A High IQ as ‘Cognitive Capital’ in the Knowledge Economy

According to Jerry Muller in his article Capitalism and Inequality in the March 2013 s issue of Foreign Affairs, we live in a ‘cognitive economy’ where cognitive ability is at a premium:

“…a period of growing equality of access to education and increasing stratification of marketplace rewards, both of which have increased the importance of human capital. One element of human capital is cognitive ability: quickness of mind, the ability to infer and apply patterns drawn from experience, and the ability to deal with mental complexity. Another is character and social skills: self-discipline, persistence, responsibility. And a third is actual knowledge. All of these are becoming increasingly crucial for success in the postindustrial marketplace.”

Quickness of mind, the ability to infer and apply patterns and deal with mental complexity – these are all aspects of our general intelligence.

The IQ – Economic Productivity Link

Why is the level of the most intelligent people important for economic productivity? Dr Rindermann, who has researched the topic of cognitive capital extensively, offers the following explanation:

IQ is relevant for technological progress, for innovation, for leading a nation, for leading organizations, as entrepreneurs, and so on.

According to the Rindermann, cognitive capital is the major determiner of economic productivity – more important than economic freedom itself.

I think in the modern economy, human capital and cognitive ability are more important than economic freedom.

A high IQ in a knowledge economy benefits people for:

  • Problem solving at work
  • Learning at work
  • Adaptability at work
  • Continuous improvement at work
  • Being flexible in workplace

This pays off in terms of income and professional success, as shown in this data:

Cognitive capital has a premium in knowledge economies, and this graph shows the benefits of a knowledge economy:

For blog articles on cognitive capital, click here.

 

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