Vol. 38, No. 1 (Spring 2013)
Cognitive Human Capital and Economic Growth: Defining the Causal Paths
Ross University School of Medicine, Dominica
University of Ulster, Coleraine, United Kingdom
This study examines two key issues about the role of cognitive human capital (also known as intelligence) for economic growth between 1975 and 2009: (1) the measures of cognitive human capital that are most relevant to the prediction of economic growth; and (2) the proximate mechanisms through which this form of human capital promotes economic growth. We find that cognitive ability, measured as IQ or school achievement, robustly predicts economic growth on a worldwide scale. These two measures can be averaged into a single measure of “intelligence.” In multivariate analyses that include a measure of cognitive ability, length of schooling is a poor predictor of economic growth. The growth-promoting effect of cognitive ability is mediated by multiple mechanisms, including lower fertility and greater technological competitiveness in developing countries, and increased domestic saving rate and reduced burden of infectious diseases in all countries. The main conclusion is that rising intelligence has been a major determinant of economic growth in the recent past.