Frugal Living 

Smarter People Make More Money, Save Less

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According to Ohio State professor Jay Zagorsky, in order to become wealthy it doesn’t matter if you’re smart. “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.” What ultimately matters is whether or not you save – mind boggling!

But that’s not what piqued my interest because pretty much everyone can tell you that, it’s just a matter of whether or not someone is willing to do it. What did interest me was the results of a study (Yahoo has since pulled the article) of 7,500 middle-aged Americans, which basically were that the smarter you are, the more money you’ll make. Specifically, for each IQ point you have above someone else, you’ll probably make anywhere from $200 to $600 more each year. So, if you’re smarter by 50 points, that’ll translate to anywhere from $10,000 to $30,000 more earnings each year according to this study. It’s interesting that a point in IQ was quantified in terms of dollar value, something I’d never seen before… but you’ll have to get over the disputed validity of IQ tests.

So, if smarter people earn more, why aren’t they more likely to be rich? (Rather, why isn’t there a correlation between IQ and wealth?) Zagorsky guesses it’s probably because smarter people think they can earn more later on so they spend more now.

{ 5 comments, please add your thoughts now! }

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5 Responses to “Smarter People Make More Money, Save Less”

  1. That must explain why I’m not rich. I’m too smart.

  2. KMC says:

    My guess on why smarter people aren’t richer is (1) overconfidence in their knowledge and investing ability, and (2) being absorbed in their vocation and disinterested in personal finance.

  3. plonkee says:

    I would never have thought that smarter people were better at holding on to money.

    I think its willpower thats required in the first instance, and I never expected that to be related to IQ.

  4. In many areas of life those extra IQ points don’t help much. We all know genuises who are lacking in common sense.
    Also think of the gifted students who never develop good work habits and discipline because they can wing it. Probably wealth accumulation is more about self-discipline and work ethic than winging it!
    Fields like law and medicine, which attract the high IQ crowd, are in the end relatively fixed incomes, unlike the business world, where the sky is the limit!

  5. Mario Salcedo says:

    Be careful

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