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Intelligence, Human Capital, and Economic Growth: A Bayesian Averaging of Classical Estimates (BACE) Approach

  • Garett Jones

    (Southern Illinois University Edwardsville)

  • W. Joel Schneider

    (Illinois State University)

Human capital plays an important role in the theory of economic growth, but it has been difficult to measure this abstract concept. We survey the psychological literature on cross-cultural IQ tests, and conclude that modern intelligence tests are well-suited for measuring an important form of a nation’s human capital. Using a new database compiled by Lynn and Vanhanen (2002) along with a Bayesian methodology derived from Sala-i-Martin, Doppelhofer, and Miller (AER, 2004), we show that national average IQ has a robust positive relationship with economic growth. In growth regressions that include only robust control variables, IQ is statistically significant in 99.8% of these 1330 regressions, and the IQ coefficient is always positive. A strong relationship persists even when OECD countries are excluded from the sample. A 1 point increase in a nation’s average IQ is associated with a persistent 0.11% annual increase in GDP per capita.

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File URL: http://econwpa.repec.org/eps/dev/papers/0507/0507005.pdf
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Paper provided by EconWPA in its series Development and Comp Systems with number 0507005.

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Length: 48 pages
Date of creation: 11 Jul 2005
Date of revision:
Handle: RePEc:wpa:wuwpdc:0507005
Note: Type of Document - pdf; pages: 48
Contact details of provider: Web page: http://econwpa.repec.org

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