There has been a lot of discussion over the past few days regarding the relationship among income, genetics, and intelligence. A controversial paper by economist Bruce Sacerdote purports to show that the relationship between parental income and children's income is different for biological and adopted children. Biological kids make more money as parents' income increases whereas adopted kids have a flat income curve as parental income increases. Mike has a great writeup (follow the link) explaining the high school-caliber errors in the author's ultimate conclusion that intelligence is passed down genetically, which is stacked upon the equally fallacious claim that high income = intelligence. In other words, Prof. Sacerdote presents some very interesting if deceiving findings – I can't emphasize enough Mike's point about the four year difference in mean age between the groups of children – and then closes with some nice eugenics.

Economists are useful people to have around in the academic world. They have great quantitative skills and, in my experience, a keen eye for research design. Unfortunately most of them think they are social scientists. They aren't. They are mathematicians practicing a hard science. They should not do political science, biology, or sociology any more than practitioners of those disciplines should do economics. But economists have the misfortune of seeing the entire world in rational choice terms and a field which encourages them to make the most immoderate, speculative conclusions possible based on their findings.

Prof. Sacerdote, for example, could have written a paper in which he said "Here is a very interesting disparity I have uncovered. I hope this encourages others to study this issue and find out what's going on here." Nah. As economists like to do, he just solves the dilemma himself at the end of the paper: it's genetic. People who make more money are smarter than people who make less, and that intelligence is passed on to their children. See how much easier that was compared to doing all that messy "research" and using "logic"?

Similarly, from the are-you-fucking-kidding file we have this entry on Harvard economist Greg Mankiw's blog. This man is a very good economist. He is famous. He has achieved much in his academic and professional career. Now read this:

The NY Times Economix blog offers us the above graph, showing that kids from higher income families get higher average SAT scores.

Of course! But so what? This fact tells us nothing about the causal impact of income on test scores. (Economix does not advance a causal interpretation, but nor does it warn readers against it.)

This graph is a good example of omitted variable bias, a statistical issue discussed in Chapter 2 of my favorite textbook. The key omitted variable here is parents' IQ. Smart parents make more money and pass those good genes on to their offspring.

Suppose we were to graph average SAT scores by the number of bathrooms a student has in his or her family home. That curve would also likely slope upward. (After all, people with more money buy larger homes with more bathrooms.) But it would be a mistake to conclude that installing an extra toilet raises yours kids' SAT scores.

Is this a joke? He opens by recognizing that the data offer no evidence whatsoever about causality and closes with a warning about making spurious and unwarranted conclusions about causality when correlation is present. Which is cute, because between those two statements he grabs his ankles, reaches deep within his ass, and pulls out the uncited, unwarranted, and baseless conclusion that the real causal mechanism here is genetics. A goddamn college freshman could look at the relationship between income and SAT scores and conclude, "Hmm. Well, parents with more money can afford expensive schools and SAT prep courses." That is just about the most basic example of cause and effect one could imagine.

If you took your car to a mechanic because the alternator was shot – you can open the hood and plainly see that the alternator is burnt out and not functioning – a reasonable mechanic would say "Hey, you need a new alternator." If you took the same car to an economist, he or (rarely) she would say "The problem is obvious. Your parents have low IQs, and thus you have inherited genes which make you too dumb to pick out a car that will be free of mechanical problems." If that analogy seems ridiculous, that is exactly what Mankiw has done here. He has ignored the overwhelmingly obvious explanation and substituted his own imagined causal mechanism.

Economists may not suck at causal inferences universally, but the ones that do it well and judiciously are well-hidden. Their field provides perverse incentives to draw attention to one's work by stating the biggest, most shocking conclusion that can be wrung from the data, however tenuous the evidence. Either that or they just suck at playing social scientist. Causality is determined by hypothesis testing and supported with evidence. When hypotheses can't be thoroughly tested, statements about causality should at least adhere to basic logic. Showing a correlation and then going off half-assed on one's own preferred explanation of How the World Works is not science. And it is particularly unwelcome when that preferred explanation happens to be 19th Century eugenics and a handful of social Darwinism.

