A higher level of education paves the way for high prestige jobs where the work is challenging & complex – and also better paid.
Competition for top tier jobs for university graduates is intense. The average number of graduates chasing every job on offer in 2009 in the UK is 50:1. IQ level is a critical factor in this competition.
Education level, occupation level and income are closely linked.
Are there any studies looking directly at links between IQ, education & income ? Yes – Here we look at one of those studies – by economist Daniel Hamermesh and Stephen Donald in 2008.
Their survey covered University of Texas Austin alumni between the ages of 23 and 43, revealing very large variations in average earnings between different majors after graduating. The highest-earning majors (e.g. “hard” Business, Engineering and Plan II (honors college), have incomes approximately three times that of the lowest majors (e.g. Education).
So there is a clear link between major and earnings?
What about the link between IQ and major?
This link is shown by the link between IQ level, SAT scores and major. In a nutshell, IQ level strongly predicts SAT scores which strongly predict which major a person takes, which strongly predict how much they will earn in the labor market.
For those who like technical details, a correlation is a statistic measuring the strength of a relationship between two variables such as SAT score and earnings. A correlation of >0.5 is considered to be a strong link. There is a strong link (correlation of .62) between average SAT scores in each major and graduate earnings. The highest earners of all are the Plan II (honors college) alumni, who have by far the highest average SAT scores (1364).
Since SAT is a good intelligence test (with a high correlation of around .80 with standardized IQ tests), this study shows the critical role of IQ level in earning potential, as you can see in the graph below.
The conclusion: In the US, higher IQs tend to take up university majors that equip them for higher paid jobs. This is not universally true of course, but it is true statistically.
Average degree major SAT (IQ) score predicts income
Taking maths and science courses is a good investment
Another interesting finding relating to crystallized intelligence (what information and skills we are trained in) is that taking science and math courses raises earnings – even taking into account prior mathematical ability. If there are are two students who have the same ability in maths, and one of them takes science or math courses, that person is more likely to get higher earnings! There is a valuable return on taking these difficult courses. Maths and science feed into our ‘cognitive capital’. To quote from the study:
…Even within major, taking more upper-division science or math courses and doing better in them raise eventual earnings. ,,,A student who takes 15 credits of upper-division science and math courses and obtains a B average in them will earn about 10 percent more than an otherwise identical student in the same major … who takes no upper-division classes in these areas. There is clearly a return to taking these difficult courses. This holds true even after we have adjusted for differences in mathematical ability by using the total SAT score … . The importance of access to this information should not be underestimated.
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The data are shown in the graph below (click to enlarge):
