IQ is not that important…except for all the things in which it is

The social media outrage in response to New York City Mayor Eric Adams’s seemingly innocuous observation that not all workers are equally skilled, revealed that America’s fraught understanding of class is one of deliberate omission or cognitive dissonance, in which we have to simultaneously acknowledge that economic and class disparities are real but at the same time not attributable to anything that can be quantified per say, such as individual differences of ability or skill.

This shows the contradiction or incoherence of the left-wing intelligentsia worldview: if skills are irrelevant, equally distributed, or all jobs are equally skilled, then what difference does it make if someone’s kid goes to Harvard or no-name-U if both schools signal or confer equal skill, intelligence, or ability, which they don’t. This is why revealed preferences are closer to the truth than stated ones. ‘We’ wish that skills didn’t matter that much, but our behaviors suggest they do. Why do software engineers earn much more compared to bus drivers if they are equally skilled or skill is irrelevant, by the left’s logic? Parents, even in deep-blue New York City, collectively spend billions of dollars annually on enrichment, such as private schools, test prep, tutoring, etc. in the hope of raising their child’s aptitude (or whatever euphemism can stand for intelligence). Because being smart means being able to do things that society deems important, better.

Of course, some people reject the centrality or importance of IQ. “There is more to life than IQ,” they say. And indeed there is, but IQ matters a lot for the things that most people and society, in general, deem important, those being social status, educational attainment, individual wealth, job security, having enough money for retirement, and even health. So yes, if you exclude those things, IQ does not matter much or even at all, but most people like making money, they like having social status, they like having career success, etc. They like understanding how things work or having good opinions, which is also correlated with IQ.

Another argument is that the correlation between income and IQ or wealth and IQ is low, as explicated by Taleb in his highly viral article IQ is largely a pseudoscientific swindle. The fatal flaw of Talab’s reasoning is he fails to take into account individual preferences. So what this means is, of course, in the aggregate, the correlation is not that high, because it’s not like all smart people are drawn to high-paying professions or seek to make money. But after controlling for individual preferences, being smart is essential to becoming wealthy, especially at an early age, if that is one’s preference.

On popular Reddit subs such as /r/fatfire, /r/financialindependence, and /r/investing, those who attain financial independence early in life, in their 30s or 40s, are almost all high IQ, even if they inherited their wealth, such as tech, finance, law, medical, start-ups, etc. I cannot recall ever seeing anyone on any of those subs who made millions by their 30s or 40s in a blue collar profession. I am sure it has happened, but it’s exceedingly rare. Thus, it would seem, if a goal in life is to have a lot of money, then having a decently high IQ is pretty much a prerequisite. (Yes, there are possible exceptions, such as politicians, in which the link between ability and wealth is much more tenuous or even non-existent).

I think today there is much more variance compared to 50-70 years ago. Those who have high intelligence and ‘drive’ have more opportunity for advancement and to become wealthy, compared to smart people of 70 years ago. Nowadays, you got plenty of smart people making good money with high-paying white collar professional jobs, sometimes right out of college, whereas 50-70 years ago, such jobs didn’t really exist and pay was lower relative to inflation and even after accounting for student loan debt. There was no equivalent of the ‘$400k tech job’ or the ‘$200k analyst job’ in the 70s. No campus recruiters for high-paying white collar jobs like today. There were plenty of manufacturing jobs, but the pay even then was not that lucrative, as much as pundits may reminisce about the ‘good old days’ of manufacturing. Same for being a doctor, a lawyer, or a consultant in the 50s-70s. Those jobs payed more, relatively speaking, but not like we see today. I call this the so-called ‘professional job boom,’ which began around 2013 or so as the economy recovered from the Great Recession and ‘big tech’ began to boom, and picking up even more so after Covid.

Articles about millionaire janitors or millionaire secretaries occasionally go viral, not not because this is common, but its rarity makes it newsworthy, and also the secretaries and janitors tend to be very old (the aforementioned janitor, Ronald Read, died at 92, and the secretary, Grace Groner, died at 100), not in their 30s or 40s. A lawyer making a million dollars, in and of itself, is not newsworthy. As a general rule, something is newsworthy only because it’s uncommon. Millionaires in tech or private equity are a dime a dozen.

Michael Harris, a friend of Taleb who sells overpriced trading software, in the comments writes:

Possibly IQ contributes about 10% — 20% to intelligence in a non sufficient mode. The other 80% comes from processes we do not understand but also from experience.

But then where does this experience come from? See the inherent contradiction of the anti-IQ view. So IQ does not matter or is not real, but this second thing, which is is highly correlated with IQ, does? Indeed, job performance and IQ are very highly correlated. (Like above, this does not answer why someone like Nancy Pelosi is so rich despite being so poor at her job, but the rule generally holds.)

Another common argument, possibly popularized by Malcom Gladwell in his 2008 best-seller Outliers, is that there is a point of diminishing returns to IQ, maybe around 120 or so, above which any additional points doesn’t help. I suppose this depends, again, on individual preferences. If you aspire to wait tables for a living, having a genius-level IQ is not a prerequisite. But in any competitive, intellectually-demanding endeavor, whether it’s academic research, chess, technology jobs, or even YouTube success, to say there is a limit at 120-130, which is only a 1-in-50 rarity of intelligence, is like saying that you can be ‘too fast’ as a sprinter or ‘too strong’ as a weightlifter or ‘too accurate’ as a golfer. Any additional strength, speed, accuracy, or intelligence can only help. Having only 95%-percentile ability at sprinting or weightlifting won’t even be good enough to be the best in your local community, let alone the best in the world or among the elite. A difference of 20-30 IQ points can make the difference between PhD in math and then a job in the private sector or teaching undergrad, vs a PhD in math and a research career.

Athletes, pop musicians, and actors may have a lot of social status despite having average IQs, but based on my personal experience and some data I collected, non-celebrities who are successful in terms of social status and wealth, online especially (which is as important as offline nowadays given how big and important the internet is), tend to almost all have above average IQs, some examples being Noah Smith, Richard Hanania, and Lex Fridman. Also, they are making a lot of money, such as with Substack subscriptions or YouTube ads, again, affirming the link between IQ and income. Someone like Hannity, who is not that smart, can be rich and have high social status, but he’s an outlier who was promoted by Fox News and other networks. Same for Bongino, Tucker, and Mark Levin. Without connections and luck, IQ matters above all. Normies without connections and luck tend to not get that far in life, that’s just the brutal reality of things.

The good news is you don’t need to be brilliant to have a successful, happy life. Living standards even for the middle class are objectively higher today than a generation ago. That’s why I disagree with calls for wealth redistribution as a way to rectify wealth inequality. Healthcare and tuition are expensive, but I don’t see wealth redistribution as a solution to those problems. Context is also needed. As popular as the FIRE/early-retirement community is, it’s just a tiny slice of the US and world population. Same for high-paying tech jobs. If you put a couple dozen lottery winners or billionaires in a room and videotaped it for the world to see, which is sorta what reality TV or the intellectual-web is, one would be inclined to overestimate the likelihood of the attainability of those things.