Why Aren’t You Rich?

It is still not well understood why some people are rich and others are poor. Luck, timing, parents, choice of spouse and many other factors play important roles in shaping an individual’s circumstances. Past analyses have mostly just looked at income, with studies of World War II veterans finding a link between smarts and a better salary. Looking at the National Longitudinal Survey of Youth 1979’s latest round of survey answers from more than 7,000 randomly-selected participants, he tries to tackle the question of whether better IQs lead to bulging bank accounts and less bankruptcy. “Being more intelligent does not confer any advantage along two of the three key dimensions of financial success (income, net worth and financial distress),” says author Jay Zagorsky, looking at the data with statistical tests. And when it comes to financial distress, smarts are no help at all.

People with 140 IQ scores (a score of 100 is average) missed payments and maxed-out their credit cards more often than their lower IQ counterparts. “Only among people slightly above-average does an increasing IQ score lead to a reduced chance of financial distress,” says the study. “The survey provides no data to explain why this occurs,” but Zagorsky offers these explanations for High IQ types getting into financial hot water:

• They might be busier and less focused on routines like paying bills.
• They might lead a lifestyle that is closer to the financial precipice because they feel they are smart enough to get away with the risks of credit card spending and saving less.

“Since intelligence is not a factor for explaining wealth,” he writes, “individuals with low intelligence should not believe they are handicapped in achieving financial success, nor should high intelligence people believe they have an advantage.” Having a high IQ can sure lift your ego, but when a female is very good looking and has well developed large breasts or a male is physically strong, athletic, very good looking and has loot, those attributes will do more for the person than being “gifted mentally”.

This entry was posted on Wednesday, August 15th, 2007 at 6:49 pm and is filed under American Education, Business, Business Psychology, Humor, Money Savvy, News, People, Personal Finance, Studies and Surveys, That's Life. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.