Interesting Article on Wealth IQ

[Perry]

Study Finds That Smarter People Are No Wealthier
Wednesday, April 25, 2007 | CBC News

People who score higher on intelligence tests may still have
difficulty balancing their chequebooks, according to a U.S.
study that finds no link between smarts and wealth.

The study of over 7,000 Americans who have been tested
since the late 1970s and are now in their 40s found that
while higher IQ scores have led to higher income, that
income hasn't translated into greater wealth.

"Intelligence is not a factor for explaining wealth," said the
author of the study, Ohio State University research scientist
Jay Zagorsky, in a statement.

"Those with low intelligence should not believe they are
handicapped, and those with high intelligence should not
believe they have an advantage."

People with higher IQs tended to earn higher incomes, the
study found, with each point increase in IQ score associated
with $202 to $616 US more income per year, meaning the
difference in income between a person in the normal range
(100) and someone in the top two per cent of society (130) is
between $6,000 and $18,500 a year.

But the same trend did not carry over when the study looked
at wealth, which was defined as a combination of factors
including income, investments and home value minus
mortgages, credit cards and other debts.

While Zagorsky said the data don't provide an explanation
for this, he suggests high-IQ people are not saving as much
as others.

The study found an irregular relationship between
intelligence and measures of financial distress. The
percentage of people who maxed out their credit cards, for
example, rises from 7.7 per cent for those with an IQ of 75
or below to 12.1 per cent for those with an IQ of 90.

It then falls to 5.4 per cent for those with an IQ of 115
before rising to six per cent for those with an IQ higher than
125.

"Just because you're smart doesn't mean you don't get into
trouble," he said. "Among the smartest people, those with IQ
scores above 125, even six per cent of them have maxed out
their credit cards and 11 per cent occasionally miss
payments."

The study, which appears online in the journal Intelligence,
is based on data collected from 7,403 Americans who have
been participating in the National Longitudinal Survey of
Youth, a series of surveys conducted since 1979.

Survey participants were surveyed about income, wealth and
three measures of financial difficulty, such as late bill
payments, credit card debt and bankruptcy.

The IQ test used came from four tests found in the Armed
Services Vocational Aptitude Battery, a series of tests the
U.S. Department of Defence uses to judge recruits.

[muppet]

Hi Perry

Robert Kiyosaki worked this out years ago and wrote his first book Rich Dad, Poor Dad.

He also developed his game Cashflow 101 to teach highly paid professionals that they didn't know about money.

Regards

[Stevegoodey]

Thank god for that, we can't all be smart.

[toby]

That's why the "Millionaire next door" is a must read.

[Rolf]

And 'The Millionaire Mind' as well. Highly recommended.

[Perry]

Robert Kiyosaki worked this out years ago and wrote his first book Rich Dad, Poor Dad.

He also developed his game Cashflow 101 to teach highly paid professionals what they didn't know about money.

Where did that other book come in the chronology?

Wasn't it called:

If You Want to Get Rich Don't go to School

Was it before or after RD-PD?

[toby]

If you want to be rich and happy don't go to school. was his first book.
Then RD/PD and every derivative there after.

[donna]

That's why the "Millionaire next door" is a must read.

And the 'Millionaire Mind' are both available in our bookstore Here

Cheers,

Donna

[poormastery]

Academic Scribbling

The first point poormastery would make is that I think that Emotional Intelligence is more important than IQ.

The second point I would make is that from my experience, the article is not necessarily correct.

Many of the people in finance that I have met in my life are

(a) Exceptionally intelligent
(b) Earn very high incomes
(c) Are very wealthy

This would tend to contradict the articles conclusion.

The third point I would make is that many high IQ types may not be as interested in money as poor low IQ people. For example, Professor Wittgenstein (a philosopher that I have mentioned before) was perhaps the wealthiest person in Europe. He gave his entire fortune away, mostly to rich people. Perhaps he thought that rich people would not be corrupted as easily by wealth (or it was already too late for them)? Perhaps he might have thought that being an über rich philosopher might not have been consistent with his message? Who knows?

After Professor Wittgenstein gave his massive wealth away, he spent a decade or so as a humble schoolteacher, teaching Austrian peasant children in exceptionally poor conditions.

The point is that high IQ types are often more interested in ideas than money.

If you are a quantum physicist, you could work as a proprietary trader or in risk at an investment bank or in a hedge fund, where you would most probably earn a fortune. Alternatively, you could probably work for the government doing research, and you would most probably earn much less. Many might prefer the latter, even though less money is involved? Of course, many academics can get their self worth from their work. They might not need to paint houses magnolia to feel successful.

Irrespectively, I suppose one of the predominant traits I have noticed in New Zealanders is a virulent distrust of intellectual ideas and critical thinking. It is not only ignorant, in my view - it can be dangerous. The power of ideas should not be underestimated.

I give you two great economists as examples of the power of ideas.

Karl Marx was an obscure, impoverished and almost completely unknown academic scribbler. Less than 100 years after he had written Das Kapital, 1/3 of the world was living under communism. Amazing.

My second example is Thomas Malthus, who was a priest and a famous economist (and by all accounts, a very nice person). His theory was the populations would grow faster than the food supply. When the Irish famine occurred, one reason why help was not forthcoming was the conclusions some took from his ideas – famines were necessary. Worse was to come. Herr Hitler was also strongly influenced by Malthus. His policy of lebensraum (living space) involved expansion to the East to secure resources was partly in response to Hitler’s belief in Malthus’ ideas. Mass slaughter in WW2 ensued. It is rather ironic that the unintended consequences of a nice, caring man’s facilitated so much death and destruction.

The ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed, the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually the slaves of some defunct economist. Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back. (Lord Keynes)

Regards,
*poormastery*

[Perry]

The first point poormastery would make is that
Emotional Intelligence is more important than IQ.

Why? More important in what way?

[poormastery]

A good question, Perry.

My views are perhaps politically incorrect these days. For example, I don’t agree with the charlatan Robert Kiyosaki. Indeed, I believe his views are downright dangerous. When I see the Asian students in New Zealand, outperforming the natives badly, I fear for New Zealand’s future. Asian parents do not seem to share the local parents’ disdain for education.

As for my implication that IQ is important, so it is. The lifestyle that you hold to be self evident is in large part a consequence of technological advances, often due to the application of ideas from the greatest minds in history. For example, when Isaac Newtown discovered calculus, the usefulness of this tool across a huge range of disciplines from engineering to finance was probably not apparent. It is now.

Nonetheless, I have said EQ is more important than IQ. The reason for this is that I believe that how we treat others is more important than the technological advances that humanity achieves.

I was once asked whether I was impressed by the legendary super investors. I am afraid to say that the collection of painters and decorators do not really impress me. I suppose that if the super investors managed to retain some humility after earning a few dollars, I could be mildly impressed. A bunch of clowns giving the thumbs up because they have worked out a scheme to rip people off is not particularly impressive, in my view.

Again, the people I respect have rather more about them. For example, Poormastery is in awe of Johann Sebastian Bach. When God leaves the room, we listen to Mozart. It is said that Mozart provides the justification for the existence of humanity. I am in awe of Michelangelo – the ultimate man of action, who often worked for 20 hours a day, virtually never stopping for food or sleep, throughout his long life. Michelangelo achieved rather more than paint a few walls magnolia. His legacy to mankind was simply sublime. And so it goes on…

I was in the pub the other day, with a bunch of expats from all around the world (English, German, American et al). We all agreed that it was almost impossible to be comprehensible to people who have lived in one country all their lives – even people from our home countries. I am not talking about travelling around and vomiting in 20 countries in 20 days on a Kontiki tour. When you live for extended periods of time all over the world, the experiences you have result in your attitudes changing.

In these circumstances, it is unsurprising that my views are completely different from everyone else here. So be it…

Regards,
*poormastery*

[Perry]

An interesting philosophical post. When I'd finished reading it,
I wasn't sure if you'd answered my questions, or not?
There are some professional philosophers on this forum.
I'm an amateur philosopher. One who has a very basic, nay,
earthy background – organics, and agricultural economics.
While I can readily relate to much of what you say, there's
something of a conundrum in there, somewhere . . .

The path of "human progression" is besprinkled with the
imprints of our forebears, whether it be Archimedes,
Leonardo da Vinci, Copernicus, Samuel Plimsoll, Marie
Curie, Benjamin Franklin, Louis Stevenson, Nicola Tesla, or
Lois Pasteur, etc., etc., etc. And so the list goes on… But
what relevance does such convey to us, now?

You appear to suggest that how we treat others is (or should
be) based on emotions. I find that strange. Perverse, even.
Ethics, reason, logic, etc., would seem more appropriate.

We all agreed that it was almost impossible to be
comprehensible to people who have lived in one country all
their lives – even people from our home countries. When
you live for extended periods of time all over the world, the
experiences you have result in your attitudes changing.

Indeed. The simple sin of a mistaken sense of separateness.
Perhaps something to do with the gawd[s] (of [m]any
name[s]) that left the room for Mozart to play?

When I see the Asian students in New Zealand,
outperforming the natives badly, I fear for New Zealand's
future. Asian parents do not seem to share the local parents'
disdain for education.

Agreed. Fiji is a contemporary example of that cultural dichotomy.

In these circumstances, it is unsurprising that my views are
completely different from everyone else here. So be it . . .

You presume too much . . . .

[poormastery]

Perry,

I rather enjoyed your post. Anyway, you ask:

“But what relevance do [the great minds and achievers] convey to us, now?”

Standing in the Sistine chapel, one is left with a sense of awe for mankind’s achievements, and humility about ourselves.

“You appear to suggest that how we treat others is (or should be) based on emotions. I find that strange. Perverse, even. Ethics, reason, logic, etc., would seem more appropriate.”

According to the great philosopher, Professor Kant, moral law cannot be affected by expediency. For example Kant reasoned that it could never be right to tell a lie. He called our obligation to obey this moral law the 'categorical imperative'.

Courtesy is a ritual by which we avoid hurting other people's feelings for the sake of our own egos, and in this sense, I would disagree with Professor Kant. Reason and logic can never be enough alone.

The simple sin of a mistaken sense of separateness…


Our reality is formed with reference to our experiences. In this respect, we are all, in at least some respects, separate. Nonetheless, as John Donne once commented, we are also simultaneously a part of the whole:

No man is an island, entire of itself; every man is a piece of the continent, a part of the main. If a clod be washed away by the sea, Europe is the less, as well as if a promontory were, as well as if a manor of they friends's or of thine own were. Any man's death diminishes me, because I am involved in mankind. And therefore never send to know for whom the bell tolls; it tolls for thee.

So be it...

Regards,
*poormastery*

[Perry]

So, in your estimation, a philosophical property investor (or
an ethical one, if that seems a better adjective) is a contradiction
in terms?

I.e. It is not possible to be either:

an appropriately philosophical person and have property investments (& tenants);

or

a property investor (with tenants) and have an appropriate philosophy.

If so, why?

[muzza]

Again a lot of crap 'poormaster'. Perhaps you should do something constructive like say something positive for a change