Meritocracy, Intelligence and Welfare

Abstract

Why should the ‘overclass’ care about the underclass? The fact that a significant part of human ability is inherited puts society in a bind. We cannot redistribute intelligence and it is difficult to redistribute income without affecting incentives. Therefore it is vitally important to know how much ability is inherited, how much can be changed by education and what are the effects of inequality on economic welfare. These questions are the task of this chapter. How much can we understand if we treat the brain as a ‘black box’ only studied from outside? What is IQ? How valid are statistical results relating a person’s early IQ to their subsequent place in the meritocracy? How strong is the hereditary factor in the final statistical distribution of earnings? Some answers to these questions can be gleaned from the ‘shape’ of the earnings distribution. It appears to be roughly bell-shaped at the bottom, moderately skewed in the middle and highly skewed at the top. Fairly straightforward economics can explain this. What are the implications of these findings for the measurement of welfare? There is a controversy in economics, originally set going by V. Pareto, as to whether welfare is a measurable quantity. I strongly believe that it is. Otherwise economics is politically impotent. For example if one is not allowed to conceive of quantifiable welfare one cannot even discuss whether it is better to have low wages and low unemployment, as in the US, or higher wages and more unemployment, as in Europe.