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It is just a coincidence, but the initials NNT are best known to me as Numbers Needed to Treat. This is a measure of the numbers of patients you need to give a drug to in order to get one cure. For example, an NNT of 5 means that you have to treat five patients in order to get one patient cured. Even very useful drugs do not help everybody, so several people need to take the drug before one of them benefits.

I do not know how many posts I need to write to convince one person that Nassim Nicholas Taleb is an unreliable guide to intelligence research. It might take 30 posts, but I still think it would be worthwhile.

One of NNT’s complaints was that intelligence test scores did not predict important real-world achievements, such as being a good investor. A very quick search immediately came up with a paper which showed that brighter people had more successful investment histories. Those authors found that by making better stock selections and achieving lower transaction costs high IQ subjects did 4.9% per year better than low IQ subjects. Given that real returns average 7%, this is a massive difference which will accumulate over time and result in far high net personal worth for brighter investors. By the way, intelligence was measured at conscription age, long before there is much investment history, so it is more likely to be causal.

https://www.sciencedirect.com/science/article/pii/S0304405X1100211X

In this post I will describe another paper which shows that an intelligence test predicts savings 40 years later. This is real-world skin-in-the-game of which NNT should approve.

Furnham, A., & Cheng, H. (2019). Factors influencing adult savings and investment: Findings from a nationally representative sample. Personality and Individual Differences, 151, 109510. doi:10.1016/j.paid.2019.109510

https://drive.google.com/file/d/10TFhHwSEUhrSIOCBNdZnNUhQxNstPb6-/view?usp=sharing

The authors review the cognitive and personality measures which affect savings rates: neuroticism and conscientiousness affect outcomes. Both these measures involve paper and pencil questionnaires designed by psychologists, yet are associated with real life outcomes.

The National Child Development Study 1958 is a large-scale longitudinal study of the 17,415 individuals who were born in Great Britain in a week in March 1958 (Ferri, Bynner, & Wadsworth, 2003). They were a representative sample of the country at the time. 14,134 children at age 11 completed tests of cognitive ability (response =87%).

At 33 years, 11,141 participants provided information on their educational qualifications obtained (response =72%). At age 50 years, 8210 participants provided information on their current occupational levels (response = 67%); 9790 participants completed a questionnaire on personality (response = 79%); 9762 participants provided information on their self-assessed financial situation (response= 79%), 9729 participants provided information on their savings and investment (response =57%). The analytic sample comprises 5766 cohort members (50% females) for whom complete data were collected at birth, at ages 11years, and the outcome measure at age 50years. Bias due to attrition of the sample during childhood has been shown to be minimal (Davie, Butler, & Goldstein; 1972).

3.2. Measures

1. Family Social Background at Birth Family social background includes information on parental social class and parental education. Parental social class at birth was measured by the Registrar General’s measure of social class (RGSC). Parental education is measured by the age parents had left their full-time education.

2. Childhood Intelligence Childhood intelligence was assessed at age 11 in school using a general ability test (Douglas, 1964) consisting of 40 verbal and 40 non-verbal items. For the verbal items, children were presented with an example set of four words that were linked either logically, semantically, or phonologically. For the non-verbal tasks, shapes or symbols were used. The children were then given another set of three words or shapes or symbols with a blank. Participants were required to select the missing item from a list of five alternatives. Scores from these two set of tests correlate strongly with scores on an IQ-type test used for secondary school selection (r =0.93, Douglas, 1964) suggesting a high degree of validity.

3. Educational Qualifications At age 33, participants were asked about their highest academic or vocational qualifications. Responses are coded to the six-point scale of National Vocational Qualifications levels (NVQ) ranging from ‘none’ to ‘higher degree level’: 0= no qualifications; 1=some qualifications [Certificate of Secondary Education Grades 2 to 5]; 2= O level [equivalent to qualifications taken at the end of compulsory schooling]; 3= A level [equivalent to university entrance level qualifications]; 4=postsecondary degree/diploma and equivalent; and 5=higher post-graduate degrees and equivalent.

4. Personality Traits Personality traits were assessed at age 50, by the 50 questions from the International Personality Item Pool (IPIP)(Goldberg, 1999). Responses (5-point, from “Strongly Agree” to “Strongly Disagree”) are summed to provide scores on the so called ‘Big-5’ personality traits: Extraversion, Emotionality/neuroticism, Conscientiousness, Agreeableness and Openness. Scores on each trait range between 5 and 50 with higher scores equating to higher levels of each trait, of which 10 items for each trait. A preliminary test showed that the associations between traits Extraversion and Agreeableness were not significantly associated with adult savings and investment, thus these two traits were excluded from the following analyses. Preliminary analysis which included these two traits in the SEM model demonstrated that they were not moderator variables. Alpha was 0.88 for emotionality/neuroticism, 0.77 for conscientiousness, and 0.79 for intellect/openness.

5. Occupational Prestige Data on current or last occupation held by cohort members at age 50 are coded according to the RGSC described above, using a 6-point classification.

6. Financial Assessment was assessed at age 50. Participants were asked to assess their personal financial situation on a 5-point measure (1 =Finding it very difficult, 2= Finding it quite difficult, 3=Just about getting by, 4=Doing all right, 5= Living comfortably).

7. Adult Savings and Investment. At age 50, participants provided information on the amount of savings and investment they had, which were logged in the following analyses. In addition, participants also mentioned the specific types of their savings and investment, of which bank or building society =70.2%, ISA=51.8%, premium bonds= 35.0%, stocks and/or other shares =32.9%.

All this is fine, though self-report on wealth could be a problem. Asking people about their wealth can be a tricky business in the UK. If anything, people might be tempted to downplay it to avoid any tax enquiries. One simple control would have been to study the postcodes of participants, from which it is easy to get wealth estimates. Worth doing as a further measure of the accuracy of self-reports.

The verbal and non-verbal scores have been added for an overall ability latent variable, which has more predictive power.

The strongest association was between personal financial assessment and adult savings and investment, followed by education and occupation. This is a well-established finding. However, what was particularly interesting was the correlation between IQ measured as age 11 and savings measured 39 years later.

 

 

To my eye the correlations are very low, so the effect sizes are small. In partial defence of this observation, they are a bit larger than the effects of paternal social class at birth, and even of parental educational levels at birth, both of which have long been touted as the major determinants in life. Not so. Particularly in the structured equation modelling, the effects of intelligence measured in childhood are apparent.

 

Although wealth is a good measure of real-life success, in the United Kingdom there is the considerable blunting effect of income tax, which reduces the ability to save. For example, using Office of National Statistics figures the Institute of Financial Studies has just shown that:

A unique IFS analysis of HMRC tax records reveals 43 per cent of adults do not pay income tax, up from 38 per cent in 2010. By contrast, the top one per cent of earners are now paying 27 per cent of the nation’s income tax.

As Thomas Sowell has always pointed out, and the Institute of Fiscal Studies figures now show, membership of the top 0ne Percent is pretty fluid:

Only around three-quarters of people in the top one per cent in one year will be there in the next year, while only half will still be in the top one % in five years.

As a result, someone has a much higher chance of being in the top 1% at some point in their lives than they do in any given year. 3.4% of all people (and 5.5% of men) born in 1963 were in the top 1% of income tax payers at some point between 2000–01 and 2015–16.

In fact, among the high earning top 1% only 6% of income comes from non-work-related earnings, showing that accumulated wealth is a minor addition to work age incomes.

The authors, having shown the correlations and done some structured equation modelling say:

It demonstrated that childhood intelligence, much more than adult personality is a predictor of saving forty years later. Although related to Conscientiousness, it was how intelligence effected education and also occupation (social class) that explains its importance in adult financial success.

Intelligence leads to higher scholastic attainments which lead to a higher propensity to save. The effect is small, but it is larger than social class of origin. The effect might possibly be reduced by sharply redistributive taxation. Overall, intelligent kids go on to being good savers.

 
• Category: Science • Tags: Finance, Intelligence, Nassim Nicholas Taleb, Wealth 
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  1. jb says:

    Of possible interest: Competent Elites.

    I was shocked, meeting Steve Jurvetson, because from everything I’d read about venture capitalists before then, VCs were supposed to be fools in business suits, who couldn’t understand technology or engineers or the needs of a fragile young startup, but who’d gotten ahold of large amounts of money by dint of seeming reliable to other business suits.

    One of the major surprises I received when I moved out of childhood into the real world, was the degree to which the world is stratified by genuine competence.

  2. Anon[910] • Disclaimer says:

    Would it be possible to replace the diagrams in the post with higher-resolution versions? It’s almost impossible to read the coefficients on the SEM models.

    • Replies: @James Thompson
  3. @Anon

    I agree. Something has gone wrong, and I wasn’t able to sort it out. Will try again.

    • Replies: @Anonymous
    , @niteranger
  4. @jb

    Ditto the few admirals, generals and federal judges I’ve met.

  5. dearieme says:

    Parental education is measured by the age parents had left their full-time education.

    I suppose they settle for whatever rough age the children can guess?

  6. TheJester says:
    @jb

    One of the major surprises I received when I moved out of childhood into the real world, was the degree to which the world is stratified by genuine competence.

    Years ago I had a life-altering experience that supports the above thesis. It was one of the formative events of my life:

    There was a meeting of CEOs and venture capitalists from various US high-tech sectors that focused on economic development in a Third World country. Since I was already present in the country, my company directed me, a middling manager, to represent it.

    The first thing that captured my attention was the high intelligence of the assembled CEOs and VCs. They could get to the root of economic development problems with prescient one-liners. My favorite was that it does nothing for a country to develop industries (especially prestigious industries) that require importing large numbers of immigrants to do the work. These industries help immigrants … not the country.

    I also noticed that the assembled moguls were not pretentious. They projected what they knew, not how they looked. (It was as if they spoke a private language that they collectively understood.) I noticed one with dandruff on his shoulder. Another, allegedly one of the major VCs on the east coast, had a rough countenance. He was dressed in a cheap suit and wore a Mickey Mouse watch.

    My assumption is that the original planning meetings for the Apollo Space Program contained a stratified assemblage of similar personalities and competence.

    • Replies: @Truth
  7. Realist says:

    I would classify saving more as wisdom than intelligence. Some people are fortunate enough to have both attributes.

    • Agree: freedom-cat
  8. I was just reading Taleb’s _Skin in the game_ yesterday and found myself laughing out loud in merriment. He is a smart and insightful and pleasure to read. (It was the part where he said you that *other things being equal*, you should go to the surgeon who looks like an aging butcher, not the surgeon who dresses in stylish and expensive clothing and who stresses his elite education).

    In this sense, The Jester’s comment above is making basically the same point.

    = – = – = – =

    Taleb seems to be contrarian by nature. This may lead him to “double down” on his assertions, even where he is out of his domain of competence. Most possibly that’s the case when he discusses intelligence research.

    • Replies: @Dieter Kief
  9. @charles w abbott

    Yep, Taleb seems to have (at least) to different sides.
    At times he is unreliable and quite childish even (self-centered to the nth degree).
    But at times, he is on the spot and interesting. See this analysis of him of fragile and stable banks – here, he is clear and – – a team player, even (he lauds the risk-analysis of the ETH Türich and praises it, with a number of sound arguments see this long interview with him in Swiss Television I –

    https://www.srf.ch/play/tv/sternstunde-philosophie/video/nassim-taleb—der-mit-dem-schwarzen-schwan-tanzt?id=6d03b632-38e5-4445-9073-b3b3c93605a9

    19 minutes in

  10. Children of parents who invest in the markets are more likely to invest in the markets.

    • Replies: @freedom-cat
  11. A Goy says:

    “It demonstrated that childhood intelligence, much more than adult personality, is a predictor of savings 40 years later.”

    What about role models?

    My mother was what we might call middle lower class, i.e. daughter of tenant farmer. My father was lower class i.e son of farm labourer.

    However.
    My mother was a saver, opened savings accounts for all her children on their first birthday , often referred to it as we were growing up as well as diverting birthday gifts of money to the account. Unsurprisingly I also am a saver, but my income is so small now at the age of 74 that I am classified as living in poverty, but still saving😉

    What about interests other than the pursuit of money.?

    A few people have commented that I seem to have had an interesting life. The principal reason for that, as I see it, is because I have always had a high disregard for money and possessions believing that quality of life and experience is preferable to the obsession of the majority which as Mark Twain informed us are always reason to ‘pause and reflect’

  12. Брат says:

    Investing is so jewy.
    It’s all about sitting back and scheming ways to make money off of money. Essentially it’s about free money, aka theft. But someone, somewhere down the line will be paying the difference, always. Whether it’s some sweatshop worker in SE Asia, a slave on a coffee plantation in Latin America, or some drug-addict prostitute in Eastern Europe. Their blood, their sweat, and their tears will be on you. At the end of your life, when your karma is reckoned before God, if you are found wanting, then as sure as the sun rises, you will be reincarnated into a much worse life in the hereafter.
    It’s no shock that Abrahamic religions are really vague about the after life, what more could you expect from religions which place so much emphasis on prospering on the material plane? Even Christians get super touchy over karma. Cause and effect couldn’t possibly be real, Jesus will forgive anything! But then again, an Abrahamic religion denying something as simple as cause and effect is nothing shocking. Just look at what Islam brings to the world *kaboom!*
    Eternal things are not for the jews and their gentile imitators.
    I will work for my money, thanks.
    I don’t want anything I do not deserve.

    • Agree: Parfois1
    • Replies: @Jester
    , @advancedatheist
  13. Lets see.

    1. Steve King (Nazi-Iowa) getting kicked to the curb for racism.

    2. Alexandria Ocasio-Cortez is ripping it up and has republicans running scared.

    3. Deplatforming of right wingers continues to happen everyday.

    4. Most young people are People of Color

    5. Islam is growing and getting respect.

    6. Christian supremacy is getting criticized

    7. most white people are old and dying off

    8. white birth rates are low

    9. white girls are increasingly having Children of Color with Men of Color

    10. Open borders immigration is about to be a reality

    Darn it feels good to be a progressive!

    • Replies: @anonymous
  14. gotmituns says:

    I’m an old man now. I never gave a damn about money and things and now that I’m old, I’ve got some money. It’s good to know that when I do want something or my wife wants something, we just go and get it.

  15. @A Goy

    I am pleased to hear of your mother’s wise advice.
    The structured equation model is perhaps hard to see: I have had difficulty getting it displayed full size, but the effect of family social status at birth is very small, so role models per se do not appear to have a strong effect. The strong effect is childhood intelligence at age 11.

