency of quality to concentrate, which concentration seems at least some evidence that genius castaways are wasted potential. If virtual proximity replaces physical (if we’re ems, it won’t), the same argument for exclusivity and restricted access applies.

    • http://juridicalcoherence.blogspot.com/ Stephen Diamond

      I’d go further: whoever agitates for relaxation of high local standards should be asked to leave…

      So I guess it’s goodbye Robin Hanson. [No wonder Robin’s slightly moderating his pro-immigrationism.]

  • William

    Given that measures of IQ can be improved by effective schooling, good nutrition, and other features of wealthy/successful nations, I don’t know why Jones assumes IQ leads to success instead of resulting from it.

    • Garett Jones

      Not either-or but both-and: as with the well-known health and income literatures, joint causation can lead to a virtuous cycle, which in the book I call a Flynn Cycle.

      We can be sure there isn’t solely a health to IQ causal relationship, if only because the Schmidt and Hunter meta-analyses document the moderate link running from higher IQ to better average worker performance.

      • William

        Makes sense! I think the disconnect I was having is because I was thinking about what the /initial cause of differences/ in IQ between nations was, which would seem to be health/income effects that later lead to the Flynn Cycle you mention, but for the book what you’d really be saying is that /at present/ X% of national prosperity is explained by IQ. Thank you for the clarification!

    • Emil Kirkegaard

      That claim is not very plausible given cases like https://en.wikipedia.org/wiki/Nauru, https://en.wikipedia.org/wiki/Qatar, https://en.wikipedia.org/wiki/United_Arab_Emirates and so on. High incomes did not make these nations smarter.

      The argument does not work the other way, e.g. with North Korea/China, because one can argue that totalitarian communism is a strong enough depressor to keep a high smarts population down.

      And one cannot counter that Islam is similar because the data doesn’t support it (Islam is not a good predictor of national S when IQ is taken into account) and because Nauru isn’t Islamic.

      See also http://www.sciencedirect.com/science/article/pii/S016028961300113X

      • William

        These examples would be an argument against both directions of causation. I think what you’re really showing here is that when you have a bunch of natural resources they lead to a lot of money, but not necessarily good governance or schooling etc.

  • Joshua Brulé

    I agree the “government impatience channel” is probably the largest factor, but I’m willing to bet that market failure is still important here.

    For example, even in the absence of legal regulatory obstacles, I find it hard to imagine an apartment requiring an IQ test as part of a renters’ agreement without drawing some serious social backlash. Maybe my intuition is off here, though.

  • brendan_r

    Robin, I know most people aren’t but I’d assumed you were already aware of roughly what the between and within country IQ-income correlations were. I get that Garrett fleshes out the causation puzzle here but why does that add much to such a robust empirical regularity?

    Why such confidence low quality immigration was an obviously good thing before Hive Mind? (If I recall you listed it second after not starting wars as your highest conviction policy and I never understood why based on what I thought you knew.)

    • http://juridicalcoherence.blogspot.com/ Stephen Diamond

      I understood Robin’s support of mass migration to be (at least ostensibly) based on considerations of global human welfare. His latest comments seem a bit more nationalist.

      • brendan_r

        No he always argues from global utilitarianism, usually in both space and time.

      • http://juridicalcoherence.blogspot.com/ Stephen Diamond

        Wrote Robin: “It depends of course on whether one is trying to improve the home nation or the world. There might be a conflict between those goals.”

        This in the context of a normative argument. (Responding to Lump1.)

  • Gregory Holtorf

    Did the book make a good case that they aren’t reversing causation? We know that good nutrition, low stress, and lack of pollution cause higher IQ. Could the mystery be resolved if high national IQ and high wages are both caused by better technology?

  • dmytryl

    Well, or it could simply be that the national average IQ – which averages out individual differences – is tracking the quality of environment (nutrition, parasite load, etc) far more accurately than individual IQ does.

  • brendan_r

    Robin seems to be saying that he used to think that people with high IQ’s captured their positive spillovers via higher incomes, lower rents, cheaper tuitions, etc., because that’s what “simple economic theory” suggests.

    It’s true that many institutions try to do this but since ~1965 the government has been amping up prevention of it.

    The supreme court ~ banned employers from IQ testing decades ago; firms get sued for employing too few people from the lower IQ races; there’s an ongoing assault on objective civil service exams because disparate impact; and landlords are regularly sued for trying to keep their inner-city apartment building filled with Asians rather than Blacks.

    And of course as the fraction of low IQ voters grows so does support for this kind of thing.

    Robin obviously knew all this long before Hive Mind got him thinking about the topic.

    So I never understood his conviction that open borders was a great thing, and I don’t understand what he’s now learned that’s reduced his confidence.

    (Robin’s produced the start of a strong argument for why large scale immigration would’ve been dealt with more effectively before the civil rights era.)

