What role does intelligence play in earning potential?

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Candidate: Sergei Perfiliev

Date: May, 2005

Area: Psychology

Supervisor: Christian Bryan

Word Count: 3899 words


This study established an extent that intelligence has on earning potential of an average individual. The paper, first, discussed the meaning of the term intelligence and how it is quantified. Since the intelligence is a complex aspect, the essay separately focused on elements that make it, such as IQ and EQ, and then by examining psychological researches’ data, analyzing statistics, case examples and surveys on each element, it brought IQ’s and EQ’s analyses together and reached the conclusions concerning intelligence as a whole. Intelligence is reinforced by nature and nurture. IQ is measured through IQ testing and AFQT. EQ is quantified by self-report essays and by MSCEIT testing. Individuals with higher IQ do tend to earn more, but IQ’s overall influence is little, still not negligible. EQ serves as a better predictor of earning potential than any other factor and influences future income to the great extent. Therefore, combined IQ and EQ factors, which make up intelligence, play a very significant role in shaping the future earnings on individual. Other factors, such as luck and social, family backgrounds play a much lesser role than intelligence in predicting one’s earning potential.

The Table of Contents:

Introduction _____________________________________________________________ 4

What is Intelligence? ____________________________________________________ 4-7

How is it Quantified? ____________________________________________________ 7-9

What Roles does Intelligence play in Earning Potential? _______________________ 10-12

What Other Factors Affect Earning Potential? _______________________________ 12-14

Conclusion ___________________________________________________________ 14-16

Bibliography ____________________________________________________________ 17

Appendices _____________________________________________________________ 18


The concern of why some individuals become extremely successful while others fail miserably has been questioning the mind of almost every individual and interested many psychologists. A variety of studies and observations, using various data tried to establish an extent to which the earning potential of an individual is influenced by range of factors, such as intelligence level, social, family backgrounds, and other. However, they were only able to take into consideration measurable factors, and excluded such aspects as looks and luck, which also might have an impact on the earnings of individual. Some researches have found that IQ level has little but not insignificant influence on the future income, and that individuals with higher IQ however tend to earn more (Dickens, Kane, Schultze, 1995). One’s personality traits and character are said to be a one of the major determinants of who succeeds on the job and who fails (Goleman, 1998). But what is the overall affect of intelligence on one’s earnings in future?

The essay is going to establish the correlation between the intelligence level and the earning potential of individual, by examining psychological researches’ data, analyzing statistics, case examples and surveys.  It will also determine if the other factors, like luck and social background have an influence on predicting one’s future income. However, before considering the involvement of intelligence on earning potential, it is essential to define it and discuss how it is quantified.

What is Intelligence?

In everyday use, the term intelligence means how clever or smart someone is. However when looking at this concept in more detail, this definition can be tremendously limiting, as intelligence currently covers a range of different aspects, expanding its meaning far beyond the one mentioned above. The concept generally emphasizes the speed and accuracy of performance of such qualities as verbal capacity, logical reasoning, math, memory, and emotion management, therefore intelligence is a bonding term for more specific elements. In western society, all of cognitive skills have been merged into one branch – IQ, which for the last century had dominated the concept of intelligence. Lately, the researchers have brought up another way of being smart – the EQ, or the emotional intelligence, that now provides a strong counterbalance to IQ. Emotional intelligence is a concept that combines five abilities which emotionally intelligence individual has to have. They would be “knowing one’s emotions, managing them, motivating oneself, identifying other people’s emotions and handling relationships.” The combination of these abilities makes up a factor of EQ but generally the concept represents the ability to manage emotions of oneself and others for one’s benefit. It has been in existence for a long time, although gained popularity during the last twenty years, beginning with Howard Gardner’s theory of multiple intelligences (1983), reinforced in 1990 by Salovey and Mayer with their test of EQ and recently popularized by Daniel Goleman’s book on EQ (1995, 1998). These two branches IQ and EQ make the largest portion of the intelligence today, and since quantifying intelligence as a single ability can be limiting and difficult, the essay will focus on IQ and EQ as separate components.

The intelligence is a concept which depends on culture. What is regarded to be intelligence is different across cultures, since different societies value different knowledge as important for living. Gould (1982) study has shown that what makes intelligence for American culture is not the same as African, Latin, Slavic and Nordic societies would describe it. Gould evaluated and analyzed the Yerkes intelligence test, which was taken by 1.75 million army recruits during the WWI and supposed to measure intelligence level on a scale from A to E with plus or minus signs. The test was given to the numerous immigrants to the United States, and showed to have methodological, ethical, and practical defects. Gould argues that Yerkes test measured intelligence based on American general knowledge, like “number on Kaffir’s legs – 2, 4, 6, 8,” or asking what’s wrong on a picture of the tennis court without a net, which most of immigrants have never seen before and so were not able to answer correctly. Gould also determined that the longer the immigrants stayed in U.S. the higher their scores became. However, Gould’s research can be criticized for methodological errors since he did not present any empirical data supporting his critique of the Yerkes test. However, the study still demonstrates that intelligence is not a constant concept across cultures and will change from society to society. Therefore, the essay will concentrate on the western view and definition of what is intelligence.

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The debate over the origin of intelligence in human beings is split into two approaches, the nature and the nurture. Nature approach argues that intelligence is an innate ability, and therefore is determined by our genes. Conversely the nurture side debates over environmental causes shaping the intelligence factor. Many longitudinal researches and observations provide evidence for both branches. Scarr and Weinberg (1976, 1983) have found that black children adopted from poor backgrounds and raised in western families of better income and educational level scored an average increase of 16 points on their IQ tests (more about IQ testing in ...

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