The 2-Minute Thought: Are the Super-Rich Really Smarter Than Everyone Else?

**Please note: The 2-Minute Thought will be on holiday for two weeks and will return on November 10**

You may say yes, of course the super-rich are smarter.  Or you may say no way, they’re just luckier.  Or you may say, wait a minute, it depends.   And yes, it does depend . . .

But according to a recent paper by Jonathan Wai and David Lincoln, the answer is generally yes, they’re smarter.  An earlier study by Wai found that “33.9% of the world and 45.0% of U.S. billionaires were likely in the top 1% of cognitive ability.”  The more recent paper corroborates this – and not just for billionaires, but also for “ultra high net worth” individuals -- or those with $30 million or more. 

The authors divide the wealthy into three categories: 1) people who inherited their wealth entirely; 2) people who both inherited and created wealth; and 3) “self-made” people who created their own wealth entirely.  The conclusion is that regardless of how people got their money, “People in the right tail of wealth are highly educated and cognitively able.”

In short, brainpower is connected to wealth.

You may ask if brainpower can really be measured, and you would have a good point – because the authors basically have to look at elite school attendance and assume that the average graduate of an elite institution is in the 99th percentile of intelligence. 

Still, the paper is fascinating for the way it slices and dices the data to look at relationships among wealth, education, country, industry, ethnicity, religion, political affiliation, and other factors.

Source: Forbes

Source: Forbes

For example, who would guess that Austria and egalitarian Sweden have the highest percentage of wealthy individuals who inherited rather than making their own wealth?  In contrast, none of the wealthy in Vietnam or Poland inherited. 

 Some other interesting findings:

  • The countries where the ultra wealthy gave the highest percentage of their net worth to charity were the U.K. and the U.S. -- roughly 30 times the least generous countries, United Arab Emirates and Saudi Arabia.
     
  • South Korea and Chile had the highest level of elite institution education – about 11 times the countries with the lowest levels, Qatar and Ukraine.  But almost everyone in Kazakhstan, Ukraine, Russia, and South Korea attended some of kind of college or higher.
     
  • In the U.S., Democrats had the highest elite education, followed by bipartisans, and then by Republicans.  Democrats and bipartisans were more likely than Republicans to have attended Harvard.
     
  • For women, net worth is highest in China – and many of the wealthiest women there are self-made.

You can read the paper here to find the details on their research methods.

 

**Please note: The 2-Minute Thought will be on holiday for two weeks and will return on November 10**