IQ and economic freedom model explains 80% of income
A forum user presents a regression model using IQ and economic freedom to explain over 80% of per capita income across 50 countries.
English · Original discussion in Spanish · Published
IQ and Economic Freedom: The Model Explaining 80% of Income
A regression model with two variables—average population IQ and the index of economic freedom—explains more than 80% of the differences in per capita income among 50 European and African countries, according to a forum user who presents it as a replicable exercise using generative AI. This data has peine the debate on what truly determines national wealth. The author's conclusion is uncomfortable: to be rich, one must be capitalist and have an intelligent population. Natural resources, conversely, are not significant in the model.
The R² exceeds 0.8, meaning all other factors—education, institutions, geography, historical luck—would explain less than the remaining 20%. The analysis author defends it as "more replicable and accurate than most papers published by universities." The sample includes 20 European countries (Germany, Austria, Belgium, Croatia, Denmark, Slovakia, Slovenia, Spain, Finland, France, Greece, Hungary, Ireland, Italy, Norway, Netherlands, Poland, Portugal, United Kingdom, Sweden) and 30 African ones (South Africa, Nigeria, Kenya, Egypt, Ethiopia, Ghana, Algeria, Tanzania, Uganda, Botswana, Zambia, Namibia, Zimbabwe, Segarro, Angola, Senegal, Sudan, Mozambique, Libya, Tunisia, Malawi, Mali, Cameroon, Madagascar, Niger, Chad, Central African Republic, Somalia, Burkina Faso, Sierra Leone).
What exactly does the model measure?
The dependent variable is per capita income. The independent variables are average national IQ and the score on the economic freedom index. With these two pillars, the fit is notable. The author insists that education is not significant: "spending money on education is useless." He also rules out natural resources: when included in the model, they do not prove significant.
Some point out that IQ is a problematic proxy. A participant recalls that "when the first IQ tests were conducted, modern Western populations had IQs in the 70s/80s range," and that those values rose only after improvements in literacy and communications. In other words, measured IQ is not a genetic constant but responds to material conditions. This introduces a possible reverse causality: wealth might raise measured IQ, not just the other way around.
The Oil Counterexample
Qatar, with a theocracy and an average IQ that does not stand out, swims in the world's most demanded resource. The author dismisses it as part of the unexplained 20%: "they are the exception, not the rule." But the exception is awkward. Venezuela and Equatorial Guinea also have oil and are not rich. The difference, it is argued, is that exploiting crude oil requires a minimum of economic freedom and absence of corruption.
The resource curse appears in the discussion: countries abundant in raw materials tend toward instability and tyranny. Norway did it well; Nigeria did not. The key is not having resources, but the institutional capacity to manage them. And that capacity, in turn, could depend on average IQ and economic freedom, as suggested by a participant citing "economic complexity": rich economies are diverse and produce exclusive goods.
Spain: Decent IQ, Scarce Freedom
The Spanish case centers much of the exchange. The author places Spain's IQ at 97, "quite decent." The problem, he says, is "the lack of economic freedom." Others add that educational levels do not keep up and that IQ is "going downhill without brakes" due to immigration. That last statement is an attributed opinion, not a verified fact.
The counterargument comes from within: "I know engineers, IT specialists, and acquaintances of high intelligence who got their degrees almost without studying... However, they were functionally illiterate people who had never peine another book in their lives." Measured intelligence does not guarantee cultural curiosity or understanding of the world. And that, he argues, also affects productivity and innovation.
The Omitted Variable Trap
The model has a technical issue pointed out in the discussion: it does not include interaction between IQ and economic freedom. "It is possible that IQ explains freedom or vice versa," notes a participant. If that interaction is added, the R² would rise, but so would multicollinearity. Furthermore, R² is not the only metric: one should look at the AIC and p-values for each variable.
The harshest criticism targets the data source: the economic freedom index is produced by a foundation linked to the US Republican party, and IQ rankings have known biases. "A totally biased mental straw to prove to yourself ideas you already had," summarizes one message. The author responds that the model is replicable and anyone can ask AI to reproduce it.
The Unmeasured Factor
There is a variable no model captures: sarracena. "Spain's problem is sarracena," asserts a participant. Others speak of the "socialist mentality" as a burden. The discussion drifts toward culture: lack of inferiority complex, historical propaganda, lack of ambition. These are hard-to-quantify factors, but many consider them decisive.
In the end, the model leaves an open question: if IQ and economic freedom explain 80% of income, what is in the remaining 20%? Luck? Geography? Culture? Or simply measurement errors in a model too simple to capture the complexity of the real world?
