This is related, but not the research talked about. The Terman Project apparently found that the very highest IQ cohort had many more patents than the lower cohorts, but this did not show up as massively increased lifetime income.
Compare the bottom right IQ graph with SMPY results which show the impact of ability (SAT-M measured before age 13) on publication and patent rates. Ability in the SMPY graph varies between 99th and 99.99th percentile in quintiles Q1-Q5. The variation in IQ between the bottom and top deciles of the Terman study covers a similar range. The Terman super-smarties (i.e., +4 SD) only earned slightly more (say, 15-20% over a lifetime) than the ordinary smarties (i.e., +2.5 SD), but the probability of earning a patent (SMPY) went up by about 4x over the corresponding ability range.
Unless we want to assume those 4x extra patents were extremely worthless, or that the less smart groups were generating positive externalities in some other mechanism, this would seem to imply that the smartest were not capturing anywhere near the value they were creating—and hence were generating significant positive externalities.
EDIT: Jones 2011 argues much the same thing—economic returns to IQ are so low because so much of it is being lost to positive externalities.
On its own, I don’t consider this strong evidence for the greater productivity of the IQ elite. If they were contributions to open-source projects, that would be one thing. But people doing work that generates patents which don’t lead to higher income—that raises some questions for me. Is it possible that extremely high IQ is associated with a tendency to become “addicted” to a game like patenting? Added: I think Gwern and I agree more than many people might think reading this comment.
If they were contributions to open-source projects, that would be one thing.
Open-source contribution is even more gameable than patents: at least with patents there’s a human involved, checking to some degree that there is at least a little new stuff in the patent, while no one and nothing stops you from putting a worthless repo up on Github reinventing wheels poorly.
But people doing work that generates patents which don’t lead to higher income—that raises some questions for me.
The usual arrangement with, say, industrial researchers is that their employers receive the unpredictable dividends from the patents in exchange for forking over regular salaries in fallow periods...
Is it possible that extremely high IQ is associated with a tendency to become “addicted” to a game like patenting?
I don’t see why you would privilege this hypothesis.
Let me put it this way. Before considering the Terman data on patents you presented, I already thought IQ would be positively correlated with producing positive externalities and that there was a mostly one way causal link from the former to the latter. I expected the correlation between patents and IQ. What was new to me was the lack of correlation between IQ and income, and the lack of correlation between patents and income. Correction added: there was actually a fairly strong correlation between IQ and income, just not between income and patents, (conditional on IQ I think). Surely more productive industrial researchers are generally paid more. Many firms even give explicit bonuses on a per patent basis. So for me, given my priors, the Terman data you presented shifts me slightly against correction: does not shift me for or against the hypothesis that at the highest IQ levels, higher IQ individuals continues to be associated with producing more positive externalities. ref Still, I think increasing people’s IQ, even the already gifted, probably has strong positive externalities unless the method for increasing it also has surprising (to me) side-effects.
I agree that measuring open-source contributions requires more than merely counting lines of code written. But I did want to highlight the fact that the patent system is explicitly designed to increase the private returns for a given innovation. I don’t think that there is a strong correlation between the companies/industries which are patenting the most, and the companies/industries, which are benefiting the world the most.
Surely more productive industrial researchers are generally paid more. Many firms even give explicit bonuses on a per patent basis.
Yes, but the bonuses I’ve heard of are in the hundreds to thousands of dollars range, at companies committed to patenting like IBM. This isn’t going to make a big difference to lifetime incomes where the range is 1-3 million dollars although the data may be rich enough to spot these effects (and how many patents is even ‘4x’? 4 patents on average per person?), and I suspect these bonuses come at the expense of salaries & benefits. (I know that’s how I’d regard it as a manager: shifting risk from the company to the employee.)
And I think you’re forgetting that income did increase with each standard deviation by an amount somewhat comparable to my suggested numbers for patents, so we’re not explaining why IQ did not increase income whatsoever, but why it increased it relatively little, why the patenters apparently captured relatively little of the value.
Woh, I did allow myself to misread/misremember your initial comment a bit so I’ll dial it back slightly. The fact that even at the highest levels IQ is still positively correlated to income is important, and its what I would have expected, so the overall story does not undermine my support for the hypothesis that at the highest IQ levels, higher IQ individuals produce more positive externalities. I apologize for getting a bit sloppy there.
I would guess that if you had data from people with the same job description at the same company the correlation between IQ, patents, and income would be even higher.
