MAIN IDEA:

The main idea of this book is that individual IQ scores have only marginal impact on individual prosperity, but IQ of a nation or hive, defined as average of its people, is much more important because it defines overall prosperity of the nation.

DETAILS:

Introduction: Paradox of IQ

The paradox author presents here is that countries which do better on various international scholastic tests have higher GDP, however inside countries high IQ does not correlate with high income at the same level. Here is how author summarizes reasons for this:

Author identifies 5 channels for IQ to pay more for nations than for individuals:

“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, corporate 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, to 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.”
6. Just a Test Score?

Here author looks at IQ tests as tool for intelligence measurement and points out that high scores in one area predicts skills in other. Then he discusses diverse methods of measuring cognitive skills and provides some research result for impact:” The payoff to a high IQ appears moderate. Those with IQs in the top 10 percent earned about 60 percent more than those in the bottom 10 percent.” Another research demonstrates that this impact did not change that much for 100 years. Finally, author discusses Emotional IQ noting that:” Better average social skills are typically just another benefit of having a higher IQ score, and since the economy is a social system, those social skills may prove important in explaining why higher-scoring nations tend to be more productive.”

2. A da Vinci Effect for Nations

Here author extends the idea if consistent levels of IQ across different areas to Nations. First, he discusses ecological validity of tests. Then author moves to discuss main source of nations IQ – work of psychologist Richard Lynn and political scientist Tatu Vanhanen. Here is relevant graph:

3. James Flynn and the Quest to Raise Global IQ
   This chapter is about Flynn effect of IQ raising over time. Author discusses racial implications, politically correct suppression of research, impact of nutrition, health, education, and surrounding people on IQ not only of individuals, but also groups and nations.
4. Will the Intelligent Inherit the Earth?
   Here author moves to various experiments with delayed gratification and idea that smarter people are more patient. Author reviews various research results and financial results for savings rates and debts.
5. Smarter Groups Are More Cooperative
   This chapter looks at another very important area of human activity: cooperation. Once again research demonstrates correlation: smarter people are not only more patient, but are also better at mind reading to predict results of cooperation or lack thereof. To analyze this at the group level author looks at data from schools with high average SAT scores adn low, finding that students in former are more cooperative than in latter.
6. Patience and Cooperation as Ingredients for Good Politics
   Author starts this chapter with discussion of cooperation, providing example of informal truce during WWI. Then he moves to politics defining it as kind of recurring prisoners dilemma and linking it to institutions: “I contend that economic institutions—property rights, legal systems, political regimes—are often a collection of just the kinds of games for which higher average IQ pays off, games that are played day in and day out by judges, bureaucrats, politicians, and citizens.” . Author then brings in Coase Theorem: “If it’s easy for two or more parties to bargain with each other, they can bargain to an efficient, win-win outcome regardless of which party has the most power going in to the negotiation.” The final part of the chapter is about government and corruption as measured by the corruption perception index. Author makes an interesting point about IQ and corruption: “Average IQ predicts lower corruption across countries. Additional research that Potrafke and I collaborated on showed that both national average IQ and national math and science test scores do a robust job of predicting a nation’s degree of overall property rights enforcement.14 And University of Johannesburg economist Isaac Kalonda Kanyama found a moderate to strong relationship between national average IQ and yet another set of institutional quality indices created by the World Bank.15 In nations with higher average test scores, politicians tend to respect people’s property, government bureaucracies allow people and businesses to buy and sell with less interference, and bribery is less a part of daily life. In nations with higher average test scores, the government is more likely to let people and businesses find their Coasian bargains peacefully.”
7. Informed Voters and the Question of Epistocracy
   This chapter starts with example of gap between experts and population using issue of dosage. Then he moves to discuss uninformed voters as result of low numeracy and literacy of population. It is linked to IQ with high IQ voters being better informed, more active, and generally having different attitudes, usually more pro-market. Author also discusses here formation of political opinion via social pressure and information manipulation. On Epistocracy author brings in a paradox of democracy: expansion of franchise brings in low IQ masses that vote incorrectly from the point of view of high IQ elite. He ends with this: “As an economist I will make this forecast: if a nation can find an effective way to raise the information level of its voters, it will probably become more market-oriented, more socially tolerant, and more prosperous in the long run.”
8. The O-Ring Theory of Teams
   O-ring is reference to the piece of Shuttle equipment that failed causing catastrophe. Author uses this example to discuss that any system is as reliable as its least reliable subsystem. Author then expands this analogy to teams with good and bad workers and posits the question: If high IQ team is more productive, why individual IQ does not provide higher returns.
9. The Endless Quest for Substitutes and the Economic Benefits of Immigration
   Here author provides his solution to paradox: in high average IQ team even low IQ individuals much more productive than they would be on low average IQ team. This become foundation of author’s discussion on immigration. His claim is that low IQ and culturally different immigrants are becoming much more productive in high IQ team, consequently benefiting everybody. He then discusses impact of such immigration including on the political system of the new country.
10. Poem and Conclusion
    In the last chapter author become a bit poetic. Then he refers to research about top 5-10% of population with higher level of cognitive skills and whether they have disproportional impact on prosperity of the nation overall. The final inference is that individual IQ does not matter as much as overall levels of cognitive abilities and skills and politics should be directed to support their development. Author also expresses hope that Flynn effect would have global impact raising prosperity of currently lower-scoring countries.

MY TAKE ON IT:

I think that author’s attention and concentration on average IQ of the nation is somewhat strange because it does not exist. As many other thing that social “science” attempts to analyze, it is just an abstraction. IQ and other characteristics are characteristic of individual humans and sould not be applied to abstraction because it prevents clear analysis. What does matter is culture, expressed as a set of views and opinions in minds of majority of people regardless of their IQ. Average American regardless of IQ is culturally conditioned to believe that he/she is entitled to freedom of action in hope to obtain good returns if this action successful in satisfying needs of others who would pay. Whoever is the leader of the nation at the moment can help or hamper to this action, but not really define outcome. The flow of wealth is going from the bottom up with most of it supposed to stay at the bottom. Average Russian, also regardless of IQ, culturally conditioned to believe that decisive impact on his/her well being comes from whoever is the great leader, who now makes decisions and directs collective effort in creation of wealth, which them distributed down according to individuals’ position in society. Consequently, individual effort should be directed to improvement of position within society rather than to creation of wealth. IQ, either individual or national, hardly has much impact on wealth creation by overall society in either case.

Actually, table of cognitive abilities and IQ results by country nicely demonstrates my point. Both CA and IQ of Ukraine and Israel are exactly the same 93 and 95. Moreover the population of Israel to high extent came from Ukraine between 1880 and 2000, the last wave (10% of Israel population) coming after 1990. Israel’s GDP per capita is $42,452, while Ukraine $2,536, that is nearly 20 times difference. It is all despite Ukraine having large territory with the best agricultural land in the Europe, close to the rich EU countries, and vast industrial base built during Russian Empire and expanded by USSR. It is also mainly at peace, except for low scale conflict with Russia, which does not threaten its existence. Israel has miniature territory, is surrounded by enemies who seek its complete destruction and annihilation of its population, constantly suffers from terrorist attacks, constantly under political attack from United Nations, constantly under attack from anti-Semitic intelligentsia of nearly all countries. And, since national CA or IQ cannot explain this different in performance, something else should. Whether such explanation would be based on high individual IQ of Ashkenazi Jews that represent some 25% of population, or overall mix of Jewish cultures from all around the world that formed Israeli culture, or quality of air and water, it would be an interesting thing to explore.