A regression model with two variables—average population IQ and the index of economic freedom—explains more than 80% of the differences in per capita income among 50 European and African countries, according to a forum user who presents it as a replicable exercise using generative AI. This data has peine the debate on what truly determines national wealth. The author's conclusion is uncomfortable: to be rich, one must be capitalist and have an intelligent population. Natural resources, conversely, are not significant in the model.
The R² exceeds 0.8, meaning all other factors—education, institutions, geography, historical luck—would explain less than the remaining 20%. The analysis author defends it as "more replicable and accurate than most papers published by universities." The sample includes 20 European countries (Germany, Austria, Belgium, Croatia, Denmark, Slovakia, Slovenia, Spain, Finland, France, Greece, Hungary, Ireland, Italy, Norway, Netherlands, Poland, Portugal, United Kingdom, Sweden) and 30 African ones (South Africa, Nigeria, Kenya, Egypt, Ethiopia, Ghana, Algeria, Tanzania, Uganda, Botswana, Zambia, Namibia, Zimbabwe, Segarro, Angola, Senegal, Sudan, Mozambique, Libya, Tunisia, Malawi, Mali, Cameroon, Madagascar, Niger, Chad, Central African Republic, Somalia, Burkina Faso, Sierra Leone).
What exactly does the model measure?
The dependent variable is per capita income. The independent variables are average national IQ and the score on the economic freedom index. With these two pillars, the fit is notable. The author insists that education is not significant: "spending money on education is useless." He also rules out natural resources: when included in the model, they do not prove significant.
Some point out that IQ is a problematic proxy. A participant recalls that "when the first IQ tests were conducted, modern Western populations had IQs in the 70s/80s range," and that those values rose only after improvements in literacy and communications. In other words, measured IQ is not a genetic constant but responds to material conditions. This introduces a possible reverse causality: wealth might raise measured IQ, not just the other way around.
The Oil Counterexample
Qatar, with a theocracy and an average IQ that does not stand out, swims in the world's most demanded resource. The author dismisses it as part of the unexplained 20%: "they are the exception, not the rule." But the exception is awkward. Venezuela and Equatorial Guinea also have oil and are not rich. The difference, it is argued, is that exploiting crude oil requires a minimum of economic freedom and absence of corruption.
The resource curse appears in the discussion: countries abundant in raw materials tend toward instability and tyranny. Norway did it well; Nigeria did not. The key is not having resources, but the institutional capacity to manage them. And that capacity, in turn, could depend on average IQ and economic freedom, as suggested by a participant citing "economic complexity": rich economies are diverse and produce exclusive goods.
Spain: Decent IQ, Scarce Freedom
The Spanish case centers much of the exchange. The author places Spain's IQ at 97, "quite decent." The problem, he says, is "the lack of economic freedom." Others add that educational levels do not keep up and that IQ is "going downhill without brakes" due to immigration. That last statement is an attributed opinion, not a verified fact.
The counterargument comes from within: "I know engineers, IT specialists, and acquaintances of high intelligence who got their degrees almost without studying... However, they were functionally illiterate people who had never peine another book in their lives." Measured intelligence does not guarantee cultural curiosity or understanding of the world. And that, he argues, also affects productivity and innovation.
The Omitted Variable Trap
The model has a technical issue pointed out in the discussion: it does not include interaction between IQ and economic freedom. "It is possible that IQ explains freedom or vice versa," notes a participant. If that interaction is added, the R² would rise, but so would multicollinearity. Furthermore, R² is not the only metric: one should look at the AIC and p-values for each variable.
The harshest criticism targets the data source: the economic freedom index is produced by a foundation linked to the US Republican party, and IQ rankings have known biases. "A totally biased mental straw to prove to yourself ideas you already had," summarizes one message. The author responds that the model is replicable and anyone can ask AI to reproduce it.
The Unmeasured Factor
There is a variable no model captures: sarracena. "Spain's problem is sarracena," asserts a participant. Others speak of the "socialist mentality" as a burden. The discussion drifts toward culture: lack of inferiority complex, historical propaganda, lack of ambition. These are hard-to-quantify factors, but many consider them decisive.
In the end, the model leaves an open question: if IQ and economic freedom explain 80% of income, what is in the remaining 20%? Luck? Geography? Culture? Or simply measurement errors in a model too simple to capture the complexity of the real world?
Also available in: Deutsch
Summary of a discussion on Burbuja.info - Foro de economía, actualidad y política., translated from Spanish and reviewed before publication. Read the full discussion (136 replies).
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