    So, you have lots to thank your parents for.

  16. Anon[424] • Disclaimer says:

    if the ” investor ” invests in what is useful for the common welfare he desserves a lot of recognition , if the ” investor ” is just a parasitic speculator he is just a thief .

    • Replies: @Realist
    , @Wally
    , @onebornfree
  17. Given that real returns average 7%….

    Nominal returns, perhaps. Real returns are adjusted for inflation and are somewhat lower. A risk-aware portfolio, i.e. diversified, might have historically achieved 7% in the past, but those days are numbered, and you might be lucky to get 4% to 5% nominal returns going forward, and since TPTB bullshit us about inflation, your real return is considerably lower. I would also posit that much of the additional outperformance is attributable to risk-aware investing rather than “better stock selections.”

    … in the United Kingdom there is the considerable blunting effect of income tax, which reduces the ability to save.

    UK tax rates are not much worse than most other developed countries. If there is a strain on saving, it is more likely attributable to consumption. Housing costs in the UK, for example, severely constrain savings potential.

  18. Herald says:
    @jb

    So much competence, that the vaunted money grubbing suits have brought the world to near certain short term disaster. Get it spent, there is no medium or longer term.

  19. @jb

    the world is stratified by genuine competence.

    In what we euphemistically refer to as “polite company” here in the U.S., one cannot so much as hint at this notion without being permanently banished. It’s absolute apostasy and grounds for depersonning.

    As a result, it’s somewhat difficult to determine how widespread the notion actually is. That this should be the case with an assertion exhibiting prima facie legitimacy is probably grounds for despair.

    Separately, I’ll add my congratulations to the contributor upthread whose parent enforced the habit of saving. A simple matter like that can make all the difference.

    Dickens’ famous quote from Bleak House comes to mind. But we’re taught nowadays that everything I’ve just described (and much else) is as nothing, and the only possible culprit is White Privilege.

    • Replies: @Truth
  20. @The Alarmist

    Yes, should have said nominal.

  21. Truth says:
    @TheJester

    Yes, pulling off a fraud of the Apollo magnitude would have taken a great degree of manpower.

  22. Truth says:

    …edit, “brainpower.”

  23. Truth says:
    @HammerJack

    So if being a “rich white guy” is grounds to agree one is intelligent, is being a “poor white guy” an indictment that one is stupid, or is “duh man just holdin you down?”

    • Replies: @Anon
  24. It is always amusing to read these articles with their charts, hypotheses and studies all of course touted and pimped by another expert. Dr Giggles has a good laugh at these experts selling their books on whatever for $49.95 plus tax. They build THEIR wealth not by investing but by telling you how.

    When I peruse the book store there are racks and racks of books on how to do just about everything not the least of which is how to get rich for example.

    Yet I have never seen a country with so many “investment experts” and “financial professionals” and yet so many struggling, broke and bankrupt people.

    Here is Dr Giggles advice for free on “How to become financially independent”.

    STOP BUYING S##T YOU DO NOT NEED.

    Save every penny you can and invest it to earn passive income.

    Becoming financially independent has nothing to do with the amount you earn. If you earn $1M a year and spend it all and I make $50K and save half, I will surpass you. This is a mathematical certainty.

    You may never be Howard Hughes but you will accumulate enough F/U money to do and say as you please and that is a goal worth attaining.

    The “ignorant and uneducated” pioneers who built this country accumulated wealth without all the hocus pocus of charts, lofty texts and flowery words and exhortations. You can do the same !!

  25. Realist says:
    @Anon

    if the ” investor ” invests in what is useful for the common welfare he desserves a lot of recognition , if the ” investor ” is just a parasitic speculator he is just a thief .

    Sadly many are the latter.

  26. Maddaugh says:

    Many of us will never be “rich” but becoming financially independent is all about common sense. Spend less than you earn and save the difference.

    Our grandparents did this without any books or any of the advice of the “experts”.

    Today, people buy really expensive stuff they do not need not only for themselves but for their kids, relatives and others.

    All the diagrams and hypotheses in the world will not help you if you blow every paycheck.

    Ultimately, the man who can do as he pleases with $X has as much or more power than the CEO earning $1000X but who is a slave in the corporate world and a prisoner of his own ego.

    • Replies: @Wally
  27. Jester says:

    Keep tuning in to experts and buying their books and you will be taking public transit while they tool around in their Euro SUVs.

  28. onebornfree says: • Website
    @The Alarmist

    The Alarmist says: “….you might be lucky to get 4% to 5% nominal returns going forward, and since TPTB bullshit us about inflation, your real return is considerably lower”

    Exactly the point I was going to make.

    The ability to first save is certainly an absolute necessity, but at the same time it is absolutely no guarantee that what is saved is actually going to be worth more [ in real world purchasing power], over the medium to long term than what it was when it was initially put aside as savings.

    See: “The World’s Best Kept Investment Secret”:
    http://onebornfreesfinancialsafetyreports.blogspot.com/2019/07/the-worlds-best-kept-investment-secret.html

    Regards, onebornfree

  29. Wally says:
    @Anon

    “if the ” investor ” invests in what is useful for the common welfare he desserves a lot of recognition , if the ” investor ” is just a parasitic speculator he is just a thief”

    So says the lazy, unproductive, power hungry Communist.

    • Replies: @Anon
    , @Брат
    , @anonymous
  30. Wally says:
    @Maddaugh

    You started off well, but blew it with this silliness:

    “Ultimately, the man who can do as he pleases with $X has as much or more power than the CEO earning $1000X but who is a slave in the corporate world and a prisoner of his own ego.”

    As if the CEO is being forced into his job.

    Without corporations most people would have no retirements or most of the goods & services they want & need.

    And who were our grandparents ‘slaves’ to?

    Everybody works for somebody.

    • Replies: @jester
    , @Philip Owen
  31. onebornfree says: • Website
    @Anon

    Anon[424] • Disclaimer says: “if the ” investor ” is just a parasitic speculator he is just a thief .”

    A speculator is a thief? Yeah right!

    As someone who teaches safe speculation methodology, I naturally, and completely, disagree 🙂 .

    “Regards” [?], onebornfree

  32. Agent76 says:

    2019-07-27 Currency Baskets Have Their Advantages But Gold is Still Superior

    During the lengthy discussions which led to the 1944 Bretton Woods Agreement, economist John Maynard Keynes opposed fixed exchanged rates via-a-vis a gold backed US dollar.

    https://eurasiafuture.com/2019/07/27/currency-baskets-have-their-advantages-but-gold-is-still-superior/

    Jul 12, 2019 Stock Market Bubble Expands: Collusion Between Trump and Powell?

    President Trump wants The Fed to flood the economy with (even more) credit.

  33. I visited my cousin in June. I said that if gold goes above fifteen hundred dollars an ounce I will be a multimillionaire again. She frowned slightly and asserted, “Jesus said the love of money is the root of all evil.” I swallowed carefully, being sure to remain calm, and replied, “That’s a mistranslation. I wrote a book once, about Jesus. It required a lot of research. In retranslating part of it, I discovered that’s not what he said at all. What he is actually reported to have said was,’Don’t be greedy, because greed causes many problems.’ Anyone can figure out that some evils have nothing to do with money or the love of it, and some aspects of loving money resolve a lot of evils.” She didn’t say anything else all day long. Later we went out to dinner and changed the subject.

    • Replies: @davidgmillsatty
  34. Anonymous[408] • Disclaimer says:
    @James Thompson

    Anon[910] already recognised the nature of the problem and the cure.

  35. Or good old insider information and trading.

    Most of the rich made their money with connections and the info that comes with.

    • Replies: @Amerimutt Golems
  36. Anonymous[408] • Disclaimer says:

    Cognitive power leads to monetary accumulation

    Among the little people – sure. The real monetary accumulation already happened at the top of the globalist pyramid and that’s a fairly dumb crowd.

  37. it is obviously true, hence the mantra of “You can’t beat the market”, to convince people to keep buying index funds. very smart guys regularly outperform the market average. life experience would tend to tell you this. smart guys accumulate more money, dumb guys go broke. but for some reason, this has to be demonstrated academically over and over in finance, for people to disbelieve the index fund marketing which is routinely broadcast about you not being able to do better than average over the long term.

    not only do the big players routinely beat the market, once their very fast trading computer algorithms were written to make trades in less than 1 second, the computers traded all day, rarely taking a loss. anybody in serious finance understands this, and knows what a quant is. quants are based on very high intelligence, or at least very high mathematical ability, so any arguments to the contrary are simply flat out wrong. the smarter you are, the more money you can make in finance.

    index funds ARE a great tool for the average or below average intelligence person because they WILL do better simply buying an index fund than trying to trade themselves. Jack Bogle did a great service for millions of people.

    • Replies: @The Alarmist
  38. Anon[424] • Disclaimer says:
    @Wally

    Soviet socialism was a failure , we already know that . But would`t you say that we too , the USA-EU , are full like you say , of :

    ” lazy, unproductive, power hungry Communist. ” ??

    if people are unproductive and eat at the expense of others , they are thiefs too , there are many types of thiefs .

    If someone does not wants to work , he must not eat ( Saint Paul )

    • Replies: @Wally
  39. @SaneClownPosse

    IQ is interesting. But no matter how many studies are done to quantify or qualify life based on IQ measurement, it doesn’t change the fact that life is uncertain, unpredictable, insecure, with innumerable variables. Man tends to think he can control everything, including nature. In particular, Western Man imagines himself as separate from nature, and the big-3 religions of the West all support and encourage this type of thinking.
    The move toward high-tech civilization is moving humanity to its final debasement and decline. But it’s necessary. J.Robert Oppenheimer and his crew in Los Alamos, created a monstrosity with their High IQs. There are way towards a High-tech civilization where Man is put in his place among nature, however, that is not the direction we are going.
    I’m sure if someone has a higher IQ than others AND has the desire to invest well and make money, they will more often succeed, but that is beside the point when we put Man back in his place with the rest of nature.

    • Replies: @freedom-cat
  40. @A Goy

    I know a guy that buys all the gold he couldp get his hands on with left over money after expenses. He has earned about 250% over twenty years.

    Waaaaaay better than any savings account by a few million miles.

    Don’t save, invest.

  41. Agent76 says:

    Jul 6, 2014 Century of Enslavement: The History of The Federal Reserve

    What is the Federal Reserve system? How did it come into existence? Is it part of the federal government? How does it create money? Why is the public kept in the dark about these important matters?

    12/20/2010 $24.5 Trillion In US National Debt, $144 Trillion In Unfunded Liabilities In… 2015

    Should one of the bolded predictions hit, the travails of Greek and Irish bondholders will be nothing compared to what those unlucky enough to be in possession of US debt in 2015 will have to go through.

    http://www.zerohedge.com/article/245-trillion-us-national-debt-144-trillion-unfunded-liabilities-2015

    • Replies: @obwandiyag
  42. @Брат

    Investing is so jewy.
    It’s all about sitting back and scheming ways to make money off of money. Essentially it’s about free money, aka theft.

    Not if the invested money goes towards producing real wealth that wouldn’t have been produced otherwise absent the investment.

  43. @James Thompson

    Dr. Thompson– I don’t know if I agree with any of the data from anyone on wealth accumulation which I think is a better term—ACCUMULATION. For example, many groups of people make or “accumulate” fortunes by illegal networking (inside info on stocks etc.). This is especially true of the Jews. The Jews also control economic pathways which lets them monopolize certain areas of the economy. How does any of this play into the data?

    Mennonites have massive cash reserves which enable them to buy large farms in areas of the country. They also network together. Most of their business is CASH. Many people inherit money. Some of it is not reported and is passed on under the table.

    I know tons of highly educated people who are in massive debt. The rich and super rich are able to accumulate more money due to tax laws and borderline illegal accounting practices. For instance the Kennedy fortune was made on 1) illegal booze–bootlegging ( many have tried to filter this by saying Joseph just had the liquor stocked piled til prohibition but Kennedy was associated with the Irish Gangsters of their time) 2) insider stock market investing 3) shady real estate deals 4) Hollywood movie deals.

    Joseph Kennedy’s quote on making money:

    “Being educated is not the marking of a true man. Play sports, know business and politics, dress well, and know how to invest money is what it took”

    Making money especially in quantities is as much luck as it can be education or anything else. Being in the right place at the right time matters. Locally a fellow I was acquainted with inherited an old house. He barely fixed it up to rent it. He wouldn’t sell it and let it get run down so he lost his renters. Some people consider the guy a bit of low life. He didn’t bother anyone but one might say he wasn’t an outstanding citizen. One day Walmart came into the area. Of course, once Walmart goes in businesses want to go right next to it. He sold the property and land for around $650,000.

    Another family in the area inherited their grandmother’s little house. It was just a little two bedroom house in a tract of little houses. When they started to remodel it and tear down the walls they found a number large safe boxes and metal containers in the wall and floor boards. The stocks certificates which were still good were valued at over 1 million and their was a lot of cash (supposedly there was close to a million in cash but the family said there was only 50,000).

    I also think the data are misleading because of where you go to school. Getting a Ivy League education for instance in many areas is not about what you know but who you know. Jared Kushner is a prime example of that. That’s why many people believe the Ivy League degree is worth something not because what they learned but for the people they meet and how they can get connected.

    Taleb insults anyone who is not a risk taker or investor. He condemns anyone who doesn’t own a business and anyone in academia. Some of this may be warranted but Taleb lives in a world that most people don’t live in. Most people are too busy “Milking the Cow” in their every day job to really delve into owning a business or take risks as he does. His graph which he posts about IQ and Wealth is also a joke because he has fallen into his own trap. How were the data derived? The data are aggregates from other areas. He condemns IQ test data for being aggregates of different tests but he doesn’t seem to mind it in his own analysis.

    An old farmer who had a lot of money once told me about making money. He said, “It’s a simple lesson. You buy a million widgets for $1.00 and you sell them for $3.00 each.” And of course he believed in the axiom about cash which no one said better than Randy Moss:

    “Straight Cash Homey”

    • Replies: @jester
  44. jester says:
    @Wally

    I have to agree with the MAddaugh. You are right, no CEO is forced into the job but these fellows cannot stand anonymity. Hence whether you want to admit it or not, they jump to the tune of shareholders, the Government, their employees and the public. Witness a CEO earning $85M a year pulling a brand because 10% of a minority population being offended. When these fellows finally retire they are lost because no one gives a damn what they think or feel. The power they had was, they find out, an illusion. Even their wifes and kids can barely stand them.

