wealth and intelligence


When most of us were younger, we were told to do well in school – make good grades, impress the teachers in order to get good recommendations, do extra credit.
Scoring well on the ACT or SAT meant a lot. Proving that you were smarter than the average bear somehow indicated future success. Yet intelligence isn’t always a marker of success – at least success as measured by wealth.  Wealth is not, of course, the only measure of success – far from it – but it is a measure accepted by our society as at least a general measure of overall success.

Intelligent people are often gripped by what I’d call (technically) “smart people stupids.” If you’re an intelligent person, it’s quite easy to imagine a variety of outcomes to any given set of circumstances. If A happens, then B or C or even D might occur. Wondering whether “slim chance event D” might occur can drive an intelligent person nuts – you might sit around wondering how you would deal with situation D; would reaction D.1.1 be appropriate, or D.1.2? How will this affect you 15 years from now?

Over the last ten years I’ve started to believe that intelligence – at least as far as the ability to imagine future events based on current circumstance – can be a crippling factor in the pursuit of wealth (and happiness). Someone who doesn’t have the ability to imagine positive outcome X may also be able to avoid thinking about negative outcome Y – and therefore be freed from worrying about the result of their actions. Worrying about the future is a heavy burden; not worrying about the future would be liberating for most of us.

I know people who don’t worry – like I do – about long-term wealth. They assume that they will have “made their nut” at some point – whenever they make it. Whether it’s the blissful ignorance of uncaring or fewer smarts I don’t know. I would assume that not worrying about the future is an overall net plus. It may put you into some pretty bad situations, but at least you won’t worry about the outcome.

I suspect that being intelligent and being wealthy will always be unrelated. Just because I can play the piano, for example, doesn’t make me smart or stupid. It just marks me as a good piano player. I don’t think wealth accumulation can be associated with intelligence for much the same reason – it’s a skill, just like musical ability, or sports ability, or the ability to learn and speak foreign languages. You can’t think your way into it – you have it or you don’t.

photo credit: swambo

(originally posted 3/09, in different form)

7 Replies to “wealth and intelligence”

  1. From the studies I’ve seen published, it appears that there is a weak correlation between intelligence and wealth. Every extra ‘IQ point’ apparently corresponds (on average) to a couple of hundred dollars per annum of extra income. Probably because extra intelligence makes it easier to enter and complete tertiary education and qualify for a higher-than-average-salary professional job. But having a higher-than-average income doesn’t automatically lead to you becomming rich – especially if the higher income simply satisfies higher spending habits.

    Also, to become truly wealthy generally requires attributes other than just intelligence – risk taking, business acumen, EQ, etc. And a dollop of ‘luck’ seems to also help 😉 I also suspect that while getting a degree assists in getting a higher-than-average ‘job’ it also reduces the liklihood that the degree-qualified person will eventually take the plunge and start their own business – after all, why risk a well-paid job to start your own business, given the high proportion of new businesses that fail?

    Perhaps rather than looking at whether intelligence assists in making one wealthy, we should consider whether being intelligent helps an otherwise typical person avoid becoming poor? If that is the case, then being intelligent is still a big plus – money can’t buy you happiness, but poverty can certainly make you miserable.

  2. “Intelligence can be a crippling factor in the pursuit of happiness.”

    That is a brilliantly accurate statement in my opinion. I’m writing that down in my notepad of quotes. Intelligence can lead to over-analyzing and indecisiveness. Being intelligent is great, but being so intelligent that it makes you timid or “too safe” can be detrimental to your sucess/happiness… however you want to measure it. I agree with Enoughwealth as well, in that willingness to take risks is a big factor.

    I feel like self-awareness and honesty go a long way too. If you truly know yourself you’ll make the right decisions, whether that leads to success, wealth, happiness, or all three.

  3. This goes along with “Hope for the best and plan for the worst” as well as “You don’t know what you don’t know”. People who know too much can become overcome with analysis paralysis depending on personality type .. however individuals who are educated in a topic maybe don’t make as much as the guy who is an expert, but they make 80%. What is better? Make that 80% and move on or spend countless hours making the extra 20%.

    Does this make sense to anyone but me? I maybe am over analyzing this post and should just move on 🙂

    1. @Big-D: Analysis paralysis is the bane of my life. Your comment made perfect sense to me – and yes, move on 🙂

  4. My mother had two brothers, known as “the bright one” and “the slow one”. The bright brother, while earning more due to his advanced education, gambled most of his income away, always looking for the “big score”. The slower brother had a steady, menial job that allowed him to, over time, buy two houses, mortgage-free. He always spent less than he earned, proving that common sense is more valuable than intelligence.

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