Aug 28 2009, 2:19PM
Why Rich Parents Raise Smarter Children
Over at the Economix blog, Catherine Rampell produces the following graph, which shows the relationship between SAT test score and family income:
Greg Mankiw calls this the "Least Surprising Correlation of All Time" and writes:
Of course! But so what? This fact tells us nothing about the causal impact of income on test scores. [...] 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. [...] It would be interesting to see the above graph reproduced for adopted children only. I bet that the curve would be a lot flatter.
And sure, it wouldn't be surprising to find a correlation between high IQ and high income. And it wouldn't be surprising to learn that "intelligence" is partially inheritable. But the vaguely deterministic suggestion that smart parents "make more money and pass those good genes on to their offspring" is a laughably crude description of how real life works.
I don't know of any large studies that test the relationship between test scores and socioeconomic status in adopted children. But the closest adoption study described in Richard Nisbett's Intelligence and How to Get It: Why Schools and Cultures Count (I'll put the full citation at the bottom) has this to say about IQ and socioeconomic status (SES):
The obvious point to make here is that children born to wealthy parents and raised by downscale families have almost exactly the same IQ range as children born to downscale parents and raised by wealthy families. Nisbett uses this to make what I thought would have been an entirely uncontroversial point -- namely, that "both genes and class-related environmental effects are powerful contributors to intelligence" And is it really hard to figure out why those "class-related environmental effects" should make a difference? Better schools, better nutrition, better health care, better test preparation and better neighborhoods all come to mind. I'm sure an intelligent guy like Greg Mankiw can figure that out.
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(John Sides reports on some other studies and makes some good points here. The chart above is drawn from Capron & Duyme, "Assessment of Effects of Socioeconomic Status on IQ in a Full Cross-Fostering Study" (1989).)
I just wrote Greg saying that you* would probably agree that the much of the channel went through genes but would seek to remedy the unfair disadvantage of having lower IQ genes.
Guess I was wrong on that.
*Your name came up because you had posted the height/income stuff before.
well, I do think the unfairness of having bad genes is real! but it exists in addition to the unfairness of being born poor, doesn't it?
it also seems to me that the correcting for the unfairness of bad genes is more problematic than correcting for the unfairness of low income. If my productive capacity is limited because I was born smart and poor, that's bad for me AND bad for the efficiency of the economy as a whole. it seems to me that this is the real low-hanging fruit of redistribution, so I do think there's a real stake in the argument.
Conor
I doubt this continues to be a factor at the upper half of the income range. The nutrition and health care of someone making $80,000/yr can't be significantly poorer than the richer group. I doubt the neighborhoods are "better" (if you mean safer or more opportunities for education.) Test prep would also be available to anyone past the middle income range.
Schools might be overwhelmingly private instead of public the farther you get up the income range. So there could be a factor there.
But I expect the biggest factor is parental expectations and peer pressure. If you are around other smart kids (exclusively around them, at a selective private school) or come from an upper middle class family, you can't maintain your social standing without doing well at school.
Like any other form of exercise, mental exercise produces changes in the body (brain) that make you more capable. I don't think the bottom half of the income distribution are genetically inferior. I do think they are mental couch potatoes.
Are you really seriously trying to make point about heredity and income with total sample of 38??? If you look at the standard deviations, I seriously doubt whether any of this is going to statistically significant. It is just a bit of statistical noise....
Conor,
I've been following the blog since inception and really enjoy it. I was shocked that Mankiw only saw one omitted variable in the correlation. Surely thousands of upper level managers earn significantly more than the average Harvard professor...
Not sure what's bothering you about Mankiw's post. He is pointing out that the causality is confounded by the missing IQ variable. You agree. You claim that there is more to it than that. Could be, but the chart is misleading, as Mankiw pointed out, and no one has fixed it. Are you defending bad statistics because they are in the direction you desire? Let's all be on the side of truth.