    Secondly, while they make a lot of money, they spend all their lives working and when they go on “holiday” they are still working. The man with $100 in his pocket can chill in a restaurant with his family and friends. The CEO can chill in a restaurant with $10,000 but he has to keep careful watch on his guests. You never know what is going on in the mind of all the envious toadies eating your food and laughing with your corny jokes. That is power ??

    “Without corporations most people would have no retirements or most of the goods & services they want & need.”

    Perhaps so but again the world is rife with corporations who abscond with the pensions. Any thinking man should provide for his own pension rather than trust his future in the hands of others. My parents and grandparents did it ! Your great grandparent did the same. Pensions are a relatively new thing given the time man has been on this earth.

    And as for provision of goods and services how much do we need. Man lived for thousands of years without large scale manufacturing. How many clothes do we need ? How many cell phones ? How many cars ? The fact of the matter is that most of the goods and services provided serve not the customer but the corporation. When a man pays $1200 for a cell phone Mr Cook at Apple thanks him profusely even though the fellows antique Samsung phone that cost $25 back in the day works perfectly well.

    Our grandparents, at least mine were slaves to no one in the sense. First they worked for others until they got the capital to start their own businesses. Even if they had to continue all their lives as employees they would have had the money to walk away from any job they had. The fact is anyone could do the same. However people today spend and spend meaning that they MUST do as they are told or else. THAT my friend is slavery.

    There is nothing wrong with working for somebody. What is wrong is when you have no savings and must kow tow to the boss, unreasonable customers, moron co workers etc.

    That is the situation many people find themselves in. They must have the most and the best of everything they want and little of what they need. That is why we have the corporate subservience we have with I might point out, a horrendous amount of mental problems in the workplace.

    You would be surprised how many CEOs there are who crave a simple life bt are unable to deal with the anonymity.

    You need to think more deeply Wally. We live in a complex world and your thought processes are somewhat superficial.

    • Replies: @The Alarmist
    , @Wally
  45. @prime noticer

    not only do the big players routinely beat the market, once their very fast trading computer algorithms were written to make trades in less than 1 second, the computers traded all day, rarely taking a loss. anybody in serious finance understands this ….

    They aren’t “beating” the market, they are essentially front-running trades by milli- and in some cases micro-seconds by literally plucking data of orders being transmitted to the exchanges out of the air by intercepting microwave feeds to the exchanges and getting their own orders into the system before the full market impact of the original order has been realised in the markets. In that respect, HFT is just another form of tax for the benefit of a few who for some odd reason are allowed to engage in a practise that would otherwise be illegal if it was timed in minutes.

  46. @jester

    You would be surprised how many CEOs there are who crave a simple life bt are unable to deal with the anonymity.

    I’ve met plenty of CEOs and gotten to know enough of them to know that the vast majority of mid- and large-Company CEOs are sociopaths, and more than a few are outright psychopaths … FWIW, the DSM lumps both those types into one diagnosis of Antisocial Personality Disorder.

    • Agree: jester
    • LOL: Wally
  47. @jb

    Great article. But the author, who absent a yarmulke still appears to be wearing one, set my stomach to churning with his very special tikkun olam ending

    Such is the hideously unfair world we live in, which I do hope to fix.

    after apparently declaring that he imagined a software solution to the communication range, a problem that anyone who can count should immediately recognize as mathematically intractable.

  48. @jb

    You, a liar, quoted a liar.

    Yeah, right, “Competent Elites.” My ass.

    You never met one. Competent at really really sucking.

    You pathetic peasant sucker.

  49. @Agent76

    The Federal Reserve is created run and upheld by IQ geniuses.

    Thank god for them. What would we do without them.

    • Replies: @Agent76
  50. Yeah, right. Sociopath idiot savants who destroy the world are geniuses.

    You got one weird definition of genius, IQ fool.

    Taleb, by the way, is almost infinitely smarter than you.

    I notice that you cannot deal with his actual statistical, probability oriented arguments, the real meat of the matter, because it is too intelligent for you.

    (And then you mischaracterize his argument as a kicker.)

    So you pick on his off the cuff non-mathematical common-sense remarks with, surprise, statistics!

    Category mistake. Look it up.

  51. The individuals with the highest inevestment returns are the United States’ congressmen and senators.

    Nancy has more than 100 million dollars.

    Almost none of them were listed in their respective year in the annual 20,000 ‘best academic performance’ graduates from high school.

    Warren Buffet, etc, have been rescued several times in the amount of trillions by the least smart and docile American people.

    • Replies: @Брат
  52. Wally says:
    @Anon

    Socialism / Communism has failed everywhere it has been tried. There are no exceptions.

    Indeed, the current trend of Communism in the EU & USA is faltering as well.
    As usual, it is not sustainable. Hence the growing desire by productive Europeans to leave the EU, the outcry by taxpayers in the US.

    So why do you say that those who invest for profit are “just a parasitic speculator he is just a thief”.

    Without profits there are no innovations, goods, & service we all want. There are no jobs.
    And ultimately there is nothing to pay for all the free stuff that the unproductive & lazy want.

    Profits only occur when the marketplace votes for the offered goods / services with it’s spending choices.

    • Replies: @Брат
  53. Брат says:
    @Wally

    > quotes Margaret Thatcher
    The woman who wrecked blue collar Britain wants to lecture people on productivity lmfao.

    • Replies: @Wally
    , @jester
  54. Брат says:
    @Rafael Martorell

    At it’s highest levels investment is all about privatizing the profits and socializing the losses while keeping the masses as ignorant as possible by speaking in the foreign language of the Wall Street Journal.

    Can’t wait until we hang speculators again. That is too kind though. They deserve their heads cut off with a butter knife.

  55. Брат says:
    @Wally

    Socialism did not fail in Germany in the 30s. Afterall, Hitler called it the National SOCIALIST German Workers Party.
    And German was wildly succeeding and productive while the capitalist world nosedived into a depresssion. So much for socialism not working.
    Though the biggest factor isn’t ideology; it’s more about getting rid of jews and parasites. The Renaissance happened at a time when jews were kicked out of northern Italy. Imagine my shock.

    • Replies: @anonymous
  56. @freedom-cat

    I meant this to be a stand alone comment. I must have accidentally hit a reply button.

  57. Agent76 says:
    @obwandiyag

    Well, since all Wars are Bankers Wars the world could breath easier after they have all been eliminated across the globe. “It is easier to rob by setting up a bank than by holding up a bank clerk.” Bertolt Brecht

  58. bjondo says:

    Give me the investor
    who has an inside track,
    who is dishonest.
    This sort is the best investor.
    Being a low down crook
    some sort of intelligent.

  59. Anon[258] • Disclaimer says:
    @Truth

    Poor whitey drops the knowledge. “I know I’m not the smartest white dude ever been born but a dumb as fuck white guy is supposed to be smarter than a medium smart black guy, right? Since I’m not even that stupid there’s gotta be a reason for me livin in this here mobile vehicle park and earnin my pay breakin rocks in half for Mr. Ratner.” “The Democrat Party gives the coloreds and Mexicans and people like that the breaks in life that an honest white dude like me used to get.” “So yeah for sure duh man be holdin me down.” “I’ll tell you what tho, duh man should be holdin them Mexicans and negroes down cause he gotta be holdin somebody down, but it shouldn’t be me cause I’m not fuckin stupid like they are!” “It’s bullshit.” “Reverse racism for middle smart but honest white folks and marxist communism for brown and black retards is what it is!” “It ain’t fair.”

    • Replies: @Truth
  60. @Anon

    Unexpected. Still enjoyed. Yasuharu Takanashi is amazing

  61. Anon[202] • Disclaimer says:

    What’s the NNT for those toenail fungus creams? Asking for a friend.

  62. anon19 says:

    A fool and his money are soon parted.

  63. Wally says:
    @Брат

    Except she didn’t.

    Outsourcing jobs, massive ‘immigration’, and lazy ‘gimme for free’ Communists did.

    • Replies: @Брат
  64. Wally says:
    @jester

    Like all delusional Marxists you ignore:

    – Those share holders, which anyone can become, can fire their CEOs anytime they wish
    – Those same shareholders approve of CEO’s salary.
    – There are problems in all workplaces, always will be, it’s the nature of the human condition.
    – Investments in those same corporations provide retirements that previous generations of workers could only dream of.
    – Those same corporations provide goods and services that make workers live easier.

    – Your grandparents certainly were “slaves” / beholden to others.
    As you admit: “They worked for others”, hence in your mind, they were slaves” to those “others”.
    And the money that made they put where? A bank, that’s where. LOL. Now that’s a corporation with a CEO.

    – People who over spend can only blame themselves. If they are “slaves”, they are so to their own foolishness. It’s their on fault and no one else’s, aka: personal responsibility.

    On the whole you’re just mindlessly using typical juvenile, uninformed, leftist strawman arguments because you are ignorant of reality. I suggest you remove your self from your Disneyland, the world is not the superficial fantasy you imagine.

    Another Marxist utopian bites the dust.

    • Replies: @jester
  65. Брат says:
    @Wally

    Go read the latest unz article on Margaret Thatcher. Then cringe at your ignorance. I can help with that too.

  66. FKA Max says: • Website

    What It Means to Be a Value Investor, with Lauren Templeton and Scott Phillips

    Why Women Are Better At Investing

    “Men traded 45% more frequently than women
    Women outperformed men by 0.94% per year”

    https://www.forbes.com/sites/michaelcannivet/2018/12/29/why-women-are-better-at-investing/

    Family Wealth–Keeping It in the Family: How Family Members and Their Advisers Preserve Human, Intellectual, and Financial Assets for Generations

    Generational family wealth conversation between Ilze Alberts and James Hughes

    [MORE]

    Understanding Your Values with Dr John Demartini

    Social Media: FKA Max Freedom Through Financial Literacy https://twitter.com/fka_max & https://gab.com/FKAMax

    Source: https://twitter.com/fka_max/status/1107569304969445376

    • Replies: @FKA Max
  67. anonymous[248] • Disclaimer says:
    @Wally

    https://www.aish.com/jw/s/Margaret-Thatcher-and-the-Jews.html

    [MORE]

    A new book explores her deep connection with the Jewish people.

    Four years ago, following the death of former UK Prime Minister Margaret Thatcher, Robert Philpot, a British journalist, noticed an interesting pattern: almost every article noted that Thatcher was famous for her affinity with the Jewish community.

    Intrigued, Philpot decided to research Thatcher’s relationship with the Jewish People. What he found out is detailed in his new book: Margaret Thatcher – the Honorary Jew.

    “If you ask most people who remember Thatcher what made her connect so strongly with the Jews,” Philpot said in an interview with Aish.com, “they will say: ‘Well, she was the MP for Finchley.” Thatcher’s political career began in 1959 when she was elected Member of Parliament for Finchley, a constituency in north London with a large Jewish community.

    “It seemed plausible to people that Thatcher cared about Jewish concerns because her voters cared about them. But when I stated researching I found out that her strong affinity with the Jews predated her political career.”

  68. anonymous[248] • Disclaimer says:
    @Anti Racist

    Darn it feels good to be a progressive!

    And the very intelligent, very hard working (((investors))) bankroll all these developments.
    And the useful idiots like “Wally” celebrate, because (((investors))) are so smart that they are always right.
    It must really feel good to be an (((investor)))!

  69. anonymous[248] • Disclaimer says:
    @Брат

    Socialism did not fail in Germany in the 30s. Afterall, Hitler called it the National SOCIALIST German Workers Party.
    And German was wildly succeeding and productive while the capitalist world nosedived into a depresssion. So much for socialism not working.

    Yes. Tiny country without any resources, and whole world had to unite to defeat her, and today, after 80 years, still need to paint them as the greatest devils that ever lived.
    Why? What exactly are they afraid of, if the nasty Natzies were so inefficient and incompetent?

    Wally really makes me sad. Someone who sees through the “holocaust” “moon landings” “9/11” and other BS that is told us, repeats like parrot all the “free market” Ayn Rand crap. Shame.

  70. jester says:
    @Wally

    Judging your intellect from your writing I doubt you ever held a position higher than scabbing cigarette butts from the parking lot. You sound really ignorant like a red neck from the most remote backwoods.

    Your logic is all over the place.

    What you have written exists is utter nonsense and not in the real corporate world.

    And delusional marxists existing in a capitalist world. Listen to what you are saying and writing. It makes for sheer drivel !

    For example, anyone can become a shareholder I agree. But Wally the commentator who buys 100 shares has no say in how the business is run. You, as a mickey mouse investor have no power ! The big shareholders have the say and generally the CEO and his friends ARE the big shareholders or control the holding company with the large shareholdings.

    Shareholders approve the CEO salary ? Rarely…the CEO also owns large blocks of shares or his close associates do. And if any company wants a particular CEO they must approve what the man wants. Proof: CEO salaries increased 1000% while the wages of the average worker remained stagnant or declined. What approval are you talking about here ?

    Investments in those same corporations provide retirements that previous generations of workers could only dream of.

    What investments ? The average american lives paycheck to paycheck. To have such a retirement you would need a portfolio of $1M to draw down a mere $40K a year. before taxes The average person does not have enough money for a brake job on their car. Today’s employees don’t dream of any retirement. Just look around, many of them are still working to make ends meet.

    Finally, corporations exist to make a profit not to make anyone’;s life easier. How do they do this ? By convincing buyers they must have their goods. Lets look at a company that produces shirts for example. One year stripes are in fashion, the next checks and the following year floral. Companies cater to a buyer’s WANTS and in so doing make their lives HARDER because the buyer struggles to keep up with the fashion. Life for the American consumer is not easy because the advertising convinces them they are always behind the in thing. The poor fellow ends up with 50 shirts, all out of fashion from one year to the next when in fact there are just 7 days in the week and one is wash day !

    You can apply the same logic to any other product. Cell phones is a classic example with folks changing their phone every 6 months. How does Apple make their lives easier. Oh I know, the average nobody red neck like you can have call waiting, call conferencing, call forwarding, data, internet, camera, scheduler, email, voice mail and this and that app all for an extravagant amount per month plus a phone that will be “out” in six months. Check out the nearby apple store and look at the people buying the latest of what they do not need.

