In most Western countries, the top 1 percent of earners make 20 percent of the national income — but are they smarter?
The top 1 percent of earners are a little less intelligent than those earning slightly less than them, research finds.
The finding is an interesting twist on the usual fact that smarter people earn more — which they do at ‘normal’ wage levels.
This study finds, though, that the association plateaus at around one standard deviation above the average.
In other words, when you are in the top 16 percent of people for IQ, you are smart enough to be in the top 1 percent of earners.
Indeed, you probably do not need to be that smart.
Extremely high IQ
The results may come as a surprise as people automatically associate wealth and power with greater ability.
Rich people are paid more for a reason (or so they tell us): because they are smart.
To explore this issue, the researchers used data from 59,000 Swedish army conscripts.
The key was to capture people with very high incomes, explained Dr Marc Keuschnigg, the study’s first author:
“This data trove permits us to test, for the first time, whether extremely high wages are indicative of extreme intelligence.
To do so, we needed reliable income data that covers the entire wage spectrum.
Survey data typically miss top incomes, but the registers offer full income data on all citizens.”
Power and influence
What the results revealed is that for most people, salaries do reflect cognitive abilities.
At ‘normal’ wage levels, smarter people get paid more, on average.
The relationship only broke down at higher levels — in this case, it was an annual wage of €60,000.
Above this level, people paid more were no smarter, indeed they were less smart than those earning a little less than them.
Top earners claim that their wages are justified by their greater talent.
This study begs to differ — at least in so far as intelligence is a useful trait in the highest earning jobs.
Wealth vs income
Compare this study with another finding that being smart has almost no relationship to wealth.
(Remember that wealth is different to income: people can be wealthy through inheritance without ever having had a job.)
That study found that people with high IQs are no more wealthy than those who are considerably less smart, on average.
This paints an even more pessimistic picture about the relationship between IQ and money.
Critics of IQ tests may see this as damning the test; those with more faith in the test might see it as damning any society espousing meritocratic values.
The study was published in the journal European Sociological Review (Keuschnigg et al., 2023).
