One thing that we can say with a reasonably high level of certainty is that without above average intelligence and a strong work ethic, it is very difficult to accumulate wealth. Of course, a person can inherit wealth, win a lottery or accumulate wealth with a stroke of insight or luck. However, these are exceptions that prove the rule.
In a meta-analysis of the relationship between intelligence and socioeconomic success, psychologist Tarmo Strenze surveyed a wide range of research papers dealing with the relationship between these two variables. His study yielded estimates of the correlation between IQ and income that ranged between 0.15 and 0.27. He reports:*
The correlation of [IQ] with income is 0.20 considerably lower [than the correlation with job performance], perhaps even disappointingly low, being about the average of the previous meta-analytic estimates (0.15 by Bowles at al., 2001; and 0.27 by Ng et al., 2005).
According to Cohen’s classification scheme a positive correlation below 0.30 is considered weak. The research seems to indicate that, contrary to widely-held belief, there is a weak correlation between IQ and income and almost no correlation between IQ and wealth. But we know that those of above average intelligence get the high paying incomes in medicine, law and other professions. (See: Is there a positive relationship between IQ and salary? If yes, is there a causal link? – Intelligence and IQ) So why is the correlation between intelligence and wealth so low?
The taunt, “If you’re so damn smart, why ain’t you rich,” is often hurled at a Hi-Q person by someone who assumes that everyone is sufficiently interested in accumulating wealth to make the necessary effort. However, many intellectually gifted people are marching to the tune of a different drummer. They are driven to gain self-fulfillment through the exercise of their special talents and derive fulfilment from their creative endeavors–accumulating wealth is not their goal.
In his book, Entrepreneurial Genius: The Power of Passion, Dr. Gene Landrum profiled many of the wealthiest entrepreneurs, including Henry Ford, Coco Chanel, Martha Stewart, Richard Branson, Jeff Bezos and several others. He examined their personalities and found that they were all risk-takers, above average in intelligence, and workaholics. They did, indeed, combine intelligence and hard work with a passion for their endeavour and parlayed that into great wealth. However, the accumulation of wealth was not their primary goal–it was the pursuit of a dream for which they had a passion. Landrum advised, “Don’t pursue wealth for its own sake; follow your passion and the money will come in truckloads.”
In a nutshell, there is a positive correlation between IQ and income because those with higher IQ qualify for the jobs that pay higher wages or salary. Furthermore, we can see in the Forbes’ list of billionaires that the entrepreneurs with the highest incomes are among the ranks of those with high or very high IQ–though not necessarily the highest. So if you have high intelligence and a passionate interest in an entrepreneurial venture, you are well-positioned to build significant wealth, but it will require substantial sacrifices and is not guaranteed.
* Strenze, Tarmo. 2007. “Intelligence and Socioeconomic Success: A Meta-analytic Review of Longitudinal Research”. Intelligence. 35 (5): 415.
This is accessible at: https://emilkirkegaard.dk/en/wp-content/uploads/Intelligence-and-socioeconomic-success-A-meta-analytic-review-of-longitudinal-research.pdf
See also, Bowles, S., Gintis, H., & Osborne, M. 2001. “The determinants of earnings: A behavioral approach.” Journal of Economic Literature, 39, pp. 1137–1176.
