Tuesday, April 12, 2016

Fred Thompson: Hive Mind

Hive Mind: How Your Nation’s IQ Matters So Much More than Your Own
By Garett Jones (Stanford University Press, 2016)

Individual cognitive ability scores aren’t good predictors of lifetime earnings. On average individuals with high IQ scores earn about 60 percent more than the national average. That premium is more or less constant over time and distance. But nations with the highest scores are on average “about eight times more prosperous than nations with the lowest scores” (p. 5, evidence in Chapter 2).

In Hive Mind, Garett Jones sets out to explain why higher cognitive ability scores (which he argues in Chapter 1 reflects real underlying differences in skills) are so much more important for collectivities than for individuals.

Human society is a form of collective intelligence, in which the accumulated knowledge of the past makes its members richer today, and in which the many small, daily cognitive contributions of millions of their neighbors  – in offices, in factories, in the halls of government, and elsewhere – help to make their lives better.... . Members of society all draw on that collective intelligence, they all get benefits from the hive mind they never pay for... (p. 12)
Jones doesn’t really tell where differences in cognitive abilities come from. His story is mostly about why they matter. They matter because higher because (p. 13):

1)   High scoring groups cooperate more effectively, which is the key to making collective action more productive in all kinds of enterprises, both by increasing throughput and by building capacity. (Chapter 5)
2)   High scoring groups work together better in teams, which is critical to the performance of weakest-link, precision activities – the kinds of activities that are characteristic of complex value chains. (Chapter 7)
3)   High scoring groups are more patient and forward looking. They save more and they invest more, not just in plant and equipment, but also in organizational learning and technology. (Chapter 4)
4)   High scoring groups make better citizens and sustain more effective polities. (Chapter 6)
5)   Cooperative, patient, well-informed groups encourage their members to engage in cooperative, patient, information seeking behavior. (Chapter 8)
At the same time, he insists that average cognitive ability scores are increasing and that they can be improved (Chapter 3). The reason he cannot tell us how best to do so is that there are far more plausible explanations for increases in cognitive ability than there are observations with which to test them. Consequently, his strongest conclusions have to do with the provision of basic public health and nutrition. He’s moderately hopeful for education as well, but only where students are physically present, have access to books, and teachers teach. As he notes, years of formal schooling is only weakly associated with cognitive abilities, whereas the association between measured learning and cognitive ability is quite strong. Of course, the causal arrow could go either way, but Jones plausibly suggests that, over the long term and on average, educational effort drives cognitive development.

On balance this is a notable text – perhaps, 2016’s most important economics book, both for the development specialist and the general reader.

Garett Jones is Associate Professor of Economics at the Center for Study of Public Choice, George Mason University   
 As for its weaknesses, there are arguably three, none particularly damning.

Chapter 8 emphasizes monkey see monkey do, reminding us that we humans are eager and able to copy the practices of prestigious others, to the benefit of all. However, if Jones appreciates the degree to which social segregation can short-circuit this mechanism, I missed it. This is a potentially serious omission, since it suggests a important pathway to enhancing the mechanism’s efficacy.

Second, Jones writes beautifully. For the most part this book is a model of clarity and accessibility. Regrettably his explanation of why both low skilled and high skilled workers are paid better and are also more productive in rich nations than in poor ones is especially murky (Chapter 9). As an economist, even if not a very good one, I think I understand what Jones is saying, others might not.

Third, Chapter 9, on the benefits international migration, seems tangential to the main argument of the book, not, I think, because it is, but because the transition to this topic and its development are excessively truncated. Indeed, so far as the last third of the book is concerned, this reader found himself consistently wanting more.

For example, in Chapter 7, Jones talks briefly about collective intelligence within enterprises. This is hugely important. A nation’s productivity is merely the sum of the output of its enterprises. How much does enterprise performance depend on the cooperative, patient, information-seeking behavior of its members? Jones suggests that the answer may be quite a bit. But he leaves the how sketchy. This is a pity for several reasons, not the least of which is that it may be relevant to an understanding of increased income inequality. We know that inequality has increased rapidly in recent decades, nowhere more so than in the United States.  According to Song, et al. (2015), most of this increase is due to increased differences between businesses, not to increased inequality within businesses. They claim, that over the past 30 years, wage distributions within businesses have remained virtually constant, as has the wage gap between the highest paid employees within enterprises and their average employees. It seems likely (see Bender, et al., 2016) that some enterprises systematically recruit and retain workers with higher average cognitive abilities and that workforce selection and positive pay premiums explain much of the observed differences in productivity and earnings at the enterprise level. I’d really like to see a more developed discussion of this topic.

Finally, Jones is primarily concerned about improving outcomes in less-developed nations, he has little to say about boosting cognitive abilities in developed countries, although in the special case of the US, which is rather like a mosaic comprised of myriad middle–income communities and very rich ones, his strictures regarding nutrition and public health retain considerable relevance. Nevertheless, I wish that he had paid some attention to the potential payoffs to expanding pre-kindergarten, especially for disadvantaged children, and of the relationship between quality of childcare and the development of cognitive abilities.

Overall, this is a very good book, it would be better if it were about 100 pages longer.

Song, J., Price, D.J., Guvenen, F., Bloom, N. and von Wachter, T., 2015. Firming up inequality (No. w21199). National Bureau of Economic Research.

Bender, S., Bloom, N., Card, D., Van Reenen, J. and Wolter, S., 2016. Management Practices, Workforce Selection and Productivity (No. w22101). National Bureau of Economic Research.

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