The Compounding of Intelligence - Is Wealth The Key?


One of the conventional narratives in our capitalist society is that the wealthy and most successful people are often the brightest and hard-working. I think what this fails to take into consideration is the nature versus nurture debate. People often think of intelligence as being innate and not very changeable. Essentially you’re born smart and you remain smart and you become successful provided you do the work. My experience does not fit the narrative. I have observed that one’s environment can help an individual become more curious and develop effective habits to make them more intelligent as the years go by. I think some of the data bears this out. For example, over a long period of time, the average scores on IQ tests have increased which suggests that as society continues to evolve and grow and innovate that this is a byproduct of more productive and intelligent people. The average I.Q. was 100 after World War II and by 2002 it had increased to 118. This trend has been consistent throughout the industrialized world.

What Influences Intelligence?

Research has been done with mice in which the researchers created “rich” and “poor” mice. The former lived in small groups in cages with plenty of toys while the latter was confined to much larger numbers of mice and no toys. The “rich” mice had a much more robust development of their neural networks and, as a result, their brains were much heavier than their “poor” counterparts and could more easily find their way out of a maze.

Bill Gates has said he does not think he would be the person he has become without his parents engaging him in his curiosity. He shudders to think what might have happened to him had his parents tried to stifle his curiosity and his constant barrage of questions because he was being too much of a pain. The following article is a good summary of what key lessons he learned from his parents.

While of course, he is off the charts in terms of intelligence, I have to believe that had he grown up in much less affluent surroundings with less intelligent and curiosity engaging parents then he would probably not have gone into the technology field and created the mind-boggling success that he did with Microsoft in partnership with Paul Allen. A healthy, education-oriented, curiosity promoting, positive feedback environment compounds and helps make people smarter, not only intellectually, but emotionally and socially as well. How can it not make a positive difference?

Obstacles to Intelligence – Are Rich People Smarter?

An enriching environment at home along with healthy eating and a positive educational experience help stimulate our neural networks. One of the great obstacles to developing our intelligence is stress. According to an interesting article entitled “Are rich people smarter?”

A second important factor is stress, notably in cases of insecurity or poverty. In such situations, life revolves around what we do not have, what is missing: an unpaid bill, will I be able to buy enough to eat? How to pay for kids’ school? Etc.

Insecurity devours people, makes them lose a long-term perspective and prevents them from paying attention to the more important things. The judgment capabilities are in a way held hostage by big concerns or a strong anguish. The people living in poverty are absent, easily disoriented, day after day. They develop a tunnel vision that stops them from thinking clearly. They often make unreasonable decisions, not because they are stupid, but because they live in a context where anyone would make bad decisions.

The author concludes that rich people are not inherently smarter but they grow smarter while poor people are not born dumb, but become so. Good decisions tend to beget good decisions while bad ones spawn bad decisions. The margin of safety for someone who is poor is infinitesimally low and creates constrained options and short-term thinking which is exactly where you don’t want to be when navigating through life. One always wants multiple options and a long-term horizon which comes from having the financial resources to be patient and to have many more possibilities open to you. And these are a byproduct of good decisions that have compounded over the years.

What Role Does Environment Play in Intelligence?

A good example of the nature versus debate relates to inventors as there are some very interesting statistics regarding inventors I read a summary of a research project that talked about how inventors are highly correlated with growing up in a family or community of other inventors. Here are the authors’ findings (note the last part that discusses the gender gap and the huge potential for closing it in this area):

“[C]hildren from families in the top 1 percent of the income distribution are 10 times more likely to become inventors than those from families in the bottom 50 percent, and that over 80 percent of 40-year-old inventors are male….[T]hey find that children who grow up in particularly innovative geographic areas, or who are exposed to inventors via family connections, are more likely to become inventors…Moreover, children whose parents hold patents in a particular subclass, such as amplifiers, are more likely to obtain a patent in that same subclass than in another. There is also a strong gender-specific exposure effect: women are more likely to patent in a technology class if they were exposed as children to female inventors who held patents in that same type of technology. The researchers estimate that if young girls were exposed to female inventors at the same rate as young boys are currently exposed to male inventors, the gender gap in invention rates would be halved. More broadly, if women, minorities, and children from low-income families were to invent at the same rate as white men from high-income (top 20 percent) families, the rate of innovation in America would quadruple. — ”

So, therefore, environment plays a significant role in one’s growing base of intelligence.

