Higher intelligence associated with "thinking like an economist"

As the world economy dusts itself down and edges towards recovery, a provocative new paper claims that people with higher intelligence are more likely to think like economists. That is, they're more likely to be optimistic about the economy; to recognise the economic advantages of markets free from government interference, and the advantages of foreign trade and foreign workers; and to appreciate the economic benefits of achieving greater productivity with less man-power. The lead author is Bryan Caplan, an economics professor at George Mason University. Past essays by him include 'The 4 Boneheaded Biases of Stupid Voters (And we're all stupid voters.)'

Prior research has established that the more time a person spends in education, the more likely their broad economic views are to match that of the typical economist (pdf). Caplan and his colleague Stephen Miller point out that these studies failed to take into account the influence of intelligence. After all, it's known that people with higher IQ tend to spend longer in education and intelligence itself may also directly influence economic beliefs.

To overcome this problem, Caplan and Miller have focused on answers to the General Social Survey, a massive US poll of national opinions performed every two years. Crucially, it includes questions about the economy and a small test of verbal IQ.

Caplan and Miller's finding is that the link between educational background and 'thinking like an economist' is weakened when IQ is taken into account because IQ is the more important factor associated with economic beliefs. It's a complicated picture because IQ and education may be mutually influential. However, if one assumes that education is unable to raise IQ, but that IQ affects time spent in education, then the researchers said 'the net effect on economic beliefs of intelligence is more than double the net effect of education.' Even if one assumes that education can also affect IQ, 'intelligence still has a larger estimated effect [on economic beliefs],' they said.

Does the link between higher intelligence and 'thinking like an economist' mean that economists are generally right and the public wrong? In answer to this question, Caplan and Miller cite Shane Frederick, a decision-making scholar at Yale's School of Management, who's previously argued that it depends on the type of question. For financial issues, he argued, it pays to emulate those 'with higher cognitive abilities'. However, Frederick noted that 'if one were deciding between an apple or an orange, Einstein's preference for apples seems irrelevant.'

Caplan and Miller say they agree with Frederick about this, before concluding boldly: 'The fact that the beliefs of economists and intelligent non-economists dovetail is another reason to accept the "economists are right, the public is wrong" interpretation of lay-expert belief gaps.'
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Caplan, B., and Miller, S. (2010). Intelligence makes people think like economists: Evidence from the General Social Survey. Intelligence, 38 (6), 636-647 DOI: 10.1016/j.intell.2010.09.005

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