Does It Pay To Be Smart?

We ran across an interesting study about what your IQ says about how rich you’ll be. The study was conducted by Jay Zagorsky, an economist at Ohio State University, and published in the journal, Intelligence.

Zagorsky measured the income and wealth of people who were 40 to 47 years old. He sorted the data by IQ level.

Does it pay to be smart? Yes … and no.

Yes, it pays to be smart.
Zagorsky’s study confirmed what previous studies had shown. People with higher IQs tend to have higher incomes. We wonder if it’s a function of IQ or if educational attainment plays in – since it’s also been proven that higher levels of education tend to result in higher incomes.

Regardless, people with above-average IQs tend to earn more.

No, it doesn’t pay to be smart.
Zagorsky found that people with lower IQs are just as wealthy, perhaps even more so, than people with high IQs! Zagorsky defines wealth as assets minus liabilities. How much you own compared to how much you owe.

Few people with below-average IQs had high income. However, a relatively large number of them had a high net worth.

It turns out that people with higher IQs were MORE likely to have trouble paying bills, have maxed out credit cards, and have declared bankruptcy, than people with lower IQs.

Why aren’t smart people rich?
Zagorsky offers several theories for why being smart doesn’t necessarily lead to being rich. It’s possible that smart people are more confident in their ability to earn more money, so they spend more money. Perhaps they feel they can take more risk, because they can make more money if they need it.

We wonder if it’s not because of the age group. People with IQs below the norm probably started working earlier, on average, than people with high IQs, who were earning advanced degrees. So people with lower IQs have had more years in the workforce. Will people with high IQs catch up with them over time?

Smart or not, we’re only human!
What this study really confirms is a timeless principle – the real secret to accumulating more wealth is to spend less than what you make. How profound!

We’re all human – some smarter than others. However, we’re all subject to that human trait that makes us spend as much as we make. Make more … spend more.

Do you remember the secret to begin accumulating wealth, as told in The Richest Man in Babylon?

A part of all you earn should be yours to keep.

If you don’t spend it, you’ll always have it. And more – because your money will make money for you if you invest it right.

For whatever reason, people with below-average IQs seem to do a better job of that than people with above-average IQs. At least according to this study.

What do you think? Why do people with lower IQs have more wealth? What tips do you have for managing money? Let us know.

Our bigg quote today is by Benjamin Franklin.

“A penny saved is a penny earned.”

It’s smart to save money, because being smart with your money is money in the bank.

Next time, we’re going to talk about your own personal SWOT analysis – analyzing strengths, weaknesses, threats, and opportunities. It’s a follow up to Visualize The Life You Want and Live Your Dream Life With Purpose.

If your goal is to save more money, learn how to achieve that goal with our Bigg Goal-Setters Workbook. It’s free when you subscribe to our free weekly newsletter. We bet you’re smart enough to recognize that for the deal it is!

Until next time, here’s to your bigg success!

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  1. […] One example of a disturbing question is to ask something that doesn’t ring true. We recently did a show / blog entitled Does It Pay Be Smart? […]

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