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  1. Maren Says:

    Jesus. So someone did a study basically showing that women of Korean descent, no matter how rich their adoptive parents are, will make around $40k a year. Somehow I don't think that has a lot to do with genetics or inherited intelligence.

  2. Caroline Says:

    Don't tell economists that they are doing hard science! That is what they already all believe, which explains why they are willing to act like asses most of the time.

  3. doug Says:

    Greg's site is not a blog. He can't handle comments. Call it a 'soap box' or something?

  4. dbsmall Says:

    Enlightening illustration of why (some) economists follow fallacious reasoning when identifying social cause/effect.

    1) It would be a mistake to extrapolate from these data points to the general population of economists. I trust that you've taken a representative sample.

    2) Those of us trained in the hard sciences and math (ok, I have to be honest,…and economics) are equally critical of economists. "They don't know how to do math! They take their derivatives sideways. They are really just frustrated sociologists.")

    See, economics is decidedly not hard science. (Well, not macroeconomics, anyway.) And, for macroeconomics to be useful, it must have some sociological component. If it were a hard science, there would be no argument about Laffer curves, K-waves, the impact of velocity of money exchange, …there would just be a set of equations which the hard-scientists agreed modelled the economic world.

    The poor economists—rejected by both hard-scientists and sociologists, but desperately wanting to be both…

  5. JohnR Says:

    I think you're being too hard on economists just because you've got a couple of winners there. I'd bet a decent lunch (but no more than that – always don't bet what you can't afford to lose, my sainted mother told me) that economists are no more likely to see patterns that they're looking for already than any other group of people. When you already know what the cause is, you'll always see that cause. Economists aren't statisticians; they're just modern-day witch doctors, so holding them to the standards of statisticians is a bit unfair, even if that's what they like to pretend they are. My last dog liked to pretend that he was a human, but that didn't mean I had to play along.

  6. Ike Says:

    Just as any serious area of inquiry can be made into a frivolous liberal arts major by appending the word "studies," it seems that "science" can be appended to any subject to smarten it up. The business professors at my most recent house of study liked to call their field "decision science." Ironically, these "the free market is the most beautiful natural law" saviors of civilization make the same sorts of logical errors as Marx about human nature and the forces at work in economies.

  7. Robert Says:

    A good friend of mine recently introduced me to "Fooled by Randomness" and "The Black Swan" , by Tabbeh (IIRC). It is much easier for me to not take economists seriously after reading those books. If meteorologists (real ones) had as dismal a track record as economists, they'd be as highly regarded as TV weathermen.

    A good counterweight to this nonsense would be a study attempting to find a correlation between IQ and income. E.g., I would probably score higher on the standard Stanford-Binet than my husband, but he went into the private sector after university, and I went to work at the VA hospital. Result: his annual salary was about twice mine. Q.E.D., he must be more intelligent, right?

  8. jazzbumpa Says:

    The problem with Mankiw isn't that he's an economist – it's that he's a right wing tool.

    JohnR – Your dog wasn't pretending to be human. He didn't realize that you aren't a dog.

  9. Aslan Maskhadov Says:

    Remember when economists were all telling us how great the internet was going to be, or how wonderful mortgage securities were? Many of the popular economists these days are just selling neo-liberal bullshit. Just as leaders of the feudal era tried to justify the system by claiming the aristocracy consisted of natural betters, so to have bourgeois apologists endeavored to convince us that CEOs and other businessmen are naturally smarter and work harder than the rest of us. The sad thing is when you see a working class person actually buying it. (If you have not seen this, contact the closest conservative you know).

  10. Chris Says:

    Ahhh, I love social Dawinists! "I won. So the rules are, what I did is OK, what you did is not. But only if I win again" Spend some time around 5-7 year-olds and you hear the same logic, smaller words.

  11. Desargues Says:

    Bravo, sir. I applaud your benevolent effort to enlighten us. If my clapping is not as loud as you deserve, it's because of your declaration, in your previous post, that economists are mathematicians practicing a hard science. For real?

    I grant that they use (advanced) mathematics — but they don't contribute any advances in that field. And their mathematics is hard only relative to us, poor humanities schlubs. A theoretical physicist may beg to disagree. A real mathematician would smile condescendingly.

