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

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Abstract

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 intelligence tests provide one useful measure of human capital. Using a new database of national average IQ, we show that in growth regressions that include only robust control variables, IQ is statistically significant in 99.8% of these 1330 regressions, easily passing a Bayesian model-averaging robustness test. 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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Authors and Affiliations

  1. Department of Economics and Finance, Southern Illinois University, Edwardsville, IL, 62026, USA

    Garett Jones

  2. Department of Psychology, Illinois State University, Normal, IL, 61790, USA

    W. Joel Schneider

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  1. Garett Jones
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  2. W. Joel Schneider
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Jones, G., Schneider, W.J. Intelligence, Human Capital, and Economic Growth: A Bayesian Averaging of Classical Estimates (BACE) Approach. J Econ Growth 11, 71–93 (2006). https://doi.org/10.1007/s10887-006-7407-2

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