Intelligence, international development, and immigration

Post by Vipul Naik (regular blogger and site founder, launched site and started blogging March 2012). See:

For background reading on the topic of IQ as an objection to immigration, see IQ deficit.

I recently learned from Arnold Kling’s blog post of a new book by Richard Lynn and Tatu Vanhanen titled Intelligence: A Unifying Construct for the Social Sciences (buy here). The book is an extension of earlier work by Lynn and Vanhanen, including IQ and the Wealth of Nations (Wikipedia page).

In IQ and the Wealth of Nations Lynn and Vanhanen introduce the concept of “national IQ” — the average IQ of a nation — and then attempt to demonstrate that national IQ is correlated with a number of measures of national per capita wealth. They then try to argue that at least part of the correlation is causal from IQ to per capita wealth. Controlling for IQ, they find that the extent to which an economy is a free market economy is the best predictor of national wealth. Roughly, they contend that national IQs explain about 1/3 of the variation in national wealth, market orientation explains another 1/3 of the variation, and the remaining 1/3 is explained by a host of other factors (which they don’t attempt to enumerate in full).

In Intelligence, Lynn and Vanhanen extend the analysis beyond wealth to various other measures of well being including health measures, water access, democratization, crime, and happiness. They argue that IQ can explain a significant portion of each of these (though in some cases it is not as significant) and conventional explanations such as market orientation and specific historical events can account for some of the residual. Their overall thesis is that intelligence should be treated as a unifying construct and explanatory variable across a wide range of social sciences, akin to the way that concepts from physics have explanatory power across all domains of the natural sciences.

While L&V’s thesis is new, I think that they make reasonable arguments and attempt to address all the prima facie objections one may have. How well they succeed, and whether their thesis withstands further empirical assault, is not something I feel confident to comment upon. However, I think that L&V sometimes draw the wrong conclusions from their data on the rare occasions that they try to discuss the implications for international development.

Although I don’t have any credentials in this area, I’ve relied, in addition to L&V, on the research of Garett Jones, who largely agrees with the L&V framework but tries to dig deeper into the mechanisms by which IQ might play a causal role in creating wealth. While the synthesis I present is largely my own, it relies on Jones’ work to quite an extent.

Also note: my critique of some of the conclusions that L&V (and others) draw from their work presupposes, for simplicity’s sake, that L&V’s overall framework is correct. Even if it isn’t, and IQ is not as powerful an explanatory variable as claimed, my arguments may still work in a modified sense (replacing IQ by whatever X factor is driving national differences).

National IQs versus individual IQs

Jones, L&V, and many other students of national IQs have argued that there is a relationship between national IQ and economic measures, and that this relationship is logarithmic: a one point increase in national IQ leads to a fixed proportional increase in productivity, hence also in per capita GDP and other measures. However, one of the remarkable findings is that the effects at the national level are much more salient than the effects at the individual level. Quoting from Jones’ article for Asian Development Review:

It is reasonable to be cautious about claims that IQ has a major influence on national productivity. After all, a large labor economics literature shows that IQ and other testable skills have only modest correlations with wages at the individual level. Whether we look in developing or
developed countries, the story is the same: a 1 standard deviation increase in cognitive skills (15 IQ points) within a country is associated with about a 15 percent increase in wages, perhaps less.
For instance, Alderman et al. (1996) found that in rural Pakistan, those who perform 1 standard deviation better on an abstract visual pattern-finding IQ test—the Raven’s matrices—earned 13 percent more. One should draw two lessons from this result. First, the intelligence tests widely derided in popular culture as being culturally biased nevertheless have the power to predict economic outcomes in one of the poorest regions in Asia. Second, this 13 percent effect is still far too small to explain poverty in South Asia. If differences in cognitive skill are important drivers of national economic outcomes, cognitive externalities must be large.Jones and Schneider (2006 and 2010) provide evidence for this. They found that across countries, the IQ–productivity relationship is much larger: 15 IQ points is associated with a 150 percent increase in productivity. Perhaps this strong relationship is epiphenomenal but the psychology, economic growth, and behavioral public choice literatures all give reason for thinking otherwise. There are good reasons for thinking that intelligence—the name used for the underlying trait measured by IQ tests—matters more for nations than for individuals. For instance:
1. Intelligent individuals tend to be more patient, and growth theory predicts that patient nations will save more, building up a larger capital stock in a closed-economy world.
2. Behavioral economics experiments show that high IQ players are more cooperative in repeated prisoner’s dilemma, trust, and public goods games. Since trust and trustworthiness are key to holding together wealth-creating institutions, intelligence will cause prosperity through public choice channels.
3. Skill complementarities may be important in producing “O-Ring” forms of fragile, delicate output. If so, then small differences in worker skill may cause massive differences in cross-country productivity.
4. According to Caplan and Miller (2010) high-IQ individuals appear more likely to support pro-market, pro-trade policies. Thus, more intelligent voters are more likely to see the invisible hand, supporting policies that create prosperity.