    Corporate CEOs don’t give a shit about making anyone’s life easier. If you believe that you need to stop drinking that moonshine and get out of the backwoods. Corporate CEOs care about Corporate CEOs

    Finally, I was a senior VP of Finance in a large multinational. What I have forgotten about the corporate world you have not and will never know and my salary was never dictated by the shareholders but by myself. They paid me what I demanded or they could find someone else. My level of expertise was rare. Unlike you there were hundreds of jobs and just me. With you there are hundreds of Wallies and just one job. My annual bonus I would bet was more than 10 years of your salary.

    Before you mouth off, you need to know what you are talking about. be logical and watch your grammar. You come across as ignorant, uninformed and uneducated !

  71. jester says:
    @Брат

    This Wally fellow is a genuine moron. Everyone is a marxist and communist. Wally, this a a great blog spot and we need comments with ideas and perspectives we can ponder. Your comments are neither logical, useful or tasteful. Try to elevate yourself and your intellect.

    You come across as really dumb!

    • Replies: @Wally
  72. FKA Max says: • Website
    @FKA Max

    Financial literacy: An epic fail in America

    “U.S. ranks only slightly higher than Botswana in adult financial literacy”

    https://www.investmentnews.com/article/20190302/FEATURE/190229936/financial-literacy-an-epic-fail-in-america

    In another study, researchers found in 2015 that only 30% of Americans were able to answer three simple financial questions about inflation, interest compounding and risk diversification. The academics who conducted the study, Annamaria Lusardi of George Washington University and Olivia Mitchell of the University of Pennsylvania, called that success rate “discouragingly low” in light of the complex financial decisions Americans face.

    Yet another study shows a downward trend in financial literacy. In 2015, 37% of individuals correctly answered four out of five financial questions, down from 42% in 2009, according to the Financial Industry Regulatory Authority Inc.’s Investor Education Foundation’s most recent study of financial capability in the U.S.

    “Americans are struggling and at times they’re clueless — and that’s a disaster recipe right there,” said George Barany, director of the America Saves initiative at the Consumer Federation of America.

    Why so many Americans in the middle class have no savings

    “PBS NewsHour
    Published on Jun 1, 2016
    Could you come up with $2,000 in 30 days if you had to? As many as 40 percent of American families can’t, despite the improving economy. Among them is Neal Gabler, who is frequently broke despite his successful career as a writer. As part of a collaboration between The Atlantic and the PBS NewsHour, Judy Woodruff looks at why Gabler and so many other Americans are struggling with savings.

    • Replies: @FKA Max
  73. Wally says:
    @jester

    LOL You simply dodged my points.

    It’s understandable that you would be desperately name calling since I’ve slapped your nonsense silly.

    Cheers.

  74. Factorize says:

    After rereading The Millionaire Next Door, I would tend to question the cognition connection to wealth accumulation: the most important characteristic identified in this book is the frugality factor. It is astonishing to realize how completely wrong the mainstream view of wealth is and how this suggests that the ongoing image distortion of the super-rich is nothing more than politicizing by communists and socialists. The book unequivocally refutes the illusion of the rich having highly refined and expensive tastes.

    The delicious irony is that the popular perception of luxury (fine European automobile, expensive vintages etc.) is actually much more of a characterization of poverty than wealth. Among the American wealthy this lifestyle is almost non-existent. Of even greater irony is that the most successful ethnic group in America for wealth accumulation are Russians. Why did they ever bother with communism when they are super-capitalists? Number two were the Scottish. It is almost hard to believe that people could be that frugal. They were what were called prestigious accumulators of wealth.

    One other highly interesting insight from the book was the extent to which parent’s money management approaches impacted on the lives of their children. Those parents who were more in the spender than saver category, caused profound harm to the lives of their children by oftentimes providing them with life long financial support enabling them to also live well beyond their means and in addition creating the conditions for drug abuse in their offspring.

  75. CanSpeccy says:

    Here’s the proof that IQ correlates with wealth — Not.

    From: Zagorsky, 2007. Do you have to be smart to be rich? The impact of IQ on wealth, income and financial distress. Intelligence, 35: 489-501.

    Regression results suggest no statistically distinguishable relationship between IQ scores and wealth. Financial distress, such as problems paying bills, going bankrupt or reaching credit card limits, is related to IQ scores not linearly but instead in a quadratic relationship. This means higher IQ scores sometimes increase the probability of being in financial difficulty.

    • Replies: @res
    , @anonymous
  76. FKA Max says: • Website
    @FKA Max

    IQ and Stock Market Participation
    https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1441512

    Abstract

    Stock market participation is monotonically related to IQ, controlling for wealth, income, age, and other demographic and occupational information. The high correlation between IQ, measured early in adult life, and participation, exists even among the affluent. Supplemental data from siblings, studied with an instrumental variables approach and regressions that control for family effects, demonstrate that IQ’s influence on participation extends to females and does not arise from omitted familial and non-familial variables. High-IQ investors are more likely to hold mutual funds and larger numbers of stocks, experience lower risk, and earn higher Sharpe ratios. We discuss implications for policy and finance research.

    Make the Stock Market Work For You [Enough is Enough]

    “Capitalism vs. other Economic Systems [00:49] – What drives the stock market? [05:36] – How do I use these concepts to grow my money?(3 tips) [07:59]”

    • Replies: @FKA Max
  77. @Wally

    Those of my colleagues who made it to the top of large corporations were very driven with wives who supported their ambition. However, if you are freelance or owner of a small business you are more of a free man. Customers are always a frustration. They never do it right but projects end.

  78. A few things seem to be getting mixed up here.

    Acquisition of wealth is not the same as investment performance.

    Neither is necessarily particularly enhanced by intellect. The best sales people are not IQ 130 types. They are IQ 105. Not so bright that they see the disadvantages of their product. Conscientiousness and just going out and doing it also count. Learning from experience can be the easiest path. The overly intelligent can paralyze themselves with analysis.

    In my time, I have been in the top 0.25% of income earners in the UK. I even held it for a few years. I have also been near bankrupt. I suggest both conditions were IQ driven, plus a certain appetite for challenge that owed nothing to IQ.

    When it comes to stock market investment, there are many proofs that no one can outperform the market deliberately. Fooled by randomness says it all there. Taken himself had a wonderful example of 10,000 fund managers being recruited into The City. All those with below average performance were sacked each year. The 250 or so left after 5 years would of course be regarded as geniuses. Their books would sell. They would be forgiven a bad year. Their methods would be regarded as infallible. Yet a high IQ would have contributed nothing except perhaps exam passing ability to get recruited in the first place.

    • Replies: @CanSpeccy
    , @James Thompson
  79. CanSpeccy says: • Website
    @Philip Owen

    Acquisition of wealth is not the same as investment performance.

    Neither is it necessarily particularly enhanced by intellect.

    No. Great fortunes, and small ones too, are usually acquired more by luck than judgement. The fastest way to make money is to gamble — and win.

    But those who luck out on a big gamble are more likely to attribute their success to inspired judgement than luck, which can lead on to further bets resulting often in disaster.

    And, in any case, who says intelligent people think getting money is the most important thing to do with their time and intelligence. James Thompson, for example, surely does not write here for the the money?

    As Sam Johnson observed, one may seldom be more usefully engaged than in getting money, but only the most dull witted can think that getting as much money as possible is a worthwhile way to spend a large portion of one’s life.

    • Agree: Philip Owen
  80. @Factorize

    I enjoyed the book, and often quote its findings, yet I am not sure that their methods are sound enough to support that, though it is written in an engaging way.

  81. @Philip Owen

    Not fooled by randomness. Investment wealth can accrue to some particular investors who follow sensible methods, particularly if you look at performance over more than 8 years. There will be random good performers every year. If you are among the top performers for more than 8 years, you are probably doing something right.

    https://www8.gsb.columbia.edu/sites/valueinvesting/files/files/Buffett1984.pdf

  82. res says:
    @CanSpeccy

    Since I don’t enjoy out of context quotes, let’s include the abstract from that paper in full.

    How important is intelligence to financial success? Using the NLSY79, which tracks a large group of young U.S. baby boomers, this research shows that each point increase in IQ test scores raises income by between $234 and $616 per year after holding a variety of factors constant. Regression results suggest no statistically distinguishable relationship between IQ scores and wealth. Financial distress, such as problems paying bills, going bankrupt or reaching credit card limits, is related to IQ scores not linearly but instead in a quadratic relationship. This means higher IQ scores sometimes increase the probability of being in financial difficulty

    Here is some summary data for the three primary variables. Note that income includes entitlements (e.g. welfare, food stamps) which likely mutes the IQ correlation for it.

    Variable | Mean | SD | Correlation with IQ test score | Correlation with income | Correlation with net worth
    IQ test score 100 15 1.00 0.30 0.16
    Income $43,699 $47,709 0.30 1.00 0.39
    Net worth $145,837 $447,814 0.16 0.39 1.00

    The largest correlation with net worth was “Times inherit” at 0.2 which tells us something. Second largest was “Amount inherit” at 0.18. That 0.16 does not look so bad when considering that. One thing that intrigued me is that “Wealth at 28” only correlated 0.13 with net worth here (mean age 36.7).

    It’s worth noting that your graphs omit subjects with a net worth over $230,000. The summary statistics above indicate they are important statistically (the net worth graph cap is at about +0.2 SD).

    Here’s an excerpt from the paper:

    Table 2 shows the median income and net worth held by young baby boomers broken down by IQ scores. The numbers suggest that IQ scores are directly related to both income and wealth. Comparing individuals in the bottom of the IQ score distribution to those in the highest shows their net worth is over twenty three times lower, while their income is 3.6 times lower.

    Table 2 sounds interesting, so let’s include it here.

    Table 2
    Median income and net worth of young baby boomers by IQ test score
    IQ test score Net worth Income
    75 & below $5775 $15,020
    80 $10,500 $18,467
    85 $24,250 $27,700
    90 $37,500 $30,881
    95 $52,500 $34,985
    100 $57,550 $36,826
    105 $83,918 $40,628
    110 $71,445 $40,884
    115 $94,500 $45,675
    120 $127,500 $48,681
    125 & above $133,250 $55,555
    Overall $55,250 $35,918
    Correlation 0.156 0.297

    Wow. Clearly no relationship at all between IQ and net worth. Not.

    The abstract quote relies on the regression results. Looking at Table 3; Age, Education, and Times inherit $ (and income, see below) dominate the positive net worth coefficients while “Ever divorced” and race dominate the negative coefficients. I’m guessing the correlated variables are an issue in the regression. Let’s take a look at some of their correlations with IQ:

    Black -0.35
    Hispanic -0.16
    Education 0.62 (! Bingo!)
    Ever divorced -0.08
    Times inherit $ 0.32

    In addition, I think including income and net worth as explanatory variables for each other adds some confusion. I understand why they would do that, but I think it would have been more informative to include some models without them. Recall that Income correlates 0.3 with IQ.

    Also, most here probably realize this, but when interpreting those regression coefficients it is important to remember what sort of variables one is dealing with. For example, those income coefficients are multiplied by income in dollars so are very large even though they don’t look it at first glance. It is also worth noting from the Table 3 footnotes that Times inherit $ only covers from ages zero to thirteen. Seems likely that inheritances from age thirteen on are as or even more important.

    I think Table 2 serves as an effective rebuttal to your assertions.

    P.S. Thank you for including the paper link.

    P.P.S. This page looks at the variables which probably went into net worth.
    https://www.nlsinfo.org/content/cohorts/nlsy79/other-documentation/codebook-supplement/nlsy79-appendix-23-revised-asset-and

    P.P.P.S. The NLS Investigator: https://www.nlsinfo.org/investigator
    indicates family net wealth is being updated every four years (last in 2016). A quick look at citing papers did not show an update to the net worth work, but Ian Deary was coauthor of a 2015 paper using this data: Intelligence in youth and health at age 50
    https://www.sciencedirect.com/science/article/pii/S0160289615001014
    It would be interesting to see what the net worth and income correlations look like now.

    • Replies: @James Thompson
    , @CanSpeccy
  83. @Factorize

    As far as I recall, they did not measure intelligence, so have nothing to say about the matter!

  84. Factorize says:
    @Factorize

    The book offers so many penetrating insights into common patterns of spending that occur in the community and the significant intergenerational effects that such spending can have. It had never occurred to me that anyone could become so trapped into the deeply immoral profligate hyperconsumerism outlined in the book. Everyone needs to read this book to protect themselves against such behavior; otherwise it is all too possible that you will become a sugar daddy to these overspenders. You do not want to marry into these families with their children who possibly also have overconsumption behaviors along with potentially drug issues and/or AIDS.

    The psychometric regression to mean then merely compounds their problems as they try to live a life which they are intellectually incapable of managing. Shutting down the psychometric conveyor belt of wealth that naturally flows towards the upper middle class (without any awareness by those drawn to them of their grossly dysfunctional financial status) might be one of the only mechanisms that could help move them toward financial sanity.

    There is clearly a large potential for this message to become a central player in the political dialogue. It is not difficult to imagine that much political argumentation is simply those with grossly unrealistic consumption patterns demanding that prudent savers finance their lifestyles. By peering behind the headlines and observing the actual balance sheets of people in the community, a more informed discussion can occur in such we can demand others behave with financial responsibility. Politicians that were unable to demonstrate long term ability to accumulate wealth should be disqualified from public office. We need role models that understand the lifestyle required for wealth accumulation.

  85. @res

    Thank you so much for your detailed reading. Raw data are always so informative! Income data very useful. I tire of models which allow sleight of hand “corrections”. Tiresome how often authors correct for education, or even for social class itself. The sociologist’s fallacy once again.

  86. well says: • Website

    lies and more lies, then the bailout

  87. CanSpeccy says: • Website
    @res

    Since I don’t enjoy out of context quotes,

    What are you moaning about. I gave you a link to the full article. No one can demand fuller context than that. Or did you expect me to post the full article here?

    I also gave you a plot of the primary data, which confirms that, excluding the mentally incompetent, there is virtually no effect of IQ on wealth. The statistics are mere distraction from this principal finding as stated in the article summary:

    Regression results suggest no statistically distinguishable relationship between IQ scores and wealth.

    Let me repeat that:

    Regression results suggest no statistically distinguishable relationship between IQ scores and wealth.

    Furthermore, the authors state in the article summary:

    … higher IQ scores sometimes increase the probability of being in financial difficulty.

    • Replies: @res
  88. res says:
    @CanSpeccy

    The full abstract was only a bit longer than your excerpt which is why I complained. A bit of a nitpick admittedly (it gives an idea of how much I dislike failure to give full context when it is easy to do so). And I thanked you for posting the link already.