Perhaps economic returns to IQ as so low because there are other skills which are good for getting economic returns, and those skills don’t correlate strongly with IQ.
Yes, this is consistent with the large income changes seen with some of the personality traits. If you have time, you could check the paper to see if that explains it: perhaps the highest cohort disproportionately went into academia or was low on Extraversion or something, or those subsets were entirely responsible for the excess patents.
This is related, but not the research talked about. The Terman Project apparently found that the very highest IQ cohort had many more patents than the lower cohorts, but this did not show up as massively increased lifetime income.
http://infoproc.blogspot.com/2011/04/earnings-effects-of-personality.html
Unless we want to assume those 4x extra patents were extremely worthless, or that the less smart groups were generating positive externalities in some other mechanism, this would seem to imply that the smartest were not capturing anywhere near the value they were creating—and hence were generating significant positive externalities.
EDIT: Jones 2011 argues much the same thing—economic returns to IQ are so low because so much of it is being lost to positive externalities.
On its own, I don’t consider this strong evidence for the greater productivity of the IQ elite. If they were contributions to open-source projects, that would be one thing. But people doing work that generates patents which don’t lead to higher income—that raises some questions for me. Is it possible that extremely high IQ is associated with a tendency to become “addicted” to a game like patenting? Added: I think Gwern and I agree more than many people might think reading this comment.
Open-source contribution is even more gameable than patents: at least with patents there’s a human involved, checking to some degree that there is at least a little new stuff in the patent, while no one and nothing stops you from putting a worthless repo up on Github reinventing wheels poorly.
The usual arrangement with, say, industrial researchers is that their employers receive the unpredictable dividends from the patents in exchange for forking over regular salaries in fallow periods...
I don’t see why you would privilege this hypothesis.
Let me put it this way. Before considering the Terman data on patents you presented, I already thought IQ would be positively correlated with producing positive externalities and that there was a mostly one way causal link from the former to the latter. I expected the correlation between patents and IQ. What was new to me was the lack of correlation between IQ and income, and the lack of correlation between patents and income. Correction added: there was actually a fairly strong correlation between IQ and income, just not between income and patents, (conditional on IQ I think). Surely more productive industrial researchers are generally paid more. Many firms even give explicit bonuses on a per patent basis. So for me, given my priors, the Terman data you presented shifts me slightly against correction: does not shift me for or against the hypothesis that at the highest IQ levels, higher IQ individuals continues to be associated with producing more positive externalities. ref Still, I think increasing people’s IQ, even the already gifted, probably has strong positive externalities unless the method for increasing it also has surprising (to me) side-effects.
I agree that measuring open-source contributions requires more than merely counting lines of code written. But I did want to highlight the fact that the patent system is explicitly designed to increase the private returns for a given innovation. I don’t think that there is a strong correlation between the companies/industries which are patenting the most, and the companies/industries, which are benefiting the world the most.
Yes, but the bonuses I’ve heard of are in the hundreds to thousands of dollars range, at companies committed to patenting like IBM. This isn’t going to make a big difference to lifetime incomes where the range is 1-3 million dollars although the data may be rich enough to spot these effects (and how many patents is even ‘4x’? 4 patents on average per person?), and I suspect these bonuses come at the expense of salaries & benefits. (I know that’s how I’d regard it as a manager: shifting risk from the company to the employee.)
And I think you’re forgetting that income did increase with each standard deviation by an amount somewhat comparable to my suggested numbers for patents, so we’re not explaining why IQ did not increase income whatsoever, but why it increased it relatively little, why the patenters apparently captured relatively little of the value.
Woh, I did allow myself to misread/misremember your initial comment a bit so I’ll dial it back slightly. The fact that even at the highest levels IQ is still positively correlated to income is important, and its what I would have expected, so the overall story does not undermine my support for the hypothesis that at the highest IQ levels, higher IQ individuals produce more positive externalities. I apologize for getting a bit sloppy there.
I would guess that if you had data from people with the same job description at the same company the correlation between IQ, patents, and income would be even higher.
Perhaps economic returns to IQ as so low because there are other skills which are good for getting economic returns, and those skills don’t correlate strongly with IQ.
Yes, this is consistent with the large income changes seen with some of the personality traits. If you have time, you could check the paper to see if that explains it: perhaps the highest cohort disproportionately went into academia or was low on Extraversion or something, or those subsets were entirely responsible for the excess patents.