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The plateauing of cognitive ability among top earners

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Re: The plateauing of cognitive ability among top earners

#21

This study looks only at Swedish men who served in the military, which as the authors observe may well introduce a bias. They also note that a possibility is that higher cognitive ability individuals may more frequently opt for worse paying but prestigious roles, such as academia. I buy it, but I think there’s another factor today, which is that many higher cognitive ability individuals simply are not in the job mark…

[deleted]

Re: The plateauing of cognitive ability among top earners

#22

Seems aligned with what Maslow pyramid of needs predicts. I.e. above a certain safety net, the individual places more value on internal fulfilment rather than external perception of worth.

There's the theory that above a very high net worth, the accrual of additional wealth is a pure ego thing. Competition with other billionaires etc. as to who gets up the Forbes rich list.

Re: The plateauing of cognitive ability among top earners

#24
post #7

It's not a surprise that cognitive ability (the paper seems to define it as relatively close to classical IQ) is not highly correlated with earning ability or even value production for society. I would argue that a much better correlant of both production value and capture value is conscientiousness, or vaguely synonymously, hardworking, diligent, etc. A brilliant world observer who tweets their witty one-liners all…

I’d add that there’s also somewhat of a random evolutionary walk in the way an individual’s intrinsic qualities end up aligning (or not) with the skills, values, temperaments and opportunities of their environment. Even how they match the needs and values of their historical time and culture can matter. This is beyond just plane nature-nurture, but stressing the importance of random “right place right time” dynamics…

It's a good point. Also being slotted into the proper path when your capabilities are still forming and you know very little about the world. I know a lot of extremely smart and capable people that ended up stuck in dead end jobs because they were pursuing the wrong thing as a young adult (often, their "dreams"), and by the time they realized it no one was interested in giving them a chance to prove themselves in another field.

Some eventually lucked out and were at the right place and time where someone gave them the opportunity, and were eventually able to minimum wage jobs to high-paying executive jobs in the span of a few years. Others never got that shot and were stuck where they were.

I've heard people lament that they worry about all the Einsteins out there who will never be able to reach their potential because they're plowing fields in underdeveloped countries. But in our own society it's likely that most Einsteins would never make it out of the patent office.

Re: The plateauing of cognitive ability among top earners

#25
This seems to be related to this recent article on luck: https://news.ycombinator.com/item?id=34609167

Much like in the universe, it seems as if random fluctuations in an otherwise uniform (playing) field results in the accrual of cumulative advantages that soon become exponential without the need for additional energy input.

In other words: to covert $100 into $120 is work; to convert $100 million to $120 million is inevitable (author unknown).

Re: The plateauing of cognitive ability among top earners

#26

It's not a surprise that cognitive ability (the paper seems to define it as relatively close to classical IQ) is not highly correlated with earning ability or even value production for society. I would argue that a much better correlant of both production value and capture value is conscientiousness, or vaguely synonymously, hardworking, diligent, etc. A brilliant world observer who tweets their witty one-liners all…

There's a lot of truth in this. Some of the most classically brilliant people I went to school with ended up being homeless drug addicts or shut-ins. Meanwhile, the unassuming Ukrainian guy who built my deck is a secret multi-millionaire from his house flipping business. You can walk around the neighborhood and pick out the houses he's remodeled and modernized because they look so much better than the ones on either side.

Re: The plateauing of cognitive ability among top earners

#27

Extremely high cognitive ability allows a person to find success in life without taking on as much risk. In my opinion this explains why the highest earners and most successful individuals with the most prestigious jobs are drawn from the ranks of those with B+ cognitive ability rather than A+ cognitive ability. The A+ people don’t need to swing for the fences as much, which means they’re less likely to end up with h…

I agree with this sentiment.

Although possibly a better way to frame it is to say “people who feel like they have something to prove” are more likely to swing for the fences and succeed.

That also likely (roughly) correlates with cognitive ability.

Re: The plateauing of cognitive ability among top earners

#28
Implicit is the presumption that the smartest people optimize for wealth, or that the smartest people are good at optimizing for wealth. Outside of Wall Street, "smart" people - academics, doctors, lawyers, engineers, etc. - are just as likely to make bad personal finance decisions and/or to stay in labor (rather than management) positions for most of their careers (leave aside the dual-track IC/management ladder at a relatively small handful of companies). People don't bother to max out their earning potential because, after you earn enough to meet your needs, it quite frankly doesn't matter anymore compared to other means of personal fulfillment.

This is besides the point that the ranks of upper management are typically filled with people who are socially/politically smart, and not necessarily STEM-style smart; the cognitive ability of whom may or may not be adequately captured by this study.

Re: The plateauing of cognitive ability among top earners

#29

It's not a surprise that cognitive ability (the paper seems to define it as relatively close to classical IQ) is not highly correlated with earning ability or even value production for society. I would argue that a much better correlant of both production value and capture value is conscientiousness, or vaguely synonymously, hardworking, diligent, etc. A brilliant world observer who tweets their witty one-liners all…

> A brilliant world observer who tweets their witty one-liners all day produces probably less value

Musk?

Re: The plateauing of cognitive ability among top earners

#30
This is great data. I think the figures, particularly fig 3, tell the clearest story here. Wage percentile is monotonic in cognitive ability between the 10th and 95th percentile of income. You could imagine that in the top percentiles other factors start to dominate; e.g maybe the likelihood of someone being both top 5pct in cognition and contentiousness is low, and the latter starts to be weighted more heavily at the extremes.
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