    Let me repeat that:

    Regression results suggest no statistically distinguishable relationship between IQ scores and wealth.

    So no response to my critique of those regression results? Or presentation of Table 2?

    Single sentences in abstracts (and summaries) are often used to spin results. This seems like a prime example. I explained in detail why I had an issue with that sentence. Any response to my points?

    Furthermore, the authors state in the article summary:

    … higher IQ scores sometimes increase the probability of being in financial difficulty.

    You might want to consider what it means when people use weasel words like “sometimes.” If nothing else they are generally a good clue as to what agendas are present.

    The financial difficulty results are very interesting, because they are presented in two different ways which superficially lead to very different conclusions.

    This table (which I believe is from the raw data) shows a fairly consistent decline in financial distress with increasing IQ. One might expect some odd behavior at the low end. I wonder how many people with IQs below 75 have credit cards and are taking care of the finances for their household.

    Table 5
    Relationship between IQ test score and financial stress
    IQ test score | Maxed credit card (%) | Missed payment (%) | Declared bankruptcy (%)
    75 & below 7.7 17.5 14.5
    80 11.7 25.4 14.4
    85 11.7 23.3 18.6
    90 12.1 23.5 16.9
    95 12.0 20.4 18.7
    100 8.6 18.5 13.7
    105 10.0 15.2 11.8
    110 6.3 17.0 11.8
    115 5.4 12.2 11.4
    120 6.3 12.5 9.1
    125 & above 6.1 11.8 5.0
    Average 9.0 18.1 13.5

    Presented by itself, this seems like compelling evidence for asserting something like: “higher IQ people are less likely to experience financial distress.” Remember that this table is based on raw data and not a model fit.

    Table 7 is the basis for your quote and is more interesting.

    Table 7
    Probability baseline respondent has financial distress for various IQ score levels
    IQ test score | Maxed credit card (%) | Missed payment (%) | Bankrupt (%)
    70 2.6 7.6 7.9
    80 7.6 14.2 15.2
    90 10.0 17.9 20.0
    100 8.3 17.6 20.7
    110 5.8 15.5 18.5
    120 4.6 13.8 15.7
    130 5.7 14.1 13.9
    140 14.2 18.8 14.1
    Note: Baseline respondent defined in the text

    What they did is evaluated the logistic regression model in Table 6 for various IQs with the following other baseline characteristics.

    Since it is difficult to interpret the table directly, the impact of changes in IQ test scores on the probability of being in financial distress is shown in Table 7. This table uses as a baseline a 40-year-old respondent with an income of $45,000, net worth of $75,000, who is not black, not Hispanic, had 12 years of schooling, is not divorced, has not inherited and spends $2000 per-person a year on food. Using different baseline characteristics changes the exact probabilities but not the pattern traced out by the table.

    This is a reasonable idea to eliminate the impact of other variables. It suffers from the same issue of correlated variables I discussed in my earlier comment though.

    I find Table 5 more compelling given that it is based on the actual data. It is intriguing that the authors ignored it in favor of the Table 7 results in their summary. Just as it was intriguing that the authors focused on their regression results rather than Table 2 for net worth.

    But I think there is a more important issue here. Their logistic regression model uses a cubic model for IQ (see Table 6). Have you done any modeling? An issue with higher order models is they often fit the center of the distribution (where the population, hence variance, is concentrated) well, but do odd things at the extremes. A common result is moderate variation in the middle with both extremes heading off to opposite infinities (two turning points for a cubic). This is especially bad if one makes the error of extrapolating outside of the data range.

    I tried plotting their maxed credit IQ coefficient results (most dramatic behavior at the extremes for that variable) in Wolfram Alpha, and the full curve shows the behavior I describe. Narrowing it down to the 70-140 IQ range does not make sense so I am doing something not quite right. Perhaps someone else can take a look. Here is the equation (leave off the “, {x, 70, 140}” bit to see the full curve):
    Plot[1.7649 x – 0.0171 x^2 + 0.0001 x^3, {x, 70, 140}]

    I looked into exactly what variable they used for IQ and am a bit mystified.

    The specific steps used to calculate an IQ score were to start with NLSY79 variable R0618300 and subtract points based on the respondents age when they took the test (13.7 points for ages 20 or 21; 10.5 points age 19; 9.2 points age 18; 8.0 points age 17; 5.2 points age 16; and 3.0 points age 15). The results were then standardized so that the series’ mean was 100 and the standard deviation was 15 points.

    Variable R0618300 is a percentile rank from 1-99 with a mean of 40.95 (presumably indicating high scores are underrepresented). You can find the variable information at https://www.nlsinfo.org/investigator/pages/search.jsp#
    but I don’t see a way to give a direct link.

    The corrections described do not make sense to me (those operations on percentile ranks?!). Can anyone help clarify this?

    Note that 99th percentile roughly corresponds to an IQ of 135. Extrapolating models beyond the range of the data (as done in Table 7 with the 140 IQ datapoint–the primary evidence for your quote) is statistical malpractice.

    It is also worth noting that NLSY79 uses survey sampling techniques. I suspect this gives a clue why the IQ mean is so low (oversampling of groups with a low mean). See page 5 for sample details. The OCR is horrible.
    https://www.nlsinfo.org/sites/nlsinfo.org/files/attachments/140821/NLSY79%20Tech%20Samp%20Rpt.pdf

    The closer I look at this paper the less convincing it becomes.

    P.S. You might consider the cliche about holes and digging.

    • Replies: @CanSpeccy
  89. CanSpeccy says: • Website
    @res

    So no response to my critique of those regression results?

    I leave the statistics to the statisticians, while noting that the author’s stats in the paper under discussion were evidently considered valid by the reviewers of the journal Intelligence. For myself, I place trust in my own lyin’ eyes, which is why I added the scattergram showing the raw data.

    I also rely on common sense which tells me that intelligent people, whether or not so designated by an IQ test score, generally manage to earn a comfortable living in a congenial way, and thus have better things to attend to than the accumulation of surplus wealth.

    However, those who must struggle, perhaps due to low intelligence, to get a living or to achieve some degree of social standing, are more likely to be obsessed with laying up for themselves treasures on earth notwithstanding that “moth and rust destroy and thieves break in and steal” — if they don’t leave you strangled like the late unlamented Jeffrey Epstein.

    • Replies: @res
  90. res says:
    @CanSpeccy

    I leave the statistics to the statisticians

    Your trusting nature is admirable. I think. Here is a book you might find worthwhile:

    while noting that the author’s stats in the paper under discussion were evidently considered valid by the reviewers of the journal Intelligence

    That does make me wonder. Perhaps they need better reviewers? And again with the trusting nature on your part. Seems a bit inconsistent with the vehemence with which you criticize other experts in the area of intelligence.

    Do you always let experts (statisticians and reviewers here) do your thinking for you? Or only when it is convenient to your preconceived notions?

    showing the raw data

    Part of the raw data. Your lyin’ eyes can’t evaluate what they are not shown. You do understand that not all of the data is shown on that graph, right?

    I enjoyed your just so story. Do you consider that kind of thing convincing?

    P.S. Still no response to my points–at all. Pretty sad. Tables 2 and 5 were clear cut, even for a non-statistician. If anything, they are even easier to understand than the regression analysis.

    P.P.S. Keep on digging.

    • Replies: @James Thompson
  91. @res

    Thank you for your patient work. It is interesting how often an abstract does not do justice to the actual findings. We should find a metric for this.

    • Replies: @res
  92. res says:
    @James Thompson

    That would be an excellent metric. It would help identify areas of controversy and researchers to treat with caution. The only (but fatal IMHO) problem is that it would become victim of the same bias, politicization, and groupthink which causes the problem in the first place.

    I think the most important thing to do here is the move towards open data. I find the progress in this area encouraging.
    https://www.the-scientist.com/careers/the-open-data-explosion-65248

    For the paper CanSpeccy and I are discussing I wish the data were available to look at:
    – See what those missing outliers look like.
    – Alternative regression models with different variables.
    – Variance inflation issues with the correlated variables in the regression models.
    – Better understand how their IQ measure was derived and its properties. For example, from the scatterplot it appears the IQ range is 75-130 (again, note their model fit to IQ 140 in Table 7) with overrepresentation at the low end. I think this would be worth quantifying.
    In theory, the NLSY79 data is available, but I don’t think their data acquisition and manipulation are well described enough to permit reverse engineering (at least with high confidence I am getting the same results). And understanding that data acquisition and manipulation is one of the points of open data–for example, how plausible are the age corrections they use?

    It is fascinating that some of the most controversial intelligence researchers (e.g. Emil Kirkegaard, Davide Piffer, and John Fuerst) are among the most committed to open data.
    https://osf.io/a2yfn/
    https://osf.io/ky4ze/
    https://osf.io/z4jmy/
    Yet for all the criticism directed at them we so seldom see any of the critics engage with their data and methods. And when we do see engagement it is usually FUD (e.g. but LD!) rather than alternative analyses.

    I think openness and willingness to engage with the data are excellent metrics for assessing who is making an honest effort to seek and illuminate the truth. And who is not.

    • Replies: @James Thompson
  93. @res

    Open data is the way forward. Emil, Davide and John have always laid out their work so that it can be studied in detail. I see that as more profound than a refereed article, because an open document can be picked over by many people.

    I am tied up with other things at the moment, but would like to look at the paper and its implications, with the benefit of all your careful work.

  94. not sure why you guys are arguing about this one paper from 2007. one paper, which is not even that good or comprehensive, is going to settle the argument?

    a bigger data set – the world, real life – shows that intelligence matters a lot to investment performance, which is the subject of the thread, as well as wealth accumulation, which is a tangent the thread has taken on.

    let’s go beyond performance of 130 on paper and pencil intelligence tests. what does that show? it shows that the actual, really smart guys, make millions. pumpkin person did a post about this a few years ago, covering the entire wechsler spectrum, correlated to square footage of how big your house was. surprise, guys who could do 150 or more on the wechlser lived in mansions on average. and guess what? people at these levels are not rare. there’s millions of them. probably 2 million in the US, europe, east asia.

    what does the forbes 400 show? a comprehensive, yearly report with data that is totally contradictory to the idea that intelligence is irrelevant to finance performance or wealth accumulation. performance of the smartest guys, and there are several on the forbes list at wechsler 160, and, what a shock, they have billions.

    one useful thing to calculate would be the science and research penalty. that is to say, how much reduction in wealth accumulation do the smartest guys incur, for trying to figure out important stuff, rather than spending their career accumulating money. does anybody have a good figure on this? how many people in the 140 to 160 range, take a big net wealth penalty for the mistake of going into science and medicine?

    we haven’t even gotten into the HBD factor yet, which, if you do any serious research into african performance, shows they basically do nothing, and have net wealth accumulation of literally zero, even in the US. wonder what causes that…

    • Replies: @res
  95. res says:
    @prime noticer

    not sure why you guys are arguing about this one paper from 2007. one paper, which is not even that good or comprehensive, is going to settle the argument?

    Because it seems like one of the few sources of relatively good data on this subject. And, from my point of view, because it appears they have slanted their top line conclusions–which annoys me.

    pumpkin person did a post about this a few years ago, covering the entire wechsler spectrum, correlated to square footage of how big your house was

    Do you have a link to this? I searched, but did not find it. Pumpkin Person has some interesting posts, but the SNR (Signal to Noise Ratio) over there is not always so great.

    one useful thing to calculate would be the science and research penalty.

    Indeed. Another way of thinking about it would be to plot different careers on a graph of “financial reward” vs. “societal contribution.” Perhaps grouped by ability (e.g. intelligence) or by rarity/difficulty of performing in the field. Of course, judging “societal contribution” is difficult and would lead to endless arguments.

    Also worth thinking about the risk/reward profiles of the professions. Science is relatively flat for that, with careers like acting or professional athlete being at the opposite extreme. Also things like prestige and enjoyment of the job.

    • Replies: @James Thompson
  96. @res

    Good data on intelligence, income and wealth are always welcome. The sample is very good, and the intelligence test measures pretty good, so the results are interesting. Hope to blog on this shortly.

    • Replies: @res
  97. CanSpeccy says:

    Your trusting nature is admirable.

    Me? Trusting?

    About statistics in psychology?

    You kidding?

    You must be familiar with the Ioannidis paper: Why Most Published Research Findings Are False

    and the fact that for all the mandatory statistics, the conclusions of most psychology papers are false.

    That’s why I leave the statistics to statisticians. Not worth wasting what remains of my one and only life trying to sort out the statistical bullshit. But when the raw data make a clear point why ignore it?

    So here, for anyone interested in the actual facts, are the data once more.

    Which confirm, what the authors stated up front, that there is:

    no statistically distinguishable relationship between IQ scores and wealth

    — except at the bottom end among the mentally retarded.

    So keep barracking away. You’re surely not fooling anyone. Or if you are, let us hear from them.

    • LOL: res
    • Replies: @res
  98. anonymous[400] • Disclaimer says:
    @CanSpeccy

    wwebd said – You don’t know much about how the world works, do you?

    Look, I can rattle off the lifetime income of about a thousand different people whom I know, and I can tell you which of the men have hot wives and which do not, which of the men have probably been cheated on by their hot wives and which have not, and vice versa, and I can tell you which ones have enjoyed their work-lives and which ones have only succeeded because they slaved away day after day with the constant fear of poverty over their heads. And as a bonus I can tell you about lots of them who went to work with their rich uncles and about lots of them who were Gamblers and lots of them who were not. And I can tell you about the walking wounded who tried and failed and the walking wounded who misused their gifts and smoked a lot of weed while being taken for a ride by their “friends”.

    And you show me some little cloud of dots with two (2! – do you know how ignorant I think you are) variables being plotted, and tell me that you have proven something.

    Seriously? You think that those little dots show who has won the game of maximizing their abilities to use their God-given gifts?

    Like I said you and people like you don’t even seem to be pretending to understand the world that we live in.

    • Replies: @anonymous
  99. anonymous[400] • Disclaimer says:
    @anonymous

    wwebd said – By the way, Can Speccy, in case you aren’t as lucky as me to have known many people in their prime of life, and in case you don’t want to talk about the real world and want to talk about books, well, then, you might want to ponder on the fact that differences in “IQ” or something similar are very Lindy (that is something that all generations have noticed).
    Read the Iliad and the Odyssey and pay attention to what the poet said about Ulysses, the crafty man, and several others who were likewise gifted.
    Read the Book of Proverbs, where the difference in intellectual gifts between some men and other men is a constant theme (of course not a theme that glorifies those with more gifts -quite the contrary, frequently) and read the sayings of Jesus (who was not at all a big fan of most people with above average intellectual gifts but who recognized their existence).

