IQ in the Utility Function: Cognitive Skills, Time Preference, and Cross-­Country Differences in Savings Rates

23 Pages Posted: 4 Apr 2011

See all articles by Garett Jones

Garett Jones

George Mason University - Department of Economics

Marta Podemska-Mikluch

Gustavus Adolphus College

Date Written: October 2, 2010

Abstract

Social science research has shown that intelligence is positively correlated with patience, while growth theory predicts that more patient countries will save more. In a closed economy, that means high average IQ countries will become more capital-­intensive. In an open economy, high average IQ countries will hold a greater share of the world's widely-traded assets. We provide the first empirical evidence that in today's world, presumably somewhere between the closed‐economy and open‐economy benchmarks, both predictions hold true: Countries whose residents currently have the highest average IQs have higher capital output ratios and higher ratios of U.S. Treasuries to nominal GDP.

Suggested Citation

Jones, Garett and Podemska-Mikluch, Marta, IQ in the Utility Function: Cognitive Skills, Time Preference, and Cross-­Country Differences in Savings Rates (October 2, 2010). GMU Working Paper in Economics No. 11-17. Available at SSRN: https://ssrn.com/abstract=1801566 or http://dx.doi.org/10.2139/ssrn.1801566

Garett Jones (Contact Author)

George Mason University - Department of Economics ( email )

4400 University Drive
Fairfax, VA 22030
United States

Marta Podemska-Mikluch

Gustavus Adolphus College ( email )

800 West College Ave.
Saint Peter, MN Mn 56082
United States
(507) 933-6120 (Phone)

HOME PAGE: http://www.podemska.com

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