The Relation Between Intelligence and Unemployment at the Individual and National Level

Richard Lynn and Garth Zietsman, Journal of Social, Political, and Economic Studies, Summer 2013

Abstract

It has been shown that there is an association between low intelligence and unemployment among individuals within nations. We explore the question of whether this relationship is present across nations. We find that national rates of unemployment for 107 nations, averaged for the years 2001 and 2008, are correlated with national IQs at r = -0.66, and national IQ therefore explains 43.5% of the national variance in unemployment.   Corrected for unreliability of both variables, the correlation between national IQ and rates of unemployment is r = -0.756 and national IQ explains 57.2% of the national differences in unemployment. Variations in economic freedom independently account for another 12.9% of national rates of unemployment.

Introduction

In this paper we explore the relationship between intelligence and unemployment at the levels of individuals and nations. At the individual level, several studies have shown that there is an association between low intelligence and unemployment. Toppen (1971) reported that a sample of the unemployed in the United States had an average IQ of 81. Lynn, Hampson & Magee (1984) reported that a sample of the unemployed in Northern Ireland had an average IQ of 92. Herrnstein and Murray (1994) reported that in a sample in the United States, 14 per cent of those with IQs below 74 had been unemployed for one month or longer during the preceding year, and the percentages of the unemployed declined in successively higher IQ groups to 4 percent among those with IQs above 126.

The likely explanation for the association between low intelligence and unemployment is that individuals compete for jobs, and employers select those that they judge will be the most efficient. Sometimes employers select on the basis of intelligence tests. For instance, the US military tests applicants and normally only accept those with IQs above 92 (Department of Defense, 1998). More commonly, employers select on the basis of educational qualifications (as a proxy for intelligence plus the capacity for application). Employers are reasonable to use intelligence as a criterion for employability, since numerous studies have shown that intelligence is positively related to the efficiency of performance in the United States (Ghiselli, 1966; Hunter & Hunter, 1984); Schmidt & Hunter, 1998) and Europe (Salgardo, Anderson, Moscoso, et al., 2003). The effect of this is that in a competitive labor market those with low IQs find it difficult to obtain employment and are more likely to be unemployed.

A further factor is that United States and the United Kingdom, where the association between low intelligence and unemployment has been reported, have minimum wage legislation. The effect of minimum wage legislation is that employers are reluctant to employ those with low IQs and associated low skills at the required minimum wage. These and other economically developed nations also provide welfare benefits for the unemployed and the effect of these is that those with low IQs and associated low skills are able to survive as  unemployed.

We are not able to make a prediction about whether the association between low intelligence and unemployment among individuals can be extended to nations. There are two countervailing forces. First, countries with high per capita incomes also tend to have high national IQs; the correlation between national IQ and per capita GDP 0.64 (Lynn & Vanhanen, 2006, p. 104). Economic theory predicts that countries with high GDP should have high rates of unemployment, as a result of the trend of corporations to outsource employment to countries with low GDPs, to gain the advantage of low labor costs. During recent decades there has been an increasing trend for corporations in economically developed high GDP/high IQ nations to move manufacturing and services (e.g. call centers) to poorer countries where labor costs are lower. This generates unemployment in high GDP/high IQ nations and employment in poorer countries. This would lead to a positive correlation between national IQs and rates of unemployment.

There is a countervailing force that national populations with high IQs should have the same advantages as individuals within nations in selling their products and services. National populations with higher IQs should have a competitive advantage because they can make and provide more cognitively demanding and higher value products and services (e.g. aircraft, computers, banking, etc.) that require high IQs, and that national populations with lower IQs are unable to make and provide. There is a strong demand for the products and services that high IQ populations provide, and this generates higher employment in high IQ nations, entailing a positive a positive correlation between national IQs and rates of employment.  It is a matter for empirical investigation which of these two countervailing force is the stronger, and therefore whether the correlation between national IQs and rates of unemployment are positive or negative.

