According to the results of a study conducted at Ohio State University’s Center for Human Resource Research, super-intelligent people are only as good as (or as bad as) people with average or below-average intelligence, when it comes to better management of finances.
The study concludes that, generally, income increases with IQ; but, the increased income does not necessarily translate into increased wealth (by “wealth” the study means “net worth”). It also says that people with high IQ are not consistently better than people with low IQ at staying away from financial distress - as measured by problems like maxed out credit cards, late bill payments, and bankruptcy.
The way I see it, the report serves as a note of caution for seemingly *intelligent* people with high IQ (who think that just being smart can make them rich) and a word of encouragement for seemingly *less intelligent* people (who may not be confident enough in their approach towards becoming rich).
If you think about it for a while, the findings don’t seem too surprising. Below are some of the essential characteristics of people who are on the path to financial prosperity. I don’t see any reason why a person with low IQ will possess these characteristics to a lesser extent than a person with very high IQ.
- Ambition: somewhere deep in you, there has to be this powerful drive to excel financially. Intelligence alone does not guarantee this drive.
- Energy, willpower, and discipline: you need to put your thoughts (and/or *intelligent* analysis) into action. There is a big difference (usually recognized as “results“) between just *knowing* about things and implementing them. Also, once you find the right direction, you need to keep pushing to make progress along that direction - that requires quite a bit of discipline.
- Emotional stability: from what I have observed, a whole lot of *intelligent* people lack this (by the way, although I don’t consider myself to be intelligent, I do have some issues in this area that need to be addressed). Recently, JD of Get Rich Slowly elaborated on this subject (incidentally, the post was a review of the book titled “Why Smart People Make Big Money Mistakes“).
A couple of other important factors that might keep super-intelligent people from becoming wealthy are: ego and overconfidence. It’s not too difficult to find intelligent people with this written all over their foreheads: “I am intelligent; hence, I must be right. Everyone else must be wrong“.
Of course, there is this other thing called common sense which cannot be judged by IQ tests. And, there is this whole bag of vices like procrastination, impulsive behavior, etc., which can become a burden for anyone - irrespective of his/her IQ. Personally, I still have a lot of things in my bag of vices, and I don’t foresee much financial progress before I empty it. My intelligence (or whatever is left of it) is immaterial in this situation.
Jay Zagorsky (the scientist who conducted the research), summarizes the study very well:
Your IQ has really no relationship to your wealth. And being very smart does not protect you from getting into financial difficulty.
Intelligence is not a factor for explaining wealth. Those with low intelligence should not believe they are handicapped, and those with high intelligence should not believe they have an advantage.
That gives me some hope.
Some Totally Tangent Discussion
Interestingly, for the sake of entertaining ourselves, this leads to two contradictory statements:
- It is dumb to be smart but not wealthy.
- It is smart to be dumb but wealthy.
On a cautionary note, attributing *smartness* to just being wealthy is a tricky business. I am sure there are smart people in this world for whom accumulating wealth is not a priority. This may sound absurd to a whole lot of people who are interested in personal finance - but after a few years in grad school, it sounds perfectly normal.
On a more fundamental level, the reason behind the results of the study coming out the way they did, could be our interpretation of the human intelligence as scaled by the conventional IQ tests. As far as my perception goes, such tests are pretty narrow in scope, and probably favor book-smarts over street-smarts, even though people in both categories may be almost equally “intelligent” [sort of .. the difference between Sherlock Holmes and Mycroft Holmes - for those you are familiar with these characters].
Image source: health.allrefer.com (original image has been edited)