I read a very interesting and thought-provoking book called How Will you Measure your Life? The author, who wrote the highly acclaimed The Innovator’s Dilemma, cites some very important research that shows how vital it is for kids to be engaged by their parents right out of the shoot and what advantages this can bring about for them over the course of their lives. The opposite is true of course as well. Here is a long, but important excerpt from the book about this topic that shows how the sustained interaction of a particular type of communication with children from day one can compound enormously into massive benefits over the course of their lifetime. The opposite, of course, is also true. I broke up the section into paragraphs to make it more readable.

There’s significant research emerging that demonstrates just how important the earliest months of life are to the development of intellectual capacity. As recounted in our book Disrupting Class, two researchers, Todd Risley and Betty Hart, studied the effects of how parents talk to a child during the first two and a half years of life. After meticulously observing and recording all of the interactions between parent and child, they noticed that on average, parents speak 1,500 words per hour to their infant children. “Talkative” (often college-educated) parents spoke 2,100 words to their child, on average. By contrast, parents from less verbal (and often less-educated) backgrounds spoke only 600 per hour, on average. If you add that up over the first thirty months, the child of “talkative” parents heard an estimated 48 million words spoken, compared to the disadvantaged child, who heard only 13 million.

The most important time for the children to hear the words, the research suggests, is the first year of life. Risley and Hart’s research followed the children they studied as they progressed through school. The number of words spoken to a child had a strong correlation between the number of words that they heard in their first thirty months and their performance on vocabulary and reading comprehension tests as they got older. And it didn’t matter that just any words were spoken to a child—the way a parent spoke to a child had a significant effect. The researchers observed two different types of conversations between parents and infants. One type they dubbed “business language”—such as, “Time for a nap,” “Let’s go for a ride,” and “Finish your milk.” Such conversations were simple and direct, not rich and complex. Risley and Hart concluded that these types of conversations had limited effect on cognitive development. In contrast, when parents engaged in face-to-face conversation with the child—speaking in fully adult, sophisticated language as if the child could be part of a chatty, grown-up conversation—the impact on cognitive development was enormous. These richer interactions they called “language dancing.”

Language dancing is being chatty, thinking aloud, and commenting on what the child is doing and what the parent is doing or planning to do. “Do you want to wear the blue shirt or the red shirt today?” “Do you think it will rain today?” “Do you remember the time I put your bottle in the oven by mistake?” and so on. Language dancing involves talking to the child about “what if,” and “do you remember,” and “wouldn’t it be nice if”—questions that invite the child to think deeply about what is happening around him. And it has a profound effect long before a parent might actually expect a child to understand what is being asked. In short, when a parent engages in extra talk, many, many more of the synaptic pathways in the child’s brain are exercised and refined.

Synapses are the junctions in the brain where a signal is transmitted from one nerve cell to another. In simple terms, the more pathways that are created between synapses in the brain, the more efficiently connections are formed. This makes the subsequent patterns of thought easier and faster. This matters. A child who has heard 48 million words in the first three years won’t just have 3.7 times as many well-lubricated connections in its brain as a child who has heard only 13 million words. The effect on brain cells is exponential. Each brain cell can be connected to hundreds of other cells by as many as ten thousand synapses. That means children who have been exposed to extra talk have an almost incalculable cognitive advantage. What’s more, Risley and Hart’s research suggests that “language dancing” is the key to this cognitive advantage—not income, ethnicity, or parents’ education. “In other words,” summarized Risley and Hart, “some working-poor people talked a lot to their kids and their kids did really well. Some affluent businesspeople talked very little to their kids and their kids did very poorly…. All the variation in outcomes was taken up by the amount of talking, in the family, to the babies before age three.” A child who enters school with a strong vocabulary and strong cognitive abilities is likely to do well in school early on and continues to do well in the longer term. It’s mind-boggling to think that such a tiny investment has the potential for such enormous returns. Yet many parents think they can start focusing on their child’s academic performance when they hit school. But by then, they’ve missed a huge window of opportunity to give their kid a leg up.

It’s often said that we are our habits. It turns out that our ability to cultivate and form habits is highly influenced by how we were raised and the interactions we had from our earliest days of life. That’s not to say we can’t overcome poor ones, but from the research cited above it sure does look like there are kids who have won the ovarian lottery as Warren Buffett likes to call it and compounded their curiosity into taking on more challenges in ways that exercised their muscle for taking risks, gaining valuable experience, building up margins of safety so they have options in life, and compounding all of these positive attributes into a successful life of growth, not only financially and experientially, but from an intelligence standpoint as well.

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So parents of newborns, please engage in “language dancing” with your babies and don’t stop engaging your kids’ curiosity so that you can help influence them to travel down the path of curiosity and ever compounding intelligence.

Over to You:

Have you or your children ‘won the ovarian lottery’ or did upbringing have a positive or adverse impact intelligence?


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