Method

To examine which of the two countervailing forces acting on the relationship between national IQ and rate of unemployment is the stronger, we have computed the correlation between these two variables. National IQs for 192 nations comprising all the nations in the world with populations greater than 40,000 are taken from Table 4.3 in Lynn & Vanhanen (2006). National data for unemployment are taken from the Central Intelligence Agency (CIA) Yearbook (2003 & 2008). For a few nations the CIA Yearbook gives the official unemployment figure and an estimate for underemployment (based on those working part time, etc).  In these cases we have used the official estimate and ignored the estimate of underemployment.  The general effect of this decision is to reduce the degree of unemployment of mainly low IQ countries and therefore underestimates the true size of the relationship between IQ and unemployment.

The CIA Yearbook figures are also not always for a single calendar year. For a number of nations the Yearbook gives the most recent estimate at the time of publication.  Some of these are up to 5 years old.  Taking this into account we have defined two periods encompassing a range of dates.  The first period is from 1996 to 2002 (93.6% of the unemployment figures are within the range 1999 to 2002). The median year is 2001.  The second period is from 2003 to 2009 (92.8% of the unemployment figures are within the range 2005 to 2008).  The median year is 2008.

The first period (median year 2001) has unemployment data for 141 nations for which national IQ data exist.  The median unemployment figure was 10.3% and the mean 14.3%.  The standard deviation was 12.3 and first and third quartiles 5.4% and 18.25% respectively. The second period (median year 2008) has unemployment data for 128 nations for which IQ national data exist.  The median unemployment figure was 6.8% and the mean 11.1%.  The standard deviation was 13.894 and first and third quartiles 4% and 11.8% respectively. The average of the two periods yielded unemployment data for 107 nations for which national IQ data exists.

Results

The scatterplot of national IQ and unemployment suggested that the relationship is not linear, especially during the first period when international unemployment is lower, so we fitted a non-linear equation using least squares estimation of the parameters. Using the average unemployment for the two periods the equation is

% unemployment = 0.21*e**(-0.05*IQ + 8.45).

The correlation between the unemployment estimate based on this equation and national IQ unemployment is r = – 0.66 (107 nations).  This figure can be corrected for unreliability of both variables. The correlation between the unemployment figures in the two periods is r = 0.81.  This is the reliability estimate of the average unemployment figure.  The reliability of national IQs given by Lynn & Vanhanen (2006) is 0.94.  Correcting for unreliability, the correlation between national IQ and unemployment is r = – 0.756 and the unemployment variance explained by national IQ is 57.2%.

We have also examined the relationship between national GDP in and rates of unemployment. The correlation is negative (r= -0.38), i.e. counties with high GDP have lower rates of unemployment. To examine more closely the contributions of national IQs and GDP to rates of unemployment, we have run a multiple regression entering national IQs and GDP as independent variables. The result is that the beta coefficient for national IQ is -0.59 and the beta coefficient for GDP is -0.02. The GDP coefficient is effectively zero, showing that high GDP does not generate either higher or lower rates of unemployment, independently of high national IQ.

We have also examined the relation of economic freedom to rates of unemployment, controlling for national IQ.  National differences in economic freedom were taken from the Economic Freedom of the World Index (Gwartney & Lawson, 2008). The results are that economic freedom independently explains (after accounting for the relationship of both with IQ) a further 12.9% of the variance in unemployment, with less economic freedom increasing rates of unemployment.

Discussion

The results resolve a problem for economic theory that that countries with high GDP could have high or low rates of unemployment. High of unemployment should be present as a result of the trend of corporations to outsource employment to countries with low GDPs to gain the advantage of low labor costs. Alternatively, counties with high GDP also have high IQs, and this enables them to produce cognitively demanding goods and services that cannot be produced by low IQ populations. We show that countries with high GDP tend to have low rates of unemployment (r= -0.38). We believe that the explanation for this is that countries with high GDP also have high national IQs. We show that the correlation (corrected for unreliability) between national IQ and unemployment is r = – 0.756, and hence that low national IQ explains 57.2% of the variance in unemployment. We show further that when national IQ is controlled, national GDP has no effect on rates of unemployment. We propose the likely explanation for the negative correlation between national IQ and rates of unemployment is that national populations with high IQs have the same competitive advantages as individuals within nations in selling their products and services. This generates higher employment in high IQ nations, entailing a negative correlation between national IQs and rates of unemployment.

