Intelligence and incentives

Arnold Kling has some more thoughts on the Flynn effect here. The question is: how can we reconcile this with this (worth the free registration)?

Here’s one possibility. There is an economic explanation for the Flynn effect, but not (just) the one Arnold suggests.

It’s that people are as clever as they need to be, and they respond to incentives.

A hundred years ago, there were no calculators and reference books were expensive. As a result, there was a big premium (in terms of both wages and status) on rote-learning and on being able to do long multiplication. People were therefore encouraged by schools to invest in such skills.

Today, though, the availability of calculators and reference sources mean there is no such premium on these skills. The incentive to acquire them has therefore diminished.

Instead, the premium today lies in the ability to interpret information, to tell stories and to see patterns.

The incentive to acquire these skills has therefore increased. And people have responded accordingly. The upshot is that the skills measured by IQ tests have risen, whilst the skills not measured – rote-learning and arithmetical trickery – have declined.

The Flynn effect is therefore (at least partly) the result of people reallocating their mental energies in response to changing incentives. It’s just substitution in response to relative prices.

But what evidence is there that intellectual abilities do respond to incentives? Here are three anecdotes.

First, in the film Lorenzo’s Oil, based on a true story, a man became a skilled pharmacologist in an effort to find a cure for his son’s rare illness for which there was no known cure. He found a useful therapy.

Second, a friend of mine has been threatened with a huge bill from Islington council for building works. In response, he’s become quite an expert on local government sub-contracting procedures and aspects of land law.

Third, a few years ago, I was watching TV news with the father of a friend, who was a test pilot for a civil airline. There was a report of an RAF plane crashing.

“No surprise there” said pop. “No-one in the RAF can fly properly.”

I raised an eyebrow.

“They’ve got ejector seats” he said. “No-one can fly properly with an ejector seat. Strap the fuckers in. They’ll learn to keep the plane in the air then.”

Maybe, then, intellectual energy does respond, at least partly, to incentives. Could it be that we over-estimate short-run responses to incentives (for example, to tax or exchange rate changes) but under-estimate long-run responses?

Comments

[David Gillies]

I've read that some researchers have ascribed the indubitable fact that Ashkenazi Jews consistently score about a standard deviation (15 points) higher on IQ tests to the intellectual effort required to become a Talmudist. The level of ratiocination and logic chopping inherent in Talmudic study, and its very high cachet in days gone by, is adduced as evidence of a selection effect.

I'm not sure that the Flynn effect can simply be ascribed to the demand for skills that are IQ-test friendly.. Intelligence as a whole is more in demand now than 100 years ago. Human capital, which is the only truly finite resource, has shifted from manual to intellectual work. If rewards accrue to a cognitive elite then we would expect to see intelligence rise. In fact, that's something of a truism: if a trait is heritable (and intelligence certainly seems to be), and its posession leads to increased fitness, then by definition the allele that codes for the trait will tend to increase its representation in the population.

The flip side is that those of lesser cognitive ability are disproprtionately penalised in a knowledge-based society. Thus there tends to be a stratification of society, with a large underclass essentially locked out of success. That's pretty much the central conclusion of Murray and Herrnstein's The Bell Curve (which is roundly execrated by a large crowd of people who've never read it).