How IQ fosters the virtues that gave rise to the modern commercial world.
People who do well on IQ tests are different from other people. On average, they remember more facts, they’re better at solving block puzzles and they’re better at reciting a list of numbers in reverse order. But IQ predicts more than just conventional mental skills: IQ predicts virtue as well.
An outrageous claim, but let’s make the outrageous claim concrete. Let’s see whether higher IQ not only predicts but even helps to create a particular set of virtues: the seven cardinal virtues, central to economist Deirdre McCloskey’s influential book The Bourgeois Virtues. These seven consist of the four classical virtues—prudence, temperance, fortitude, justice—along with the three Christian virtues—faith, hope, and love. McCloskey argues that the rise of the modern commercial world—the capitalist world—depended crucially on these seven virtues. Capitalism depends on hope for a better future, prudent financial decisions, and all the rest.
Let’s run through all seven, starting with faith, particularly faith in the future. Over two dozen psychology and economics studies find that people who do better on IQ tests are more likely to make patient choices, so it tends to be easier for them to have faith in the future. For the patient, the promise of the future is no mere theory, just as to a deeply religious person the promise of heaven is no mere theory. Both have faith, and both act upon their faith. When people have faith in the future that means more saving, more lending, and so more funds for businesses to borrow: The economy benefits from the faith of its people.
Capitalism depends on hope for a better future, prudent financial decisions, and all the rest.
People who do better on IQ tests also combine hope and temperance: As a variety of experiments and surveys demonstrate, they’re more likely to take risks (so they’re hopeful), but only certain kinds of risks (so they’re temperate about risk-taking). That means that people with higher IQs are more likely to take stock-market style risks, bets that usually work out in the long run. U.S. stocks have gone up and down from decade to decade, but they’ve grown an average of 6% a year adjusted for inflation since the U.S. Civil War. But at the same time, higher-IQ individuals are less likely to take Las Vegas style risks. They tend to turn down bets that lose on average, a case of prudence in action. This combination of hope and temperance matters: When lots of people take bigger stock-market style risks, the law of averages kicks in—on average the wins are bigger than the losses, the Amazons and Microsofts outweigh the Pets.coms and even the Lehmans, and so the economy grows.
Are smarter people more loving? I’ll make the case that they are. Fortunately for me, I don’t have to torture the definition of love to make my case—economist Gregory Hess already did the torturing for me in a 2004 article in the Journal of Political Economy. He defines love as the trait that helps a relationship last even when times get tough. A loving relationship is one that has enough surplus, enough good in it, to keep things together even when there’s an incentive to walk away. That sounds a lot like being cooperative. Being in a cooperative group isn’t quite the same as being in a loving group, but cooperation is certainly a step in the right direction. And here we have a variety of experiments showing that smarter groups are indeed more cooperative, perhaps less out of kindness than out of shrewdness.
I call this kind of intelligence Coasian intelligence after the Nobel laureate Ronald Coase. Coase showed that if the parties to a dispute are allowed to bargain with each other, they can achieve a win-win outcome regardless of who starts off with more power in the negotiation. Skill at bargaining and negotiating isn’t the only trait that keeps love alive, but it certainly helps. And since people who do well on IQ tests also tend to do well on emotional intelligence tests, there’s yet more reason to think that smarter people are better at holding relationships together.
Coasian intelligence is likely at work in governments, in businesses, and in families, helping people find win-win solutions to life’s most vexing problems.
But of course these are all indirect forms of evidence: is there some direct evidence that smarter people have more love in their lives? Two studies, one from the Netherlands and one from the U.S., suggest that IQ either creates love or helps sustain it: both studies find that in recent decades individuals with higher IQs are less likely to get divorced. That held true even if you statistically compared individuals with similar incomes and education levels. Perhaps that’s partly because smarter people tend to make better marriage decisions, but that would just be another way of saying that smarter people are better at finding love. If higher IQ can help create more marital harmony, more win-win thinking, and better bargaining in the household, that’s an astonishing example of the power of intelligence to generate and maintain love. Coasian intelligence is likely at work in governments, in businesses, and in families, helping people find win-win solutions to life’s most vexing problems.
Higher intelligence also predicts prudent thinking. One experiment found that people who did better on the related Cognitive Reflection Test were less likely to make a basic mistake when thinking about probability (a mistake known as the conjunction fallacy), and a larger literature in behavioral finance reports that higher intelligence predicts better financial decision-making. Three studies—part of a fascinating series of papers by Mark Grinblatt, Matti Keloharju and coauthors on IQ and finance—find that people with high IQs are less likely to sell stocks just because they’ve had a big run-up in price, they’re more likely to choose lower-fee investment funds, and they’re less likely to fall into big tax mistakes when making investment choices. Smarter people are usually more prudent.
But while IQ predicts a variety of virtuous traits, IQ doesn’t predict fortitude at all, at least not without doing damage to the usual definition of fortitude: grit, courage, strength of character. As I say in the introduction to my book (free online, mobile-friendly), national average IQ doesn’t explain everything about cross-country income differences, just half of everything. Someone should find out whether cross-country differences in grit can help explain some of the other half.
It might be hard to believe in a link between IQ and justice, but countries with higher average test scores tend to have less corruption, even if you only look at countries with similar income levels and countries with similar legal backgrounds. I think most people would consider low corruption a form of justice. You can see why higher national test scores help create justice just by combining the fact that smarter people tend to be more patient with the fact that they’re more likely to cooperate. Smarter politicians are more likely to focus on the long run, growing the economy rather than shoving the nation’s wealth into secret bank accounts, and they’re at least a little more likely to work with other politicians to cooperate and grow the economic pie rather than point fingers, grandstand for political gain, or threaten to bring down the entire political system just to get a few more years in office. Cooperative politicians might not keep all their campaign promises, but at least they’ll reduce the chance of civil strife, and they’ll reduce the chance of ransacking the national treasury for short-term gain. Smarter politicians increase your odds of achieving justice.
So human intelligence is a source of six of the seven cardinal virtues: faith, hope, love, prudence, temperance, and justice. And if McCloskey is right in thinking that these virtues help create modern commercial life, then human intelligence is a source of the prosperity we see around us. Unfortunately, IQ research is currently a taboo topic in much of academia, especially research into the reasons why nations and demographic groups currently differ in average IQ. But if human intelligence is such an important driver of human virtue, this taboo comes at horrific human cost: Every barrier to studying human intelligence is a barrier to raising human intelligence. Let’s work to remove this taboo, and to replace it with a virtue—the virtue of unimpeded free inquiry.