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IQ and National Productivity

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The New Palgrave Dictionary of Economics

Abstract

A recent line of research in economics and psychology hypothesizes that differences in national average intelligence, proxied by IQ tests, are important drivers of national economic outcomes. Cross-country regressions, while showing a robust IQ-growth relationship, cannot fully test this hypothesis. Thus, recent work explores the micro-foundations of the IQ-productivity relationship. The well-identified psychological relationship between IQ and patience implies higher savings rates and higher folk theorem-driven institutional quality in high average IQ countries. Experiments indicate that intelligence predicts greater pro-social behavior in public goods and prisoner’s dilemma games, supporting the hypothesis that high national average IQ causes higher institutional quality. High average IQ countries also have higher savings intensity by a variety of measures. Other possible IQ-productivity channels are discussed, as are possible environmental causes of differences in national average IQ.

This chapter was originally published in The New Palgrave Dictionary of Economics, Online edition, 2011. Edited by Palgrave Macmillan

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Acknowledgements

I would like to thank Alex Tabarrok, Tyler Cowen and an anonymous reader for extremely helpful suggestions. Any remaining errors are my own.

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  1. http://link.springer.com/referencework/10.1057/978-1-349-95121-5

    Garett Jones

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    Jones, G. (2011). IQ and National Productivity. In: The New Palgrave Dictionary of Economics. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-349-95121-5_3004-1

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    • DOI: https://doi.org/10.1057/978-1-349-95121-5_3004-1

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