Saturday, May 02, 2009

People with higher IQs make wiser economic choices, study finds

Funnily enough. Nice to see yet another proof of some very old generalizations, though

People with higher measures of cognitive ability are more likely to make good choices in several different types of economic decisions, according to a new study with researchers from the University of Minnesota's Twin Cities and Morris campuses. The study, set to be published online in the Proceedings of the National Academy of Sciences this week, was conducted with 1,000 trainee truck drivers at Schneider National, Inc., an American motor carrier employing 20,000. The researchers measured the trainees' cognitive skills and asked them to make choices in several economic experiments, and then followed them on the job.

People with better cognitive skills, in particular higher IQ, were more willing to take calculated risks and to save their money and made more consistent choices. They were also more likely to be cooperative in a strategic situation, and exhibited higher "social awareness" in that they more accurately forecasted others' behavior.

The researchers also tracked how trainees persevered on their new job. The company paid for the training of those who stayed a year, but those who left early owed thousands in training costs. The study found that those with the highest level of cognitive ability stayed at twice the rate of those with the lowest.

The finding that individual characteristics that improve economic success -- patience, risk taking and effective social behavior -- all cluster together and are linked through cognitive skill, which could have implications for policy making and education. [Psychometricians have been saying that for over 100 years]

"These results could shed light on the causes of differential economic success among individuals and among nations," said University of Minnesota-Twin Cities economist Aldo Rustichini, a co-author whose theoretical work on cognitive skills is used in the paper. [Charles Murray and Richard Lynn have been pointing that out for years]

"It also suggests that the benefit from early childhood education programs not only affects cognitive skills, but extends to more effective economic decision-making," said study co-author Stephen Burks, the University of Minnesota-Morris economist who organized the project that gathered the data. [Rubbish! Childhood education intervention programs have NO lasting effect on IQ. Burks should look at the data and stop "suggesting"]



Cramdown Slamdown

Three cheers for obstructionism

The power of a united minority was on beneficial display yesterday, as Senate Republicans defeated the budget bankruptcy "cramdown" bill. Credit goes to Arizona's Jon Kyl and Minority Leader Mitch McConnell, who kept their party together to beat destructive legislation that had easily passed the House and was one of President Obama's housing priorities.

The cramdown would have allowed bankruptcy judges to rewrite contracts to reduce the amount that people owe on their mortgages. But a bipartisan majority understood that relief for today's troubled borrowers would be paid with higher rates on the next generation of homeowners, as lenders priced the added risk into mortgage contracts.

A dozen Democrats joined Republicans in the 51-45 vote, and even Pennsylvania turncoat Arlen Specter gave his former GOP comrades an assist. Speaking for millions of renters and nondelinquent borrowers, Mr. McConnell said that the vote "ensures that homeowners who pay their bills and follow the rules won't see an interest-rate hike at the whim of a bankruptcy judge."

Prior to the vote, the Associated Press described the looming defeat as "the first major legislative setback for the popular president." Illinois Senator Dick Durbin and New York's Chuck Schumer also did their worst to pass the bill, including some arm-twisting of politically vulnerable bankers. Their defeat is a victory for healthy credit markets and, let us hope, a sign that Americans do not want to throw out all the rules of our market economy.

The victory is also an example of Republicans helping the economy and thus saving Democrats from their own worst instincts. Liberals were so intent on helping troubled homeowners that they were willing to punish the profits of the very banks they say they want to lend more to new mortgage borrowers. May we have more such virtuous "obstructionism."



Chrysler: Obama trying to rip off private lenders and hand their money to the UAW

As April 30 approached, the Treasury Department stepped in with a heavy jack-boot. The bondholders – people who have extended loans to Chrysler in good faith – were told to accept 33 cents on the dollar, and to be happy about it. A group of these bondholders refused. They rightly saw that to accept so little was tantamount to having their pockets picked. And, to rub salt in the wounds, the government that is supposed to uphold the law and protect citizens was on the side of the muggers, helping them steal nearly $5 billion.

Make no mistake about it, this is theft. $5 billion is being taken by force from the private sector and funneled into union pension funds and other leftist devices. Private citizens gave Chrysler loans. The government is now telling these citizens to take a huge loss. When they refuse, the President of the United States publicly rebukes, ridicules, and attacks them.

