Of Brainiacs and Billionaires
We're obsessed with America's high earners. But in the age of big data, the biggest brains will increasingly set the country's course and become top earners in the process. Meet the other 1 Percent.
By July 3, 2012 - last reviewed on June 9, 2016published
"I wanna be a billionaire so [freakin'] bad," sing Bruno Mars and Travie McCoy in their eponymous hit single. They're hardly the only ones. Americans are as enamored of extreme wealth as they are infuriated by it. Post-Occupy Wall Street, the spotlight shines more starkly than ever on the top 1 percent of earners, a fact not lost on Mars and McCoy, who rap, "And yeah, I'll be in a whole new tax bracket/ We in recession, but let me take a crack at it." Whatever one's political and ideological stance, there is no dispute over the power wielded by the nation's highest earners.
Yet the national obsession with wealth bypasses another group of elites, who overlap in a critical way with the top 1 percent in income, and who, in the age of big data and relentless globalization are arguably as important in determining the nation's economic course. This group is the top 1 percent in brains. The world is drowning in data, rendering stellar quantitative skills more critical than ever. The majority of the smartest are those with a demonstrated aptitude for math and spatial reasoning, the cognitive toolkit increasingly in demand in the age of information.
Yet ironically, America undervalues math and spatial skills—it is socially acceptable to be bad at math. (Not exactly the case when it comes to reading.) Overlooking the need for basic proficiency in STEM (science, technology, engineering, and mathematics) fields and the pedagogical needs of the most gifted students may have dire creative and economic repercussions.
First, let's consider how psychometricians and psychologists categorize the cognitive elite. IQ tests are the subject of much mainstream confusion but experts concur that such tests do measure the construct of general intelligence, or "g." Tests are normed so that a score of 100 represents the average IQ; anyone with a score above 100 is therefore brighter than average. Using the Stanford-Binet IQ scale, people who score 1.5 to just over 2 standard deviations above average (125 to 137 range) are in the top 5 percent to 1 percent of all scorers. (One in 33 people obtains an IQ score of 130, by this scale.) If the top 5 percent are the normal smart, then the top 1 percent are the super smart and the top .01 percent are the scary smart, to borrow the last term from Richard Karlgaard, the publisher of Forbes magazine, who has written about the top percentile in both income and brains. This top 1 percent includes large numbers of successful professionals such as doctors, lawyers, and business executives. These outliers reside on the right tail of the distribution curve, and just like the top 1 percent in wealth, the far right tail of ability encompasses a very wide range. The top 1 percent to .01 percent includes people with IQs that range from 137 to 160. Those in this range are in the upper echelons of the STEM professions, such as elite engineers, programmers, or computer science professors, and top lawyers, politicians, journalists and academics who have a more verbal bent. Those who score above 160 are primarily the very smartest mathematicians and physicists, whose success depends to a great deal on their raw mental processing power.
There are actually some people with IQs over 200. One such individual is Terence Tao, a mathematics professor at UCLA who won the Fields Medal, the Nobel Prize of math. At the age of 8, he scored 760 on the SAT-Math subtest. Most people don't score that high even at age 17.
Many of the people who are transforming society, advancing knowledge, and inventing modern culture are in the top 1 percent in intellectual ability. A longitudinal study that I worked on as a graduate student has demonstrated that intellectually talented students in the top 1 percent of ability (the super smart) earn doctorate-level degrees (for example, an M.D., J.D., or Ph.D.) at about 25 times the rate of the general population, and that students in the top .01 percent (the scary smart) earn doctorates at about 50 times the base rate. This Study of Mathematically Precocious Youth (SMPY), led by David Lubinski and Camilla Benbow of Vanderbilt University, found that not only is the number of doctorates earned a function of ability but also that income, number of publications, patents, and even likelihood of tenure at a top university significantly increase as IQ increases.
To be sure, many billionaires are in the top 1 percent of brains. Mark Zuckerberg and Sergey Brin were each identified during adolescence by the Center for Talented Youth at Johns Hopkins University, and they attended a summer program there, which means they are in the top percentile of intellectual ability. Bill Gates is in the top 1 percent, as was Steve Jobs. Many high-profile nontechies are as well: Stefani Germanotta, a.k.a. Lady Gaga, was enrolled in the same program as Zuckerberg and Brin. Such data exist because every year over 200,000 students participate in talent searches across the country, taking the SAT in the 7th grade instead of the 11th grade. I am a research scientist at the Duke University Talent Identification Program, one of four major centers that perform such outreach.