    They do a lot of computation, to be sure; and design models to 'explain' the data (in a sense of 'to explain' that I never coudl figure out). But it is JohnR who puts his finger on the real issue: what truly and meaningfully distinguishes these guys from witch doctors? Put another way: suppose I teach an astrologer to manipulate the formalism of differential geometry and group theory, but let him keep his ability to make claims about celestial bodies influencing our lives. How's he gonna be different from an economist?

  12. dbsmall Says:

    Desargues wins.

  13. Robert Says:

    the difference is that the astrologer will, most likely, make more accurate predictions than the economist, and charge you less for the service.

  14. Sour Kraut Says:

    Shorter Greg Mankiw:

    Ooo eee ooo ah ah, bing bang walla walla bing bang.

  15. Michael #2 Says:

    I really wish there was a way to enforce a rule that anyone that tries to speak about eugenics must first read at least one of Galton's books on the subject (_Hereditary Genius_ or _English Men of Science_ for instance) to get a precise example of what the hell is wrong with conflating correlation and causation. Galton was a pretty smart, useful fellow in other realms, but his thinking along these lines was pretty shoddy. He of course lacked a "vector" for inheritance (aided by Weismann and the rediscovery of Mendel's work in 1900), but that doesn't make his ideas any less stupid. Galton felt he had proved that because distinguished English jurists had sons and nephews who also became judges or lawyers that there was a hereditary disposition to legal talent. Though he did also try to statistically verify the efficacy of prayer (he found it useless), so maybe that's a plus.
    Of course, Charles Davenport's study on _Naval Officers_ (from 1921 I think) is riotously funny. Great seamen aren't made, they're born. (HA! Seamen!) Thalassophilia: love of the sea. It's genetics. Obvs!
    I guess the best that could be said for thinking along those lines is that at least its stupidity has a distinguished lineage.

  16. Redleg Says:

    Not to defend economists but it is the social science component in economics that makes the field challenging and not as determinate as the so-called hard sciences. It's okay to criticize economists for making spurious inferences based on correlational data but it's not helpful to criticize them for being soft because they sometimes need to account for social and behavioral variables.

  17. Desargues Says:

    REDLEG: Point taken, but you end up raising a dilemma for economics, not us people skeptical of some of its pretensions. "They sometimes need to account for social and behavioral variables" — why, of course they do, if they want to retain any hope of ever being useful to mankind at all. That's why we need economics in the first place. You make it sound as if it's reality's fault that economics has to factor in all these messy variables. So here's the dilemma. Either economics decides to hunker down and do a better job of handling quantitatively these variables inherently associated with people and their societies (hence be prepared to see people lose respect for your endeavor when you fail). Or you dismal bean counters decide to cut your losses and turn it into a branch of pure formalism, like applied mathematics (but then don't wonder if people lose interest in you).

    What's it gonna be?

  18. Redleg Says:

    I think you're reading more into my statement than I intended. In my opinion, economics becomes more valuable when it includes social and behavioral constructs rather than relying on the old "rational economic actor" model. In fact, many economists have embraced a more behavioral (i.e., micro) approach. The field of economics has recognized the contributions to economics by behavioral scientists including Herb Simon and Kanhneman and Tversky.

    The point of my earlier comment was to criticize those who scorned econ as not being as rigorous as the hard sciences and mathematics. My point was to point out that the social/behavioral component adds a great deal of complexity to the field that these "hard science" hardheads are not likely to see.

  19. Desargues Says:

    Thanks for the correction, Redleg. As it often happens to me, I discover that I'm actually in agreement — I just didn't read your thesis slowly enough.

  20. Penny Says:

    All of the intellectual stuff above aside, all I can tell you is this: my brother is my parents' biological son. I was adopted. I make easily twice what he makes on an annual basis. I also suspect very strongly that I would totally dust him on any IQ test.

    Additionally, he's been MIA from the family since he moved out of the house 30-some years ago. I hear from him occasionally. He hears from me after I've tracked him down to pass along such gems as, "Mom had a massive stroke." Our 83 year old Dad never hears a peep from him.

    So paint me with a big ol' bitter paintbrush, but these economists can go fuck themselves. That's my unscientific addition to the topic.

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