Topics: , , ,

Share This

We welcome comments that add information or perspective, and we encourage polite debate. If you log in with a social media account, your comment should appear immediately. If you prefer to remain anonymous, you may comment as a guest, using a name and an e-mail address of convenience. Your comment will be moderated.
  • din_do_nuffins

    IQ is a racist construct. Long live IQ.

  • ravitchn

    There is on this blog too much talk about genetic deficiency among blacks, I have no doubt of their inferiority, but the best argument for separation from blacks is their SAVAGERY AND LACK OF CIVILIZATION. Whites and blacks must be segregated from one another; they cannot live and work together.

    • sbuffalonative

      The two go hand in hand. Genes are what produce civil or uncivil people and societies.

      It’s important to emphasize both. It’s a one-two punch. Why give up scientifically verifiable facts?

      • George

        An individual born to a single mother, with a 32-year-old grandmother has few prospects for success in life.
        Considering that 3/4 of blacks born today are in this position, it’s no surprise they act the way they do.
        Naturally, genetic limitations on their intelligence have a very large role to play as well, but most black social problems would ease immeasurably if they waited to have children until they were married and could support a family.
        Welfare and other programmes that make it possible to exist without working mean that blacks can procreate consequence-free. Unemployment doesn’t have the same effect on them as it does to white, middle class families. You know, the ones who pay taxes and can’t afford to have more than one (maybe two) kids, because their wages are sucked up to pay for the urchins in the ghettoes of America.

    • MBlanc46

      Because we have to rebut the argument that their savagery and lack of civilization is not due to a culture shaped by discrimination, oppression, and the turrible, turrible, legacy of slabery.

  • Daniel Schmuhl

    I already knew this from reading the Bell Curve but its nice to see further research on this.

  • PlayingRootsBackwards1

    Singing to the choir. We done been knowed dis stuff.

  • bigone4u

    As blacks and immigrants increase as a percent of the US population, the country’s economy is going to go into the toilet because of their low IQs AND because we know that they hold economic freedom in disdain. Do I have that right? If so, the policy implications involve sterilization of low IQ persons and expelling illegal immigrants with low IQs. Bye, bye blacks and squat monsters.

    • 549106

      So should we encourage more immigration from high IQ countries and/or unlimited immigration for the highest IQ immigrants to offset it? Still plenty of space in America, especially in the midwest, so if we let in 10 million chinese and indians a year, that’ll keep the average IQ going up and up.

      Since it’s about a rational construct like IQ and not an irrational construct like group identity or race, we’ll of course want to keep out south europeans and most of the non-jewish slavs, since they tend to have disordered societies and lower productivity than the average east asian and the top 25% of Indians.

    • dd121

      Given their racial makeup I’m truly amazed that Brazil has a relatively developed economy. Of course they have a lot of natural resources.
      PS Their whites have most of the money and live in gated communities. Also, their economy is again on the verge of collapse.

    • MBlanc46

      You talk about the economy of “the country”. Which country? China, where they do their manufacturing? India, where they do the back office work? New York, London, and Hong Kong, where the financial wizardry takes place? The trendy shops and restaurants in the tony suburbs of New York, Chicago, Los Angeles, and San Francisco, where they amuse themselves? Sure, there are a lot of destroyed lives in, say, the North of England or the old manufacturing towns of the American heartland, but that’s another country, and not one that those making immigration policy have any concern with.

  • TheTruthHurts3

    Any effort to help failures leads to a society where failure is more common and punishes success. We should get rid of unemployment compensation. We should also replace the graduated income tax with a regressive income tax.

    Rich people do not need the government, so they should pay low taxes.

    • MBlanc46

      Rich people don’t need the government? No laws of incorporation to give to give legal status to their corporate entities? No property laws to give legal status to the resources they’ve appropriated? No police to keep the proles from just taking everything? If the rich thought that the war of all against all were in their interest, that’s what we’d have. They know it isn’t, so we don’t.