    And have some self-respect and don’t show us those 2 dimensional dots as some sort of argument ever again.

    • Replies: @CanSpeccy
  100. res says:
    @CanSpeccy

    You kidding?

    I would have thought so based on your previous comments here. But then you started going on about how I should trust the researchers’ conclusions in the abstract and appealing to the authority of the reviewers. And yes, that phrasing was meant as humor given your previous skeptical persona.

    But when the raw data make a clear point why ignore it?

    Indeed. Which is why I again reproduce Table 2 which is based upon ALL of the raw data.

    Table 2
    Median income and net worth of young baby boomers by IQ test score
    IQ test score Net worth Income
    75 & below $5775 $15,020
    80 $10,500 $18,467
    85 $24,250 $27,700
    90 $37,500 $30,881
    95 $52,500 $34,985
    100 $57,550 $36,826
    105 $83,918 $40,628
    110 $71,445 $40,884
    115 $94,500 $45,675
    120 $127,500 $48,681
    125 & above $133,250 $55,555
    Overall $55,250 $35,918
    Correlation 0.156 0.297

    A correlation of 0.16 refutes “no statistically distinguishable relationship between IQ scores and wealth.” And regarding that quote, remember how much I dislike out of context quotes? Here is the full sentence from the abstract: “Regression results suggest no statistically distinguishable relationship between IQ scores and wealth.” Rather weaker wording than yours I would say.

    And here is what the paper had to say about Table 2 in the body of the text.

    Table 2 shows the median income and net worth held by young baby boomers broken down by IQ scores. The numbers suggest that IQ scores are directly related to both income and wealth. Comparing individuals in the bottom of the IQ score distribution to those in the highest shows their net worth is over twenty three times lower, while their income is 3.6 times lower.

    Interesting.

    So here, for anyone interested in the actual facts, are the data once more.

    One. Last. Time. Those graphs only contain part of the data. From the paper.

    To keep the dots from blurring together the financial data range is a quarter of a million dollars. While the very rich are not shown in these two figures, their data are included in all other results’ sections.

    And also to repeat, the Net worth mean was $145,837 with an SD of $447,814 (from Table 1). That means the $230K maximum net worth on the graph only captures up to +0.2 SD of the distribution. I would be very interested in seeing that missing data. How about you?

    So keep barracking away. You’re surely not fooling anyone.

    I think that statement applies better to your comments in this thread then mine, but then that is just my opinion ; ) I think I have backed up my statements sufficiently for anyone who is truly interested to evaluate their validity. And I have given credible arguments against your statements, which you have completely failed to do for mine.

    P.S. Is it really asking so much much for you to respond to even one of the specific points I have made? Rather than just restating your original comments and (partial) quotes from the paper abstract and summary (have you even looked at the body of the text?) over and over? You must have been a treat in debates in your days in academia.

  101. res says:
    @James Thompson

    Hope to blog on this shortly.

    I look forward to that. Is there any chance Ian Deary could be convinced to add net worth data to the work in the 2015 paper I linked above? It would be interesting to have another set of eyes (in addition to the 2007 researchers, not mine) take a look at this data and they appear to have already done most of the data heavy lifting needed.

    Given the low correlation (0.13!) of net worth circa 2007 (2004?) with “Wealth at 28” (mean $54,398 SD $216,226, correlation with IQ 0.10) it would also be interesting to see how the IQ/Net Worth correlation behaves over the population’s lifetime. It looks like the NLSY79 has net worth data every four years since then.

    I would be interested in your opinion of the age corrections they used for IQ scores.

    The specific steps used to calculate an IQ score were to start with NLSY79 variable R0618300 and subtract points based on the respondents age when they took the test (13.7 points for ages 20 or 21; 10.5 points age 19; 9.2 points age 18; 8.0 points age 17; 5.2 points age 16; and 3.0 points age 15). The results were then standardized so that the series’ mean was 100 and the standard deviation was 15 points.

    That just does not seem right to me if they are really talking about R0618300 which is AFQT percentile rank. I am also uncertain why their IQ scatterplot axis tops out at 130 when that is only the 98% level.

    • Replies: @James Thompson
    , @CanSpeccy
  102. @res

    All good points. Will post the graph up, and hope to add the words later.

  103. CanSpeccy says: • Website
    @anonymous

    By the way, Can Speccy, in case you aren’t as lucky as me to have known many people in their prime of life …

    LOL. What does this even mean?

    you might want to ponder on the fact that differences in “IQ” or something similar are very Lindy

    What? Do you even know what the Lindy effect is?

    And have some self-respect

    OK. Here’s some self-respect. I attended one of the world’s most expensive private schools. My classmates included an heir to the greatest industrial fortune in England, the son of a cabinet minister, the son of a Hollywood star, and a future member of the British Government. I graduated from university with first class honors and and the faculty prize; I worked for three governments; held academic appointments at three universities, at one point all at the same time, two of them at among the world’s top 30 research schools (according to the Times Higher Ed); my last peer-reviewed research publication has been cited in the literature almost 500 times; a ran my own company for 20 years before selling to a multinational; my son won the faculty prize in mathematics at a major North American university; my daughter went through university on a flood of scholarships, never costing me a penny.

    And you have the insolence to tell me what to read and what to think because I don’t accept that a correlation between IQ and wealth of 0.15 or whatever is important (and less than 0.15 when you ignore the mentally challenged).

    LOL

    • Replies: @anonymous
  104. CanSpeccy says: • Website
    @res

    A correlation of 0.16 refutes “no statistically distinguishable relationship between IQ scores and wealth.”

    You’re so right. A correlation of 0.16 means that 2.5% of the variation in wealth was attributable to differences in IQ — that’s assuming that the relationship is real, i.e., statistically significant. And even if it is statistically significant, there must be a some uncertainty about the magnitude of the effect, which could with considerable probability explain less than 2.5% of the variation in wealth, or perhaps a little more.

    But as you will have noticed, I acknowledged an effect of IQ on wealth due primarily to the limited wealth of those of far below average IQ, i.e., those on or beyond the borderline of mental deficiency.

    So looking at the big picture, there is, at most, only a trivial effect of IQ on wealth and perhaps none at all in the case of people of IQs in the normal or above average range.

    What would be much more interesting to know, therefore, is what accounts for the other approximately 97.5% of the variation in wealth.

    • Replies: @res
  105. I’ve been around a lot of poor white guys in my lifetime. Yes, they are stupid.

  106. res says:
    @CanSpeccy

    I acknowledged an effect of IQ on wealth due primarily to the limited wealth of those of far below average IQ

    You keep saying this, but I don’t think it is possible to be confident without seeing the data which is missing from those scatterplots (i.e. net worth above $230k). Remember that in Table 2 the average net worth at IQ 100 is $57,550 while it is $133,250 at IQ 125 and above.

    So looking at the big picture, there is, at most, only a trivial effect of IQ on wealth and perhaps none at all in the case of people of IQs in the normal or above average range.

    What is strange is that the correlation is small yet the trend comes across so clearly in Table 2. In particular, notice that the Table 2 trend with IQ is more dramatic for net worth than for income while the correlation is almost twice as high for income. I find that fascinating. I suspect it means there is a great deal more randomness associated with net worth than there is for income. Which kind of makes sense intuitively. Another factor is that the smaller differences in income probably result in a larger difference in net worth over time.

    What would be much more interesting to know, therefore, is what accounts for the other approximately 97.5% of the variation in wealth.

    One thing we can agree on.

    P.S. This paper might give some food for thought: The Origins of Savings Behavior
    http://www.econ.yale.edu/~shiller/behfin/2010_10/cronqvist-siegel.pdf
    Abstract:

    What are the origins of individual savings behavior? Using data on identical and fraternal twins matched with data on their savings behavior, we find that an individual’s savings propensity is governed by both genetic predispositions, social transmission from parents to their children, and gene-environment interplay where certain environments moderate genetic influences. Genetic variation explains about 35 percent of the variation in savings rates across individuals, and this genetic effect is stronger in less constraining, high socioeconomic status environments. Parent-child transmission influences savings for young individuals and those who grew up in a family environment with less competition for parental resources. Individual-specific life experiences are a very important explanation for behavior in the savings domain, and strongest in urban communities. In a world progressing rapidly towards individual retirement savings autonomy, understanding the origins of individuals’ savings behavior are of key importance to economists as well as policy makers.

    They use the Swedish Twin Registry and I was wondering if it might be possible to tie intelligence to net worth there, but it appears they have cognitive data for only a small subset of the twins.
    https://pdfs.semanticscholar.org/6a86/cf073156a7e9a40ed2fdad4875d715cd38ef.pdf

    The Web application also included a battery of tests for reaction time and temporal accuracy (Holm et al., 2011), as well as cognition (Wiener Matrizentest, WMT). The WMT is a 24-item test, which is similar in construction to the Raven test, with which it is highly correlated (r = 0.92; Formann & Piswanger, 1979). A total of 3,070 twins aged between 50 and 67 (mean 58.9) chose to participate in this Web-based extension of the SALTY study.

    • Replies: @James Thompson
    , @CanSpeccy
  107. @Robert H. Burt

    There is gold in them there asteroids. So much so that someday gold could be almost worthless. And it might happen before you know it. It is the rarity of gold that makes it have value. But if an asteroid between Mars and Jupiter has so much of it that it becomes no longer rare, what it its value? Somebody will get to it. And many more like it. And then at some point we will find a way to bring the valuable asteroids to near earth orbit.

    https://www.rt.com/business/462703-golden-asteroid-everyone-billionaire/

  108. anonymous[392] • Disclaimer says:
    @CanSpeccy

    wwebd said – I am never insolent.

    I try to be helpful, as Socrates did:
    I am sad you saw insolence there.

    [MORE]

    (For the record, I could brag too – about Pulitzer Prize winners who plagiarized (with my friendly permission) my words), )and I could brag about that time when one or more of the greatest mathematicians (“linear algebra,” and “accurate statistics viewed from the von Neumann perspective”) of the day who listened to me with rapt attention when I spoke, while all around us a “college party” was going on, in one of those old new-in-the-1920s apartments that were extremely comfortably weathered in the 1970s, about the difference between how Plato understood numbers and functions and how Kolmogorov only dreamed of how Plato would have understood those EXACT SAME numbers and functions ….. and those dreamy little after-burner sequelae of functions that those of us who understand numbers know all about …. I was on a roll that night !!!

    Not to mention the academic honors I earned from the best university in the Eastern Time Zone and the medals that I earned in those days when I also earned my membership in the VFW …..

    To start over, the problem I was pointing out is that “Wealth”, in First and other non-Third World societies, CANNOT BE MEASURED BY INCOME OR OWNERSHIP of real estate, pensions, et cetera.
    CONTRA Taleb and you, A SINGLE NUMBER designating wealth is not useful, hence my mockery of your dots. Explain where I am wrong ….. You probably can’t, without referencing deeper, more truthful lodes of information …. THAT IS WHAT I WAS TELLING YOU>> TO DO I WAS NOT BEING INSOLENT

    It was a simple point, and, to be fair to you, I might have been trying too hard to riff in a sarcastic way on the common mistake that SO MANY OF US MAKE …..

    Trusting numbers over our intuition.

    By the way, congrats on getting a good education for your children.
    That is not an easy thing to do for those of us who are able to talk the way you and me can talk.

    Maybe some other day I will brag about my children ….
    but not today.

    My friend, feel free to RIFF ON EVERYTHING I SAID we are both looking for the truth

    and feel free to mock me if you are still feeling disrespected

    but don’t feel disrespected, I have seen the way this world looks, in California and Russia and on the Atlantic Beaches and in the deepest desert of the most forsaken Sahara, since well before you were born, even if you are in your 40s ….. and I was just urging you on to be more accurate

    (You can’t mock me unless you say something better than what I said and I WOULD LOVE FOR THAT TO HAPPEN ….. GOD IS THE INSPIRATION OF ALL THOSE WHO SPEAK THE TRUTH)

    • Replies: @anonymous
  109. anonymous[400] • Disclaimer says:
    @anonymous

    wwebd said – for the record, I really am a friend of a friend of Kolmogorov, decades ago I was a grad student on an “exchange program” in Moscow and, after speaking with a spectacularly gifted physicist professor friend, I agreed, on a cold December night, not far from the Ploschad’ Bogdano Khelmnitskovo (dread words, as Wallace Arnold used to say), to smuggle through the Soviet airport and back through the skies to NYC some dissident documents from one of Sakharov’s best students who was also, I guess, a good friend of Kolmogorov’s, in order to “draw the attention” of the free world to the plight of the person whose documents I smuggled, in order to be helpful.

    Mock me if you want but I have seen it all and nothing really frightens me, because God loves us all.

  110. @jb

    From what the Yudkowsky fellow wrote:

    …the last news your readers want to hear, is that this person who is wealthier than you, is also smarter, happier, and not a bad person morally.

    So executives are smarter than us mortals? Possibly, perhaps even probably. I can buy that those jobs need brainpower.

    Happier? Almost certainly.

    Not bad persons morally? This one I’m much more skeptical about. I’d think we’d see less Woke Capital if these people were, say, less evil than the average James Bond movie villain. Besides all the usual arguments about bailouts, parachutes and insider trading.

    The corporate hierarchy is heavily meritocratic, but it also selects for people with certain temperaments. Moral integrity in any deeper sense (social responsibility, as opposed to purely instrumental conscientiousness) does not seem to be considered a highly valuable trait.

    • Replies: @CanSpeccy
    , @Anonymous
  111. @res

    I started to pull together some material for my promised post, and found I had already commented on the relevant material in April 2015 as “The Wages of Intellect” . I might do a summary of that and other papers.

    • Replies: @res
  112. CanSpeccy says: • Website
    @res

    I acknowledged an effect of IQ on wealth due primarily to the limited wealth of those of far below average IQ

    You keep saying this, but I don’t think it is possible to be confident without seeing the data which is missing from those scatterplots (i.e. net worth above $230k).

    I have reiterated the point because there is clear evidence for it at the bottom left of the figure, where there is a concentration of individuals of low IQ and low, zero or negative wealth.

