IQ in the Ramsey Model: A Naive Calibration

Garett Jones

Development and Comp Systems from University Library of Munich, Germany

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: J24 O41 (search for similar items in EconPapers)
Pages: 35 pages
Date: 2005-07-11
Note: Type of Document - pdf; pages: 35
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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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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Persistent link: https://EconPapers.repec.org/RePEc:wpa:wuwpdc:0507004

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