My view: creating versus sustaining technology

My interpretation of these findings is that IQ is very important in creating new technologies and institutions, but relatively less important for sustaining, using, and benefiting from these technologies and institutions. Designing and installing the first sewage system may require a high regional IQ. Implementing an existing and time-tested sewage system design probably is less IQ-intensive. Using a flush toilet or hand wash is not IQ-intensive at all and is in many ways easier than the more primitive alternatives.

Similarly, designing the first automobiles may have required people with high IQs (and many other qualities). Using an automobile does require some intelligence, but IQ plays a very small role — people across the intelligence spectrum and nations across the intelligence spectrum can make use of automobiles reasonably effectively to transport themselves.

More important than merely sustaining technology, I think it is also true that the significance of IQ in figuring out which of two systems is better is less than the significance of IQ in creating a new system from scratch. As an example, even a nation where it would be unlikely for flush toilets to be invented would probably come around to preferring flush toilets after comparing the experience of flush toilets with open defecation.

Thus, I contend that even if L&V are right in their assertion that nations with low average national IQs are unlikely to be major sources of new innovation, this does not mean that they will have to go through an extremely slow and tortuous path to achieving the benefits of these innovations. After all, they don’t have to reinvent the wheel.

While my assertion may seem tautological to the point of not even meriting any attention, I think it explains and is supported by two lines of evidence. The first is that national IQs play a more important role than individual IQs in determining individual productivity and per capita GDP. The reason, I believe, is that even low IQ individuals don’t have much trouble using and benefiting from the tools, technologies and institutions developed in their high IQ societies, and they are usually smart enough to discern what technologies would be more beneficial to them.

My second line of evidence is the dramatic secular trend of rising standard of living. While the Flynn effect suggests rising IQ, the rise in standard of living over the last 250 years in the developed world has been by a factor of 10-100, which is far more than the Flynn effect alone would predict (I think).

The role of national boundaries

Why do national IQs matter? What is so special about national boundaries? I think the answer lies not in some mysterious law of nature but in the fact that a number of policies discriminate based on national barriers.

The absence of free trade is one factor that creates national differences. Through trade restrictions, the pool of options that an individual has to choose from is artificially restricted to things produced within that individual’s country. If my thesis above is correct that IQ plays a much more important role in invention and creation than in selection and use of technology, then we see that national IQ (which determines what gets created) would play a more significant role than individual IQ (which only determines how well the given individual uses what’s available).

A testable prediction from this would be that in those areas where there is much freer trade and exchange, there is much more rapid convergence in style and standard across the world, large IQ differences notwithstanding. Another testable prediction would be that the creation of free trade zones leads to convergence in the quality and consumption experiences for those goods and services that are tradable.

The role of institutions

Differences in goods and services account for only a small part of the differences between nations. A lot of the differences are in the form of differences between institutions. The key reason for the place premium is believed to be differences in institutions.

Unfortunately, institutions present a much bigger problem than goods and services, because they’re non-tradable, and they are typically determined through political processes (whether democratic or through violence) rather than market processes. When it comes to political processes, moreover, a number of factors conspire to make people more irrational and hence IQ differences may play a larger role. (The argument would go something like this: people are irrational in politics because of the low stakes involved and the lack of incentive to learn about the issues. In the absence of incentives and feedback mechanisms, IQ differences play a more important role in determining people’s degree of irrationality). Thus, improvement of institutions in low IQ nations through purely political processes would be extremely slow, and there may even be occasional degradation.

However, even low IQ people are discerning enough to recognize better institutions when they see them — it’s just hard to actually chart a path to achieving those institutions. This points to an obvious solution: if you can’t build the institutions where the people are, let the people move to where the institutions are! The simplest, most literal solution is open borders: free migration that would let people move to places with better institutions and reap the benefits. Even partial open borders may have significant spillover effects as the world gets closer together and ideas for better institutions spread faster.

