Intelligence, Human Capital, and Economic Growth: A Bayesian Averaging of Classical Estimates (BACE) Approach

Garett Jones () and W. Joel Schneider
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W. Joel Schneider: Illinois State University

Development and Comp Systems from EconWPA

Abstract: Human capital plays an important role in the theory of economic growth, but it has been difficult to measure this abstract concept. We survey the psychological literature on cross-cultural IQ tests, and conclude that modern intelligence tests are well-suited for measuring an important form of a nation’s human capital. Using a new database compiled by Lynn and Vanhanen (2002) along with a Bayesian methodology derived from Sala-i-Martin, Doppelhofer, and Miller (AER, 2004), we show that national average IQ has a robust positive relationship with economic growth. In growth regressions that include only robust control variables, IQ is statistically significant in 99.8% of these 1330 regressions, and the IQ coefficient is always positive. A strong relationship persists even when OECD countries are excluded from the sample. A 1 point increase in a nation’s average IQ is associated with a persistent 0.11% annual increase in GDP per capita.

Keywords: Economic Growth; Human Capital; Intelligence; IQ; Education (search for similar items in EconPapers)
JEL-codes: O41 J24 I20 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dev, nep-edu and nep-lab
Date: 2005-07-11
Note: Type of Document - pdf; pages: 48
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Journal Article: Intelligence, Human Capital, and Economic Growth: A Bayesian Averaging of Classical Estimates (BACE) Approach (2006)
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Persistent link: http://EconPapers.repec.org/RePEc:wpa:wuwpdc:0507005

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