Why isn’t Obama attacking the thugs at the UAW who bear a large part of the responsibility for the company’s financial mess? The primary reason the government did not allow Chrysler to go into Bankruptcy Court was purely to keep those pension and health plans in force. A Bankruptcy Court would have put the claims of the bondholders first and made the UAW accept less. Now, with the force of the government dictating the terms, the exact opposite is about to occur. Yes, the Red Queen is on her head.

The entire financial crisis has more twists and turns than a romp along the Skyline Drive. And, the American people are justifiably angry at Wall Street for their excess and cavalier attitude. But that anger is not an excuse for allowing the government of the United States to become a thief, to imitate the worst actions of a Hugo Chavez and other Third World dictators. Unfortunately, that seems to be the course Obama has set out upon.

So, to that small band of bondholders who refused to buckle under the pressure of Obama’s threats, good for you. Stay strong and resist the demands to be patsies for a government regime that is moving ever closer to the corrupt, thuggish Third World model it seems to admire so much. Whether Americans know it or not, we all win if you win.




Rasmussen poll: Republicans Top Democrats on Generic Congressional Ballot: "For just the second time in more than five years of daily or weekly tracking, Republicans now lead Democrats in the latest edition of the Generic Congressional Ballot. A new Rasmussen Reports national telephone survey found that 41% would vote for their district’s Republican candidate while 38% would choose the Democrat. Thirty-one percent (31%) of conservative Democrats said they would vote for their district’s Republican candidate. Overall, the GOP gained two points this week, while the Democrats lost a point in support. Still, it’s important to note that the GOP’s improved position comes primarily from falling Democratic support. Democrats are currently at their lowest level of support in the past year while Republicans are at the high water mark".

Reign of Paranoia: "In case you missed the headline, we are all going to die. Swine Flu has engulfed Mexico and is spreading to ever corner of the globe. Egypt is slaughtering its entire pig population, the UK is dispensing information leaflets to every single home, and Barack Obama has recommended that some schools be shut down. And yet, only one victim has been claimed in the United States by the strain of influenza. Likewise, the World Health Organization says that seven—not the reported 152—is the total worldwide death toll thus far. What is replicating rapidly and claiming the psyches of millions, however, is paranoia. Simply put, the Swine Flu is the latest in a long line of over-hyped illnesses and so-called pandemics that have done little more than send the world into a paranoid frenzy."

Pact for children’s rights opposed: “A global children’s-rights treaty, ratified by every U.N. member except the United States and Somalia, has so alarmed its American critics that some are now pushing to add a parental-rights amendment to the Constitution as a buffer against it. The result is a feisty new twist to a long-running saga over the U.N. Convention on the Rights of the Child. The nearly 20-year-old treaty has ardent supporters and opponents in the United States, and both sides agree that its chances of ratification, while still uncertain, are better under the Obama administration than at any point in the past.”

Canada: Average family spends nearly half its income on taxes: “The average Canadian family spends nearly half its total income on taxes, more than it spends on food, clothing, and shelter, according to a new study from independent research organization the Fraser Institute. The Canadian Consumer Tax Index 2009 shows that even though the income of the average Canadian family has increased significantly since 1961, their total tax bill has increased at a much higher rate.”


List of backup or "mirror" sites here or here -- for readers in China or for everyone when blogspot is "down" or failing to update. Email me here (Hotmail address). My Home Pages are here or here or here


The Big Lie of the late 20th century was that Nazism was Rightist. It was in fact typical of the Leftism of its day. It was only to the Right of Stalin's Communism. The very word "Nazi" is a German abbreviation for "National Socialist" (Nationalsozialist) and the full name of Hitler's political party (translated) was "The National Socialist German Workers' Party" (In German: Nationalsozialistische Deutsche Arbeiterpartei)


1 comment:

Peggy Snow Cahill said...

Dr. Ray,
I have always loved your blog; you have taught me so much! The new look of the site is great, and it is wonderful that we can leave you comments now! Thank you so much for your amazing and abundant contributions to the world!