    • http://overcomingbias.com RobinHanson

      Actually experts do no think courts prohibit firms using IQ tests. Bryan Caplan has more to say on this.

      • brendan_r

        Since IQ predicts performance pretty well, is cheap to measure, and many biz leaders are explicit in the high weight they place on it relative to experience, it’s pretty odd how rare IQ testing is if firm’s don’t feel as if its dangerous to do. Or how tech firms ask heavily g-loaded questions while insisting that IQ testing is not what they’re doing. Sure looks like they’re scared to do it.

        But fine. I tilda’ed that assertion because I know its messy. Could you respond to the broader point about what you’ve learned that wasn’t obvious before that’s changed your mind a bit about one of your highest conviction policy points?

      • http://juridicalcoherence.blogspot.com/ Stephen Diamond

        When push comes to shove, he’s more of a nationalist than he made out.

      • brendan_r

        Even if a employer prefers IQ’s neither too high nor too low a test can measure that.

        No, I think the reason they’re rare is that employers can gauge IQ with sufficient accuracy with out any formal tests so why subject yourself to the threat of disparate impact lawsuits if you don’t have to.

        But the point remains that efficient pricing of IQ spillovers is explicitly opposed in many instances by policy. That’s most obvious in housing.

      • http://juridicalcoherence.blogspot.com/ Stephen Diamond

        Even if a employer prefers IQ’s neither too high nor too low a test can measure that.

        I was thinking of the effect on morale and public regard if an employer says it doesn’t want high IQ workers. But now that you mention it, measurement may not even be possible, since a low IQ individual can’t get a high IQ score, but a high IQ individual can intentionally get a low IQ score. [R.B. Cattell had worked on some IQ tests which can’t be faked low, but I’ve never seen them.]

        [Bryan Caplan indicates that it does not seem that the legal threat is uppermost in employers’ minds.]

    • Ed

      Companies can still use IQ exams but the have to prove it’s necessary for the job. Proctor & Gamble won’t even look at your resume until you pass their IQ test. Capital One won’t invite you to interview until you pass their assessment test which although not a pure IQ test is g-loaded.

      Also the federal government is bringing back the civil service exam as a way to speed up hiring but on a limited basis initially.

  • JW Ogden

    So should would it be good to encourage the intelligent to have more children?

  • Dude Man

    “Benefits from the smart span such long social distances that they are not encompassed by shared social institutions with low enough transaction costs to allow deals to favor the smart. Maybe, for example, large metropolitan areas just can’t make effective deals on policies to favor attracting the smart, and pushing away the stupid.”

    This seems to me to make a lot of sense intuitively, especially for cities. You used to see a lot of cities try to implement policies to attract the “creative class,” but these policies didn’t seem to have any effect.

  • Ray Lopez

    Excellent review by this author. The one thing that scared me was I did not want to buy a book that’s a Malcolm Gladwell type 20 page research paper made into a 200 page book. Hence I am a little off-put when I saw that the book is a “readable and informative book”. Readable means prolix, or dumbed down for the sub-100 IQ crowd. However, I see on Amazon.com that the book is only 160 pages, which is fine, even if a dumbed down narrative. I’ve added it to my Wish List.

    BTW, Hansen’s belief that: “Governments with structures that fail to prevent the stupid and
    impatient from greatly influencing government policy. Such prevention
    might happen via restricting the franchise in democracies, by auctioning governance to a highest bidder” are essentially arguments in favor of the status quo, since the rich have the resources to buy governance. As such, these policies would perpetuate whatever Great Stagnation we’re in now. Adam Smith warned against this kind of “conspiracy”, FYI. BTW, capturing of government by the rich is essentially how the US government has largely worked, except for arguably brief periods such as when the Progressives ruled, LBJ Democrats, Andrew Jackson supporters, and arguably Clinton and Obama supporters (I’m a libertarian, and have voted all over the map, sometimes not at all since I’m overseas and it’s a bit cumbersome to qualify for an absentee ballot these days).

    • John Howard

      Proof of stupidity is the prevalence of government. Jews have statistically high I.Q.s, yet statistically promote totalitarian (socialist, communist) government thus proving that high I.Q. scores have little to do with wisdom. High I.Q. generally just means a well-read conformist.

  • gda

    Funny that there is no mention of La Griffe du Lion’s “smart fraction theory” in either the blog post “Hive Mind” or the comments.

    Deliberate, or simply an oversight? I wonder.

    • http://juridicalcoherence.blogspot.com/ Stephen Diamond

      Deliberate, or simply an oversight? I wonder.

      OK, let’s hear your conspiracy theory on the subject.

      • gda

        No conspiracy theory. Just surprised it was not mentioned given how (seemingly) relevant it is.

        Wondered if perhaps there was some particular reason.

      • John howard

        Maybe they’re not familiar with it.

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  • gvanderleun

    Short form: Smart people leave Africa, Africa collapses.

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