  • Sick of it

    This argument makes more sense when the economies of the world aren’t in a state of collapse (such as when the studies were performed). Currently, recent college graduates have the highest unemployment rate in western nations due to a lack of work experience as compared to a job market flooded with experienced individuals.

  • George

    Succinct and apt. My hat is off to you.
    Mind if I take this phrase off to the mainstream and leftist sites I post on? Sharp, short, pointed truth.
    IQ and Global Inequality shows this in a general sense. Lynn’s most recent paper adds some *ahem* colour to the reasons why the third world is the way it is.

    • Urban Teacher

      Be my guest.

  • Epiminondas

    Don’t worry. Central banking will bring about the demise of this system sooner than you think.

  • WR_the_realist

    Attacks on IQ are more sophistical than intellectual. Yes, much of what makes up human intellect and creative ability is lost in reducing everything to one number. But g (what we loosely call IQ) is real precisely because the various abilities that go into making somebody smart are all correlated with one another. And differences among races in average IQ are important precisely because they go far in explaining why different groups succeed at wildly different rates. If I assume that all races and ethnic groups are equally smart that I would have to conclude that some evil miasma keeps blacks down (institutional racism, white skin privilege, etc.). Likewise I would have to assume that some evil cabal is putting so many Jews into high g occupations like law and physics.

  • John Smith

    Maybe they’d have a chance anyways if the failing overpriced public education system taught them something economically useful. Neo-Darwinism, race symbolism, the homosexual agenda, etc… just doesn’t qualify.

  • Ed_NY

    As I have said before, the Rachel Jeantels and the Trayvon Martins offer me nothing of value as a businessman. If I were to hire them, they would definitely be a liability to my business and they would negatively affect my bottom line.

  • sshadow

    In 2 generations, by regression to the mean, their grandchilluns will be jumping us and banging our heads into the concrete and stealing and raping. Now, what was your question again?

  • Romulus

    America became an economic powerhouse because north America was incredibly resource rich at it’s inception and Anglos had the developing technologies for capitalisms advancement. ALL ECONOMIES ARE SUBLIMATED BY THE GIFTS FROM THE EARTH ITSELF. Money is nothing more than a medium of exchange of natural resources and commodities.

    • Irishgirl

      While I agree that North America is resource-rich, I think the continent of Africa is also quite resource-rich. If the people of the land lack the intellectual ability to mine/harvest their land, all the resources in the world can’t help them.

      • Romulus

        The optimal word is “was”. Particularly as it pertains to the resources that are indispensable to an industrially based machines driven society. The GATT is a treaty to allow the intercontinental trade of such resources. In the case of Africa, that is precisely why first world nations are cozying up to the continent. North America was steadily declining In exactly the kinds of inputs that were available at it’s founding. Open space for,development (sprawl),agriculture, the precise locations of cities , availability of fuels. Technology and Energy go hand in hand, but are not the same thing. Economies always falter when the inputs necessary to sustain or grow them cannot match consumption. Americas economy and therefore it’s wealth is dependent upon inputs which are now not relatively available here anymore. It is now a global economy.

  • David Ashton

    They should be leaders of their own people and of their upliftment. Why should they disappear into the white mainstream?

  • WR_the_realist

    The fact that the brain is modular, with different parts of the brain doing different things, does not in any way invalidate IQ. In particular, it does not change that fact that different attributes of intellect, such as reading ability, memory, puzzle solving, mathematical ability, etc. are all strongly correlated. Nor is it difficult to imagine why these correlations might hold — genes that control for basic biophysical processes in neurons could make all the modules work better or all work worse. No one claims that IQ has the predictive power of say, Newtonian mechanics. (No psychological theory will.) But it does have predictive power in a statistical sense. A group of low IQ people will have higher rates of crime, higher rates of illegitimacy, worse school performance, and lower income than a group with high IQ. The fact that you may find a few rappers in the first group who make millions and a few messed up geniuses in the second group who wind up sleeping under bridges does not invalidate the overall statistical trends.

    I am unaware of studies that try to find any correlation between IQ and psychopathy. I suspect that whatever correlation there may be is weak.

    I don’t know what the point of you penultimate paragraph was. Do you really think that assuming something can make it so?