Given the political infeasibility of open borders, a second-best solution may be charter cities (more on immigration and charter cities). A charter city is a city that is part of one country but where the legal infrastructure of another country is used instead. The key principles of charter cities are outlined on the Charter Cities website. In a memo to the Gates Foundation citiquing the Foundation for not funding charter cities, Bryan Caplan makes a variant of the case I’m making here:

Another upside of charter cities is that there is virtually no downside. A charter city begins on empty land. It can only grow by voluntary migration of workers and investors. If no one chooses to relocate, they’re no worse off than they would have been if the charter city had never existed. If efforts to start charter cities fail, at least they won’t harm the very people they’re intended to help.

In contrast, the paths the Gates Foundation currently intends to pursue sound worse than doing nothing. “Build capacity of organizations working on-the-ground with the urban poor” and “Integrate the voice of the poor into the planning process” sound compassionate. But they could easily further retard the only poverty-reduction process that really works: economic growth. My first book, The Myth of the Rational Voter: Why Democracies Choose Bad Policies (Princeton University Press 2007) finds that economic illiteracy is especially pronounced among the least educated. They are especially likely to misperceive the economy as a zero-sum game, to fear economic interaction with foreigners, and to naively focus on employment rather than production. Frankly, voices like this need less influence on policy, not more.

If you really want to learn what benefits the world’s poor, don’t ask them to become amateur social scientists. See how they vote with their feet. Build charter cities, and the world’s poor will come.

UPDATE: A follow-up blog post with Garett Jones’ response and further thoughts from me.

11 thoughts on “Intelligence, international development, and immigration”

  1. Jelte Wicherts, who is a psychologist with a well-earned reputation for hard-headedness and statistical finesse has several papers on his website that argue that Lynn’s meta-analysis underestimates African IQ, claiming that it is closer to 80 than 70 (as Lynn claims), only moderately worse than the IQ of 100% African-descended people in rich countries. Also, casual eyeballing shows that the African data are underestimates of potential for IQ in a rich society: African American IQs are only around a standard deviation below white American IQs, while Lynn reports two standard deviations of difference between American and African average IQs. Since African-Americans are only about 20% admixed with European ancestry, it is impossible for the low IQs in Africa reported by Lynn to be both true and all genetic (and it would be surprising giving malnutrition, disease and education in Africa).

    Here’s Wichert’s website:

    http://wicherts.socsci.uva.nl/

    1. If we try to adjust Lynn’s data by looking at performance of different groups in rich countries or better environments (where these aren’t too selected) we could try to get an estimate of the IQ of migrant source countries.

      http://en.wikipedia.org/wiki/List_of_countries_by_population
      http://wiki.answers.com/Q/What_are_the_world's_racial_demographics

      Asian 54%
      -East Asian 24% (Korea, Mongolia ,China, Japan)
      -South Asian 21% (India, Sri Lanka, Pakistan, Bangladesh, Nepal)
      -Southeast Asian 9% (Cambodia, Bruma, Philippines, Malayasia)
      Black 15%
      White 15%
      Hispanic 8%
      Middle Eastern 8%

      If we assume that China’s potential for IQ under rich-country conditions will be as high as Taiwan and Hong Kong are today, then we should estimate it at 105 rather than 100 (actually I think Lynn may give a number in that range in his most recent book, which I haven’t read). Give Africa an IQ of 80-85 based on unselected diaspora performance rather than ~70. Assume that India will cover half of its IQ gap with Europe in development (India’s internal diversity, and the highly nonrandom pattern of most emigration, makes long term potential impacts of mass South Asian migration especially uncertain, so it’s not easy to just generalize from migrants). After doing that average world IQ looks closer to 95 than 90, although the increased estimate for Chinese IQ means that IQ variance and differences are still pretty big.

      On the other hand, the non-African scores, and the Wicherts-corrected scores for Africa, are quite predictive of many things, not just GDP and human development indicators and so on, but also mass educational testing. They have noise, but the noise doesn’t seem strongly biased.

    2. As far as I remember, Lynn estimates the “genetic IQ” of Africans as about 80, and the current lower IQ (which he estimates at about 67) to be a consequence of malnutrition. I’ll look at Wicherts, but I’m happy to take Lynn as the most pessimistic plausible estimate of African IQs for my discussion.

    3. I’ve looked at Wicherts. I find his work more rigorous and plausible than Lynn’s wrt Africa. I will need to examine it more thoroughly to come to a definite conclusion, though.

  2. Unless unprecedented innovations in closing IQ and productivity gaps happen soon, or population growth rates change in particular ways, there will be substantial downward pressure from these global shifts (which make open borders likely to draw lower IQ migrant as the next few decades pass, bolstered by differences in age structure with the young migrating more):

    http://www.un.org/esa/population/publications/longrange2/WorldPop2300final.pdf

    “World population is projected to grow from 6.1 billion in 2000 to 8.9 billion in 2050, increasing
    therefore by 47 per cent.”

