IQ in the Ramsey Model: A Naive Calibration

Garett Jones ()

Development and Comp Systems from EconWPA

Abstract: I show that in a conventional Ramsey model, between one-fourth and one- half of income differences across countries can be explained by a single factor: The steady-state effect of large, persistent differences in national average IQ on worker productivity. These differences in cognitive ability--which are well-supported in the psychology literature--are likely to be malleable through better nutrition, better education, and better health care in the world’s poorest countries. A simple calibration exercise in the spirit of Bils and Klenow (2000) and Castro (2005) is conducted. According to the model, a move from the bottom decile of the global IQ distribution to the top decile will cause steady-state living standards to rise by between 75 and 350 percent. We provide evidence that little of IQ-productivity relationship is likely to be due to reverse causality.

Keywords: Economic Growth; Intelligence; IQ; Ramsey. (search for similar items in EconPapers)
JEL-codes: O41 J24 (search for similar items in EconPapers)
Date: Written 2005-07-11
Note: Type of Document - pdf; pages: 35
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http://129.3.20.41/eps/dev/papers/0507/0507004.pdf (application/pdf)

Related works:
Working Paper: IQ in the Ramsey Model: A Naive Calibration (2006)
Working Paper: IQ in the Ramsey Model: A Naive Calibration (2006)
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