    What is strange is that the correlation is small …

    Yes, even I would have thought that whatever type of intelligence it is that IQ test scores measure it would have explained more that 2.5% of the variation in net worth. But I am very much more inclined to think about the 97.5% of the variation not explained by IQ, and leave it to the specialists to worry about the tiny remainder.

    The 97.5% must be explained either by luck, personality, or judgement. Luck is surely important. People who accumulate great wealth quickly are generally highly risk tolerant. As a consequence, great fortunes are often lost as quickly as they are made.

    Personality must also be a factor. How many people do you know of who throughout their lives have made a habit of checking return coin chutes of payphones for change users failed to retrieve? I know of only one and he is a billionaire from the working-class end of Vancouver, BC.

    Then there’s intelligence. Whatever kind of intelligence IQ tests measure, it is as we’ve agreed, not very important in the determination of net worth.

    But what does IQ measure? James Flynn proposed the term cognitive intelligence, which isn’t very satisfactory since any kind of intelligence must involve cognition. A better term might be analytical intelligence. But analytical intelligence is only one rather limited aspect of intelligence. There are many other forms. Emotional intelligence, for example, the ability to read and influence the emotions of another. No salesman can achieve great success without emotional intelligence, likewise battlefield commanders — think Henry V, by W. Shakespeare — dictators, Lotharios, and confidence tricksters.

    Musical intelligence can pay good dividends too. Consider Rossini, who as Beethoven remarked “has a barrelful of melodies,” and who retired rich in his twenties.

    Today, even better perhaps than any of the above is kinasthetic intelligence, as manifest in, for example, awareness of the position and direction of other players on the soccer or football field and a grasp of how a movement in the right direction can be developed.

    In conclusion, therefore, one can say that:

    1. Empirical data show that IQ has almost nothing to do with the acquisition of wealth except among those of subnormal analytical ability;

    2. Luck and temperament almost certainly play a vastly greater role in determining the accumulation of wealth than analytical intelligence;

    and 3. Of the role of intelligence, i.e., “acquisition and use of information” (the common usage meaning of intelligence), emotional intelligence, musical intelligence and kinasthetic intelligence all may play a vastly greater roles in determining success in the accumulation of wealth than whatever it is that IQ tests measure.

    • Replies: @anonymous
  113. CanSpeccy says: • Website
    @John Regan

    The corporate hierarchy is heavily meritocratic, but it also selects for people with certain temperaments. Moral integrity in any deeper sense (social responsibility, as opposed to purely instrumental conscientiousness) does not seem to be considered a highly valuable trait.

    Good point. What the successful corporate climber clearly needs is Machiavellian intelligence. Once the shrinks get around to developing a reliable test for that, watch out.

    Though come to think of it, there probably already are tests for Machiavellianism. Perhaps James Thompson can tell us something about that, and whether such tests have been used to select candidates for promotion on the corporate, political or bureaucratic ladder.

  114. Anonymous[373] • Disclaimer says:
    @John Regan

    While executives are definitely smarter on average than the unwashed, the owners – especially the top connected families – are absolute mediocrities who haven’t seen meritocratic competition for generations.

  115. res says:
    @James Thompson

    Thanks.

    The blog post supplying the graphics has disappeared, so here is an archive link:
    https://web.archive.org/web/20150325120121/http://super-economy.blogspot.com/2011/04/iq-income-and-wealth.html

    One thing to emphasize (even though it is stated in the graphs, I missed this at first) is that the blog graphs are non-Hispanic white men.

    Something else I found intriguing is that the top decile IQs (>~119) in the blog post graphs had a mean wealth of $700k in contrast to Table 2 of the paper which gave mean net worth of their top two groups (120 and 125+) of ~$130k. That is a big difference! One possible difference is the paper was written in 2007 (I think using 2004 data) while the blog post was from 2011 and the graphics mention 2004-2008 for the data.

    It would be interesting to see a more thorough slicing and dicing of the NLSY79 IQ/Income/Wealth data. For example, looking at Box plots instead of just means and breaking out race and sex in another set of Box plots. Also giving summary statistics for all of those crosstabs. Looking at longitudinal wealth would be interesting as well.

    These are some variables of interest.

    R0618301 AFQT-3 PROFILES, ARMED FORCES QUALIFICATION TEST (AFQT) PERCENTILE SCORE – REVISED 2006
    Looks like it gives 3 implied decimal places of AFQT percentile (max 100). This is better than R0618300 used by the paper which is only integer percentiles with a max of 99. Download both for comparison.
    Very helpful notes at https://nlsinfo.org/content/cohorts/nlsy79/topical-guide/education/aptitude-achievement-intelligence-scores
    Note that the 2006 AFQT-3 (R0618301) version is controlled for age!

    R8496100 TNFI_TRUNC TOTAL NET FAMILY INCOME IN PAST CALENDAR YEAR *KEY* (TRUNCATED) 2004
    I think this is the income variable used in the paper.

    Some additional variables giving context (full sample size is 12686)
    1 R0000100 CASEID IDENTIFICATION CODE 1979
    2 R0173600 SAMPLE_ID SAMPLE IDENTIFICATION CODE 1979
    3 R0214700 SAMPLE_RACE R’S RACIAL/ETHNIC COHORT FROM SCREENER 78SCRN
    4 R0214800 SAMPLE_SEX SEX OF R 1979

    It is worth noting that the paper’s author was on the NLSY79 documentation team so presumably knows much about it (e.g. perhaps the IQ age corrections are better than I think?). I think this may mean the income and net worth calculations in the paper are subtly different from the simple aggregate records (e.g. dividing income and wealth by 2 for married).

    I am planning on spending some time downloading and analyzing this data and was wondering if you have any suggestions or interest in the results.

    P.S. There are 125 variables containing INHERITANCES. Not sure how hard it would be to extract useful data out of those.

    P.P.S. Some other details which might be useful below.

    [MORE]

    To preserve confidentiality the NLSY79 fiddles with high income values. From the User Guide https://www.bls.gov/nls/79guide/2001/nls79g0.pdf

    One method of ensuring confidentiality is to “top code” unusually high income values. The NLSY79 top code values were originally designed to prevent identification of the top two percent of respondents.
    The NLSY79 has used four top coding algorithms for income. (1) From 1979 to 1984, every NLSY79 income question that elicited a response above $75,000 was truncated to $75,001. (2) From 1985 to 1988, the values were increased to $100,000 and $100,001 respectively. Unfortunately, this algorithm results in a sharp downward bias in the mean value of NLSY79 income holdings since the entire right hand tail is truncated. (3) To fix this problem, a new algorithm was introduced beginning in 1989. The new top code algorithm replaced all values above the cutoff with the average of all outlying values. (4)
    Beginning in 1996, another new algorithm was used. This algorithm takes the top two percent of respondents with valid values and averages them. That averaged value replaces all values in the top
    range.
    Top coding primarily affects seven of the NLSY79 income variables. The seven variables that are top coded include the income from respondent’s wages, respondent’s business, spouse’s wages, spouse’s business, partner’s wages, rest of the family, and other sources such as rents, interest, and dividends.

    Note that asset values are also top coded. See page 101 of User’s Guide.

    This looks like the income variable(s) to use:

    Each year, the CHRR staff creates an NLSY79 variable entitled “Total Net Family Income.” This variable is designed to provide researchers with a summary variable of all the income received in the household. The actual computer code used to create this variable is found in Appendix 2 of the NLSY79 Codebook Supplement. Appendix 2 shows that each year a slightly different program is used to compute net family income. However, these programs all have a similar structure. For example, the 1992 net family income variable is created by:
    • Initializing 19 different income categories to valid skip (-4).
    • Examining various demographic variables such as military status to see which of the 19 categories can be automatically classified as zero.
    • Counting the number of months a respondent or partner participated in a government aid program, such as AFDC or Food Stamps. Multiplying the number of months of participation by the average weekly/monthly benefit to create total yearly income from that source.
    • Summing all 19 components to form total net family income. If any component is MISSING, REFUSED, or UNKNOWN, then set total net family income to MISSING, REFUSED, or UNKNOWN. Hence, if the respondent knows how much they received from all sources except for one, the net family income variable will be coded as missing.
    • No items are subtracted from the ‘Net Family Income’ variables to account for taxes or other adjustment

    More details: https://www.nlsinfo.org/content/cohorts/nlsy79/other-documentation/codebook-supplement/nlsy79-appendix-2-total-net-family-2

    Here are the TNFI fields from 2004-2016
    44 R8496100 TNFI_TRUNC TOTAL NET FAMILY INCOME IN PAST CALENDAR YEAR *KEY* (TRUNCATED) 2004
    45 T0987800 TNFI_TRUNC TOTAL NET FAMILY INCOME IN PAST CALENDAR YEAR *KEY* (TRUNCATED) 2006
    46 T2210000 TNFI_TRUNC TOTAL NET FAMILY INCOME IN PAST CALENDAR YEAR *KEY* (TRUNCATED) 2008
    47 T3107800 TNFI_TRUNC TOTAL NET FAMILY INCOME IN PAST CALENDAR YEAR *KEY* (TRUNCATED) 2010
    48 T4112300 TNFI_TRUNC TOTAL NET FAMILY INCOME IN PAST CALENDAR YEAR *KEY* (TRUNCATED) 2012
    49 T5022600 TNFI_TRUNC TOTAL NET FAMILY INCOME IN PAST CALENDAR YEAR *KEY* (TRUNCATED) 2014
    50 T5770800 TNFI_TRUNC TOTAL NET FAMILY INCOME IN PAST CALENDAR YEAR *KEY* (TRUNCATED) 2016

    Net worth variables. Note that these do not go below zero so are not what the paper used.
    8 R8416700 Q13-142_TRUNC AMOUNT LEFT OVER AFTER ALL DEBTS ARE PAID FROM SELLING ALL ASSETS (TRUNC) 2004
    11 T2181000 Q13-142_TRUNC AMOUNT LEFT OVER AFTER ALL DEBTS ARE PAID FROM SELLING ALL ASSETS (TRUNCATED) 2008
    14 T3092700 Q13-142_TRUNC AMOUNT LEFT OVER AFTER ALL DEBTS ARE PAID FROM SELLING ALL ASSETS (TRUNCATED) 2010
    17 T4091700 Q13-142_TRUNC AMOUNT LEFT OVER AFTER ALL DEBTS ARE PAID FROM SELLING ALL ASSETS (TRUNC) 2012
    20 T4962000 Q13-142_TRUNC AMOUNT LEFT OVER AFTER ALL DEBTS ARE PAID FROM SELLING ALL ASSETS (TRUNC) 2014
    23 T5731000 Q13-142_TRUNC AMOUNT LEFT OVER AFTER ALL DEBTS ARE PAID FROM SELLING ALL ASSETS (TRUNC) 2016

    Related variable (see others through 2016)
    36 R8416400 Q13-141 AFTER ALL DEBTS ARE PAID FROM SELLING ALL ASSETS WOULD R BE AHEAD, IN DEBT, EVEN 2004

    These look like the appropriate MARRIED variables
    22 R8324800 Q13-10 INT CHECK 2004 – IS R MARRIED & SPOUSE LISTED ON HOUSEHOLD RECORD? 2004
    23 T0919900 Q13-10 INT CHECK 2006 – IS R MARRIED & SPOUSE LISTED ON HOUSEHOLD RECORD? 2006
    24 T2084600 Q13-10 INT CHECK 2008 – IS R MARRIED & SPOUSE LISTED ON HOUSEHOLD RECORD? 2008
    25 T3055100 Q13-10 INT CHECK 2010 – IS R MARRIED & SPOUSE LISTED ON HOUSEHOLD RECORD? 2010
    26 T3986700 Q13-10 INT CHECK 2012 – IS R MARRIED & SPOUSE LISTED ON HOUSEHOLD RECORD? 2012
    27 T4924000 Q13-10 CHECK – IS R MARRIED & SPOUSE LISTED ON HOUSEHOLD RECORD? 2014
    28 T5629200 Q13-10 CHECK – IS R MARRIED & SPOUSE LISTED ON HOUSEHOLD RECORD? 2016

    Maxed credit cards variables
    1 R8417600 PS-2 NUMBER OF CREDIT CARDS R OWES MAXIMUM AMT ON 2004
    2 T2181900 PS-2 NUMBER OF CREDIT CARDS R OWES MAXIMUM AMT ON 2008
    3 T3093500 PS-2 NUMBER OF CREDIT CARDS R OWES MAXIMUM AMT ON 2010
    4 T4092500 PS-2 NUMBER OF CREDIT CARDS R OWES MAXIMUM AMT ON 2012
    5 T4962900 PS-2 NUMBER OF CREDIT CARDS R OWES MAXIMUM AMT ON 2014
    6 T5731900 PS-2 NUMBER OF CREDIT CARDS R OWES MAXIMUM AMT ON 2016

    Missed payment variables
    1 R8417500 PS-1 R MISSED PAYMENT OR BEEN AT LEAST 2 MONTHS LATE IN LAST 5 YEARS? 2004
    2 T2181800 PS-1 R MISSED PAYMENT OR BEEN AT LEAST 2 MONTHS LATE IN LAST 5 YEARS? 2008
    3 T3093401 PS-1 R MISSED PAYMENT OR BEEN AT LEAST 2 MONTHS LATE IN LAST 5 YEARS? 2010
    4 T4092401 PS-1 R MISSED PAYMENT OR BEEN AT LEAST 2 MONTHS LATE IN LAST 5 YEARS? 2012
    5 T4962800 PS-1 R MISSED PAYMENT OR BEEN AT LEAST 2 MONTHS LATE IN LAST 5 YEARS? 2014
    6 T5731800 PS-1 R MISSED PAYMENT OR BEEN AT LEAST 2 MONTHS LATE IN LAST 5 YEARS? 2016

    Bankruptcy variables
    1 R8417700 PS-3 R EVER DECLARED BANKRUPTCY 2004
    2 T2182000 PS-3 R EVER DECLARED BANKRUPTCY 2008
    3 T3093600 PS-3 R EVER DECLARED BANKRUPTCY 2010
    4 T4092600 PS-3 R EVER DECLARED BANKRUPTCY 2012
    5 T4963000 PS-3 R EVER DECLARED BANKRUPTCY 2014
    6 T5732000 PS-3 R EVER DECLARED BANKRUPTCY 2016