When it comes to elite performance, there is much evidence that across domains, the most talented outliers, i.e., the 1 percent, contribute disproportionately to the overall field. "Superstars make or break an organization," states Herman Aguinis of Indiana University at Bloomington. "The ability to identify these elite performers will become even more of a necessity as the nature of work changes in the 21st century." A recent study coauthored by Aguinis found that among more than 633,000 subjects in four domains, elite performance followed a power-law (or 80/20) distribution, with the performers on the tail dominating in terms of output. By contrast, in a normal "bell-curve," distribution would describe a "majority rule" in which those of average ability are the most generative in aggregate, as they are the vast majority of the population.
Norman Augustine, former chairman and CEO of Lockheed Martin, underscores the power-law distribution in stating that the top 1 percent produce nearly 20 times the per capita output of the bottom half in many measurable undertakings. At the level of nations, Heiner Rindermann and James Thompson examined cognitive ability data sets from over 90 countries to show that average IQ is essentially the decisive factor in human capital and that it is really the top 5 percent—or the normal smart—of a country's population that has the biggest impact on that nation's wealth.
Increasingly, wealth and quantitative abilities correlate. We have now entered the age of big data—where Google places the world's libraries online and people like Factual founder Gilad Elbaz attempt to catalog every known fact.
According to a report by the McKinsey Global Institute, America needs 140,000 to 190,000 more workers with "deep analytical expertise." In other words, the United States needs people who are really good at math—people who can find patterns in the flood of data that is becoming freely available just about everywhere you look.
Do America's Brightest Measure Up?
There's no question that America's top 1 percent in brains drive growth on a global scale—the brands Microsoft, Apple, Google, Facebook, and Gaga are all examples of this—but in the long run, can America compete in an increasingly complex world against countries with much larger populations that are equally, or more, driven to achieve?
Erik Hanushek, Paul Peterson, and Ludger Woessmann examined American students who scored in the top 6 percent on the mathematics section of the Program for International Student Assessment (PISA) and compared the percentages of students from other countries who also scored at this advanced level. Most European countries have two times the percentage at the advanced level; Taiwan's population boasts almost five times the percentage at the advanced level.
But this is the top 6 percent or, roughly, the normal smart. How does our top 1 percent compare to the top 1 percent elsewhere?
We can't know for sure, but the outlook isn't great. Because studies such as the PISA do not have measures with sufficient intellectual headroom for the top percentiles (essentially, the questions are not tough enough to measure the upper echelon), it is very difficult to make fine-tuned comparisons across countries. But it is reasonable to think that the ratios between other countries and America would likely increase if we made comparisons between the super smart and the scary smart, because as you go farther out along the right tail, differences become much larger when one group is compared to another. Small population-level average differences can translate into large tail differences.
An additional factor is the sheer number of people who compose the top 1 percent of other countries. According to recent population estimates, there are about eight Chinese and Indians for every American in the top 1 percent in brains.
This is old news to most people in the software business. Microsoft has a campus in Beijing that recruits software developers by using extensive high-level programming and IQ tests to find the cream of the crop. Gates also initiated the "Code4Bill" talent search for programmers in India. As Gates has noted to Forbes, "Software is an IQ business. Microsoft must win the IQ war, or we won't have a future."
Stateside, we're also up against educational and cultural norms that de-emphasize STEM abilities. The majority of our standardized tests, including the SAT and ACT, do not include a spatial measure. This means we miss identifying and developing the talent of many spatially gifted students at a time when we need mathematical and spatial symbol analysts more than ever. And we hold cultural biases about numeracy that our competitors likely do not share. At a recent National Science Foundation conference highlighting the importance of math and science education for girls, the First Lady herself drew laughter when she stated: "I know for me, I'm a lawyer because I was bad at [science and math]. All lawyers in the room, you know it's true. We can't add and subtract, so we argue."
What If the Top Percentiles Overlap?
"The scary smart have inherited the world," writes Richard Karlgaard. "The surest way to become a billionaire today is to be born with a 150-plus IQ and 800-point math SAT skills. This would describe most of the whizbangs in the Internet, biotechnology, and algorithmic finance." Karlgaard is referring to quants, who use sophisticated mathematical modeling to dramatically increase the wealth of the hedge funds they work for and the scary rich who invest in them. So there is unprecedented overlap among the cognitive and financial elite—earning power is linked to high IQ, as research has documented.
Charles Murray, coauthor of The Bell Curve and author most recently of Coming Apart: The State of White America 1960-2010, agrees that IQ and earning power are more closely coupled today than at any known point in recent history. He attributes this to the fact that cognitive demands have increased across industries, not just among quants. "Lawyers who are able to negotiate an extremely complex merger or a regulatory maze make a difference in a case involving hundreds of millions of dollars, so they can charge four figures per hour. The same is true of managers in corporations, who are making decisions involving huge sums of potential profit or loss. The financial rewards for brains are much higher today in various occupations up and down the ladder than they were in the past."
