Tony Karrer said... Steve, that's interesting. ...

Tony Karrer said...

Steve, that's interesting. If there happens to be a contrary study that I could update the post to point to - that would be good to know.

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I tried to reply earlier, but apparently I screwed it up.

Here's a commentary on the analysis underlying the article you mentioned:

http://www.aleph.se/andart/archives/2007/04/cubic_terms_make_smart_people_bankrupt.html

In a separate email I sent you a copy of the first several pages of the paper, including figures.

And finally, here are some more detailed comments I posted on another list:

Re: "Your IQ has really no relationship to your wealth.":

To put it politely, in my opinion the evidence presented does not
justify the conclusions expressed. As the author points out, the
essential information content of the article is contained in two
scatter plots, or actually only one, since only one pertains to wealth
(net worth) whereas the other pertains to income. In the scatter
plot for wealth, the author has chosen truncated the distribution at a
net worth of $230000 with the explanation that he didn't want the
"dots to blur together". In so doing, he has excluded *every single
individual* who would be considered even marginally "rich" by American
standards, that being the specific term he chose to use in his title
("Do you have to be smart to be rich? ..."). According to his own
figures the mean and standard deviation for net worth within his
sample were $145,837 and $447,814 respectively. Ordinarily, when
using a scatter plot to show a distribution one would use a range that
extended at least *one* standard deviation above the mean at a bare
minimum, and usually at least two or three. Why didn't the author do
so in this case? One possibility is that the standard deviation
quoted is simply wrong - it does seem a bit high, based on the part of
the distribution shown - but then again, its also possible that in the
part of the distribution the author chose not to show us, there are a
relatively small number of individuals with very high net worths, high
enough, despite their small numbers, to pull up the standard deviation
to the figure cited - i.e. "the rich". Certainly there is such a
group within the general population, whether or not they are
represented in his sample. To answer the titular question "do you
have to be smart to be rich?" we'd need to look at the IQ distribution
for *that* group. Instead, he has, according to his own explanation,
equated the term "rich" with having a net worth no less than $100,000
and no more than $230,000 for an american in their mid-40's. That's
not ricjh - in fact, at the lower cutoff of $100,000 it's *below
average*, again according to his own figures. Perhaps he should
re-title his paper "do you have to be smart to have a below average
net worth?", but then he probably wouldn't have gotten written up in
the popular press.