    “Much of the demographic change up to 2050 will take place in the less developed regions. Collectively, these regions will grow 58 per cent over 50 years, as opposed to 2 per cent for more developed regions. Less developed regions will account for 99 per cent of the expected increment to world population in this period”

    “Growth will be much faster in Africa, which will add 1.0 billion and rise from 13 to 20 per cent of world population”

    “Population growth in Asia looks impressively large, at 1.5 billion over 50 years”

    However, this is a projected net effect, as populations like the Japanese and Chinese implode, while other groups with historically bad performance at home and as migrants greatly expand:

    http://www.nst.com.my/opinion/columnist/decreasing-fertility-rate-among-chinese-1.34290

    THE growth of the Chinese population in Malaysia has been decreasing for several decades. While the number of Chinese Malaysians increased from a mere 694,970 in 1911 to 6.39 million in 2010, their proportion of the population decreased, from 35.6 per cent in 1970 to 24.6 per cent today.
    The main cause is a decreasing fertility rate: in 2000, the crude birth rate among the Chinese was 20 births per thousand people, but it dropped to 12.5 by 2009.

    http://en.wikipedia.org/wiki/Demographics_of_Singapore

    According to latest 2010 statistics, Singapore’s resident total fertility rate (TFR) reached a level of 1.1 in 2010. The Chinese TFR was (1.08), followed by Indians (1.14) and Malays (1.82).

    Birth rate 9.34 births/1,000 population (including all groups)

    1. Expressed willingness to migrate falls with the performance of the sending country (and the performance of immigrants from that country), although open borders in a rich country would change opinion and behavior through demonstration effects:

      http://www.gallup.com/poll/124028/700-million-worldwide-desire-migrate-permanently.aspx

      “From its surveys in 135 countries between 2007 and 2009, Gallup finds residents of sub-Saharan African countries are most likely to express a desire to move abroad permanently. Thirty-eight percent of the adult population in the region — or an estimated 165 million — say they would like to do this if the opportunity arises. Residents in Asian countries (disproportionately the lower-performing ones) are the least likely to say they would like to move — with 10% of the adult population, or roughly 250 million, expressing a desire to migrate permanently.”

      If rapid economic growth in Asia and population growth in Africa continue, this relative skew should increase further. The Gallup poll supports the idea that the young want to migrate more.

  3. On the special difficulty of making inferences about the future of India, and the huge differences between different waves of South Asian emigrants:

    http://blogs.discovermagazine.com/gnxp/2012/11/reflections-on-the-evolution-at-ashg-2012/

    “Another Indian group confirmed a lot of stuff that Zack has found already, but supplemented it with lots of low caste/tribal samples, which most people lacked. They assert (rightly) that within South Asia there are genetic distances across populations/castes which are analogous to inter-continental differences.”

    Since Indian castes and subgroups have been highly endogamous for many generations, with different distributions of occupations open to them and thus different selective pressures, it’s difficult to make genetic claims without accounting for the demographic subgroup composition in emigration.

  4. Here is a study on the effects of changing immigration policy in Switzerland on immigrant PISA scores:

    http://lesacreduprintemps19.files.wordpress.com/2012/08/migration-policy-can-boost-pisa-results-findings-from-a-natural-experiment.pdf

    “Migration Policy Can Boost PISA Results:
    Findings from a Natural Experiment
    Switzerland radically changed its migration policy in the mid-nineties from a “non-qualified
    only” policy to one that favors the immigration of highly qualified migrants. To analyze the
    impact of this change on the schooling outcomes of migrants, this paper compares the PISA
    (OECD Programme for International Student Assessment) results from 2000, which were not
    yet affected by the change in the migration policy, with the PISA 2009 test. Using a Blinder-
    Oaxaca decomposition analysis, we find that almost 70% of the 43-point increase (more than
    one standardized school year) in the PISA scores of first-generation immigrant students in an
    environment with stagnant Swiss PISA results was due to changes in the individual
    background characteristics of the new immigrants (direct effect) and improved school
    composition (lower shares of students who did not speak the testing languages as an indirect
    effect). The indirect effects also indicate that internationally comparative analyses should
    more fully consider differences in national migration policies when assessing the success of
    migrant integration.”

    1. Meaning that selective immigration policies can give misleadingly high estimates of the performance of those who would come under open borders, by “skimming the cream.”

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