But don't assume that the top 1 percent in brains is equivalent to the top 1 percent in wealth. According to research from SMPY, university professors and scientists are commonly in the top 1 percent in brains but not in the top percent in wealth.
Murray argues that the convergence between smart and rich populations is accelerating thanks to assortative mating: "Back in the days when Harvard men and Wellesley women were more likely to be rich than especially smart, money was likely to marry money. In an era when these students are almost certainly in the top percentiles of IQ distribution, smart is more likely to marry smart."
What We Do for the Brainiest, We Really Do for All of Us
The study of Mathematically Precocious Youth and other research on the gifted confirm what we intuitively know: The super smart are highly likely to invent something that will change our lives. When a gifted kid grows up to be a successful scientist, engineer, or inventor and develops the cure for a disease, discovers a new energy source, or invents the next life-changing device, he or she will have created something for everyone.
Bill Gates is an intellectual and financial outlier among outliers who qualifies several times over, having segued from Microsoft to the Bill and Melinda Gates Foundation, which invests massive amounts of brainpower and money toward global health care and education, the latter with an eye toward improving STEM abilities. The Gates Foundation funds Khan Academy, which provides free online tutorials, mostly in math and science, making the educational world "flat" by increasing opportunity for everyone. Khan Academy is the brainchild of Salman Khan, himself a likely member of the 1 percent in brains. The 35-year-old's online bio states that "before quitting his job as manager of a hedge fund . . . Sal also found time to get three degrees from MIT and an M.B.A. from Harvard." Then there's Factual's Elbaz, who told The New York Times "his mental and financial assets are like gifts he needs to deploy so the world works better." At age 3, Elbaz displayed a fascination with numbers, read almanacs, and watched stock prices on television, seeking patterns. His father said of him, "He would go to a lot of math competitions, and come out with three or four prizes. In between math contests he'd take tests in physics for fun."
The gifted are not a population that appears, on the face of it, to need assistance. But consider federal funding for gifted students. According to the National Association for Gifted Children website, the federal government spends 2 cents of every $100 of K-12 federal education dollars on them. This is troublesome, particularly for smart kids from financially disadvantaged backgrounds, who often depend on gifted programs offered by the public school system. If funding for such programs is .02 percent of the federal education budget, it should be no surprise if some percentage of the super smart are never identified and fail to reach their potential.
In competitive sports there are bench warmers, average players, and stars. In education there are below average, average, and star students. If a coach decided to focus solely on developing the talent of the bench and average players, it is doubtful that fans would approve—it would reduce the competitiveness of the team. Yet we commit the educational equivalent in America—we focus on educating our below average and average students and tend to ignore our top students. If this doesn't work in the competitive world of sports, why does it make sense in our cutthroat global economy?
This is why nationwide programs such as MATHCOUNTS are important. The program stresses the importance of math to all middle-school students and runs statewide and nationwide competitions for students who are intellectually talented. I recently spoke to students competing at the North Carolina MATHCOUNTS state competition. Within a matter of seconds (and with no pencil and paper), 12-year-olds solved problems such as the following: Eight swimmers, numbered from 1 to 8, stand in ascending order clockwise around the edge of a circular swimming pool. Going around clockwise, every second swimmer still standing will jump into the pool. Swimmer #2 is the first to jump into the pool. What is the number of the swimmer who is the seventh to jump into the pool? (The answer is swimmer #5.)
As I awarded trophies to the top performers in the competition, I couldn't help but wonder: Did I just shake hands with some scary smart kids who are going to create something that will forever alter our world?
I have the feeling that I did. Time will tell.
Read Jonathan Wai's PT blog: Finding the Next Einstein: Why Smart Is Relative
The Top 1 percent is an elite yet diverse club. This is because the far right tail of any distribution is wide. Those who score in the top 1 percent on IQ tests range from people of superior intelligence to indisputable geniuses. The wealthiest 1 percent includes those with handsome six-figure incomes as well as off-the-charts billionaires. Here's a breakdown of the 1 percent in America, as well as the remaining 99 percent.
AVERAGE INCOME: (World Top Incomes Database; Real U.S. 2010 dollars)
IQ: (Stanford-Binet Intelligence Scale)
The 1 Percent
The 99 Percent
- 99 percent of the US population is 308,682,000 out of 311,800,000 total, per 2011 census data.
- Approximately 31,000 Americans (1 in 10,000) would be predicted to obtain an IQ score of 160, placing them in the top .01 percent.