    More on NLSY79 race: https://www.nlsinfo.org/content/cohorts/nlsy79/topical-guide/household/race-ethnicity-immigration-data
    I think I should recode this variable to separate white/other. Use this variable?
    1 R0009600 FAM-30_1 1ST OR ONLY RACIAL/ETHNIC ORIGIN 1979
    Not sure if this helps:
    7 R0010200 FAM-31 RACIAL/ETHNIC ORIGIN WITH WHICH R IDENTIFIES MOST CLOSELY (> 1 ORIGIN) 1979
    Note finer grained classification in followup:
    38 R7093100 Q1-3_ETH_2~000001 RESPONDENT’S OTHER RACIAL/ETHNIC ORIGIN 2002
    39 R7093101 Q1-3_ETH_2~000002 RESPONDENT’S OTHER RACIAL/ETHNIC ORIGIN 2002
    40 R7093102 Q1-3_ETH_2~000003 RESPONDENT’S OTHER RACIAL/ETHNIC ORIGIN 2002
    41 R7093103 Q1-3_ETH_2~000004 RESPONDENT’S OTHER RACIAL/ETHNIC ORIGIN 2002
    42 R7093104 Q1-3_ETH_2~000005 RESPONDENT’S OTHER RACIAL/ETHNIC ORIGIN 2002
    43 R7093105 Q1-3_ETH_2~000006 RESPONDENT’S OTHER RACIAL/ETHNIC ORIGIN 2002
    44 R7093106 Q1-3_ETH_2~000007 RESPONDENT’S OTHER RACIAL/ETHNIC ORIGIN 2002

    On another note, it looks like some genetic analysis is possible with the NLSY79: https://humanvarieties.org/2014/03/11/ace-analysis-of-the-nlsy79-afqt-by-raceethnicity/
    https://cran.r-project.org/web/packages/NlsyLinks/NlsyLinks.pdf

    These might be helpful
    https://menghublog.wordpress.com/2013/09/16/jensen-effect-on-black-white-differences-and-gpa-controlling-for-parental-ses-nlsy79-spss-syntax/
    Note use of R0618301 and zR0618301
    https://humanvarieties.org/2013/09/21/jensen-effect-on-racial-iq-differences-and-gpa-controlling-for-ses-in-the-nlsy79-and-nlsy97/

    • Replies: @James Thompson
  116. anonymous[400] • Disclaimer says:
    @CanSpeccy

    wwebd said:

    Please, for the love of God, stop “reiterating” points that all of us understand.

    You are too intelligent to lack so much intellectual humility!!!!

    Look, I get it, you are very very bright and you are tempted to talk down to people.

    Well me too, join the club. But when I do it I do it (when I talk down, in the arrogance of my heart) I do it with a little more humility. Because I know how difficult it is to be accurate about this world …..

    … there are people who are brighter than you and who want you to stop making a fool of yourself in the eyes of those of us who understand statistics.

    I know you hate me because you are thinking that you are smarter than everyone else but for the love of God

    STATISTICS IS EASY AND YOU KNOW THAT

    stop trying to pretend you have some gnostic insight the rest of us do not have

    work harder.

    You did not convince me that you were being honest, and even if that seems unimportant to you

    IT IS IMPORTANT TO BE HONEST

    By the way, I give statistics lessons for free

    THIS WORLD BELONGS TO PEOPLE WHO TRY TO TELL THE TRUTH NOT TO PEOPLE WHO

    do not try

    • Replies: @CanSpeccy
  117. CanSpeccy says: • Website
    @anonymous

    Why not forget the personalities and debate the topic?

    Evidently, because seeing the debate is lost, you wish to create a diversion.

    Which is what one has come to expect of Unz’s bodyguard of anonymous bullshitters.

  118. anonymous[400] • Disclaimer says:

    the topic is this.

    Does wealth, standing alone, mean anything here and now in 2019 as an example of a real world IQ test?

    Sad little men say yes, because they idolize wealth.

    I say NO.

    It is Lindy to say NO it is Nietzschean to say yes.

    I AM MUCH MORE INTELLIGENT THAN NIETZSCHE.

    You, and your idol Taleb, lost the debate when you claimed WEALTH is a marker of intelligence.

    Taleb is right about this – anyone, coached by someone really intelligent, can rise to the top of almost any real-world competition.

    But Ulysses (Odysseus) and David (he who was blessed by God)

    WERE GIFTED WITH MORE WISDOM THAN THEIR PEERS

    IQ testing is Lindy

    Grow up

    Get back to me when you find an ancient myth where a fellow like Ulysses raised a fellow Achaean to his level, ditto with David

    LOOK AT HOW BADLY THINGS ENDED FOR SOLOMON

    and stop insulting people

    You know, your view that IQ does not exist is used to

    make Jews feel like they are criminals for being successful

    think about it

    Grow up, you are wise and intelligent but misguided by your pride

    • Replies: @CanSpeccy
  119. anonymous[400] • Disclaimer says:

    wwebd said –

    and Parsis
    and Roma
    and Han Chinese
    and others

    See the light, CanSpeccy, and cool it with the insults

  120. CanSpeccy says: • Website
    @anonymous

    You, and your idol Taleb, lost the debate when you claimed WEALTH is a marker of intelligence.

    In fact, I said herethe exact opposite:

    And, in any case, who says intelligent people think getting money is the most important thing to do with their time and intelligence. James Thompson, for example, surely does not write here for the the money?

    If you want to be a troll, at least try to show a little intelligence.

    • Replies: @anonymous
  121. @res

    Many thanks for all this work.
    It is dreadful that so much real data has been lost, particularly about the highest wages. I know it may be frowned on now, but I used to do the analyses of my data twice: once accepting that missing data were simply missing, and another time setting each missing data point to the average of all data points. Eacj gives a reality check on the other, and of course assuming the mean for missing data includes as many cases as possible. A variant is to look at how the “set missing to mean” transform affects the correlations between the other variables. That gives the “true” correlation for those unaltered variables.

  122. anonymous[400] • Disclaimer says:
    @CanSpeccy

    wwebd said —-

    Well, I have argued with many people on the internet, and you have done well. Better than almost anyone else I have argued with ….. Congratulations on that.

    but …..

    If you want to understand my arguments, please do a little research – read the five best Dover paperback books on probability and logic puzzles before you respond to me in a condescending way again,

    Then try to imagine, had you read such books, that you were going to argue with someone who pretty much knew the limits of Ramanujan and Wittgenstein.

    Like I said, what you did pretty good, but if your parting shot was “HEY I NEVER CLAIMED THAT WEALTH WAS A USEFUL VARIABLE” you have to understand this ….

    you were not very persuasive. I have studied the subject for half a century or more and you and Taleb both claimed that real world success, measured by wealth, was a viable variable.

    YOU KNOW THAT …..

    Look, I am not going to know what improvements you or Taleb may find in the years to come, but I can tell you this —- you are both very bright, but are much too comfortable on the spectrum. And you were not truthful when you claimed that WEALTH was not one of the two variables in the dot picture I was mocking.
    THAT WAS THE ENTIRE REASON FOR MY MOCKERY!!! and you pretended not to understand that ….
    you are better than that.

    That being said, you and Taleb are very bright – within one exponential level of being as bright as, say, Kolmogorov —- if you have an idea of how impressive a compliment that is, well, you are welcome —– and Taleb is not only bright but one of my heroes, when he uses his position to criticize the Jew-hater factions among the Saudis and their henchmen, or the GMO fanboys, or the pro-abortion fanatics, and other similar bedazed losers.

    I WANT YOU TO HAVE BETTER ARGUMENTs THAN TO TELL ME I AM MISSING THE POINT

    because, my young friend, I am not missing the point. And you know that, I know you do.

    Feel free to have the last word, my job is to be who I am, to discuss the REAL WORLD with people who are honest, and YOU CAN BE HONEST TOO …..

    • Troll: CanSpeccy
  123. anonymous[392] • Disclaimer says:

    You did not have the courage to reply but just pressed the Troll button, the refuge of an intellectual coward.

    You are better than that.

    Once again, you can have the last word: show us you are able to do better as you get older!

  124. anonymous[400] • Disclaimer says:

    But before you insult me again —
    think about this ….
    maybe I exaggerated a little saying I was a friend of a friend of Kolmogorov’s.
    My friend was a very good friend of Sakharov’s and obviously was also a pal of Kolmogorov’s.
    so maybe I am merely a friend of a friend of Sakharov’s and a friend of an acquaintance of Kolmogorov’s.

    And believe me, I am no troll. You really disappointed me by saying that. Maybe I am a lot stupider than I thought I was before I realized that people like you could possibly think I am a troll — but that is no reflection on my intelligence, that is just a reflection on my failure to remember not to overestimate the intelligence of others..

    Maybe it is because I have been humble enough not to talk about numbers and arithmetic and analysis and the most intense of all human studies, the study of REAL NUMBERS …. (just kidding, that is just halfway to REAL STUDIES of what this world is really like)

    I am seriously interested in why someone as smart as you is so transfixed by those little dots that sit on an elementary school chart of IQ versus annual income.

    Do you have no idea of what the mob can do to make stupid people rich, what ALL OF US with any insight into this world can do to make our kids and relatives get jobs incommensurate with their abilities, and all that?

    Why did Taleb, such an obviously bright guy, fall for this little dot IQ/Income joke?

    I really would like to know.

    And maybe you can tell me.

    Or just take the cowardly route again, tell me I am a troll.

    You do not want to do that, trust me, you are better than that.

  125. anonymous[400] • Disclaimer says:

    For Gods sake “Can Speccy” tell me you are not AFRAID TO EXPLAIN WHY YOU THOUGHT THOSE LITTLE DOTS WERE SO IMPORTANT

    I am always interested in why intelligent people believe in stupid correlations

    DON’T BE STUPID

    and don’t ever again call someone whom Kolmogorov – or Sakharov – respected and considered to be a friend of a friend a troll, my friend, that was just wrong on your part

    • Replies: @anonymous
  126. FKA Max says: • Website
    @FKA Max

    Warren Buffett predicts the Dow will hit 1 million and that may actually be pessimistic

    https://www.cnbc.com/2017/09/21/dow-1-million-warren-buffett-says-it-can-happen.html

    Buffett: Dow will hit 1 million in 100 years

    CNN Business
    Published on Sep 20, 2017
    Warren Buffett isn’t nervous about a stock market bubble. He thinks anyone betting against America is “out of their mind.”

  127. anonymous[400] • Disclaimer says:
    @anonymous

    wwebd said – or just lighten up, I told you I think you are very intelligent and that I consider Taleb to be a modern hero.

    In real life, when I compliment people, they are appreciative, I guess the internet interferes with that.

    I get it.

    Cheers ….
    and God bless ….

    yours truly

    wwebd

    “waking up men and women on the spectrum since 1974”

    (in Japan, they publish English novels in two colors – the ordinary typist black for non-sarcastic speech, and a sort of orange/purple font for sarcastic speech)

    (my first performance report at my first real job was written by a guy in his 50s who had been hired by Angleton, when he was in his 20s and Angleton was still a fairly young man)

    Cheers and God bless.

    Google “wwebd” and “unz” if you want to have hours of intellectual enjoyment, my friend.

    • Replies: @anonymous
  128. anonymous[400] • Disclaimer says:
    @anonymous

    why do I bother

    • Replies: @anonymous
  129. anonymous[392] • Disclaimer says:
    @anonymous

    wwebd said: you are welcome, Can Speccy, for my kind efforts to converse with you.

    That being said …..
    you called me a troll.

    Sad!

    and ….
    I am probably a few standard deviations smarter than people you have praised for their intelligence.

    Well I have so much love in my heart that it sort of makes me smile and be happy ….

    for the record you do not want to know as much as I know about this world.

    I know that God loves us all, and – believe it or not — that is something that is wonderful to know.

    But I also know about the intellectual deficiencies in even the best of almost all of us, including your hero Taleb.

    Like I said, you do not want to know what I know, you are not prepared for that sort of thing.

    AND YES I UNDERSTAND THE LIMITS OF POOR RAMANUJAN WITH HIS GUESSES AND POOR WITTGENSTEIN WITH HIS MISAPPREHENSIONS.

    Math is easy for people like me, you have no idea, I KNOW WHAT IT IS TO BE A FRIEND TO UNUSUAL NUMBERS AND ORDINARY NUMBERS …

    in a way I could explain to you but I doubt you would understand …..
    Tell me again I am a troll, or do this:

    reflect on the fact that there are people in this world who like you and respect you, and even if you disagree with them, you ought not to insult them.

    So, here we go

    call me a troll again and I will lose all respect for you

    or just go on with your life and search for truth.

    in either case I will pray for you

    AND GOD HEARS THE PRAYERS OF PEOPLE LIKE ME WHO ARE FRIENDS OF GOD

    and GOD wants you too to be a friend.

    Try, try, try to understand.
    Read Proverbs 8 and memorize it, if that does not help, try again.

    Keep trying you have no idea how many of the saints are praying for you …..

    (for the record nobody has ever called me a troll before and I sort of respect your angry bravery BUT YOU WERE WRONG I am not a troll I am simply a kind person, much more intelligent than your hero Taleb, I am trying to help you understand this world …

    IN WHICH SO MANY SAINTS ARE PRAYING FOR YOU).

    Trust me, my friend.

  130. anonymous[400] • Disclaimer says:

    and I like you CanSpeccy I was being nice.

    You have no idea of how powerful my rhetoric could have been if I were not being nice to you and your little idol Taleb. I like him too, he is a hero in many ways —- you know that.

    God protects the brave, and Taleb is one of the brave.

    Tell me again I am a troll!

  131. anonymous[400] • Disclaimer says:

    TYPO alert ….

    not “much more intelligent than Taleb”

    THAT WAS A TYPO

    for “not much more less”

    one gets carried away at times and leaves out a word here or there

    well what is a misspoken word among friends????

  132. Maciano says:

    Taleb is an extremely overrated intellectual. And it’s best to ignore him imo.

    His big ideas are clever packaged stuff which have been known for ages,

    Skin in the game => Agent/principal problem
    Black Swan => Outlier event with big impact like the meteorite that killed the Dinosaurs.
    Minority power => Mancur Olsen’s work on lobbies
    Fooled by randomness => People are not good with big numbers and see patterns that aren’t there
    Antifragile => “what doesn’t kill you makes you stronger”
    Etc.

    All these insights are “well, duh..”-inducing marketing for 20 somethings dudes who don’t read much, but want to have opinions anyway.

    • Replies: @James Thompson
  133. @Maciano

    As you point out, many of Taleb’s phrases are the re-labelling of better known concepts. However, I think that “fooled by randomness” is a very good phrase.

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