Working Harder Or Working Smarter?

Is workplace compensation associated with intelligence? Tangentially, yes. But it’s by no means a clear link. Compensation is based on one critical factor which Ezra Klein leaves out of the below analysis (and for which intelligence plays an important, but not necessary, role):

And that, I’d submit, is the real reason that people assume the physical trades stupid. We associate compensation with intelligence. Indeed, I’d go a step further: It’s important to us to associate compensation with intelligence. Our society wants to believe the economy relatively just. People can accept that the hand is invisible, but they don’t want to believe it capricious. There should be a “reason” that bankers make more money than construction workers. Something more virtuous than the economy happens to prefer people who move money to people who move plywood. And there are generally two acceptable candidates: They work harder or they’re smarter. Hanging drywall isn’t an air conditioned endeavor, so relative toil doesn’t obviously favor the finance people. That leaves intelligence.

The economy is relatively just. Compensation is based on a pretty simple metric: supply and demand.

I’ll repeat that, because it’s important. Compensation is based on a pretty simple metric: supply and demand.

Intelligence has something to do with it, but not everything. Some skills, whether brainpower-based or not, are in more demand than others. Think, for example, of a garbage collector. Garbage collectors can earn a pretty decent living, but I don’t think many would suggest that their earnings are based on their intelligence. Then think, for example, of the guy with the BA in English Literature — sorry, the technical term is barista — who served you your coffee at Starbucks this morning. To get a university degree in literature takes at least a respectable amount of brainpower, but English Lit majors are roughly unemployable in their degree area.

My own career, engineering, is a happy mix between the two. The math and science curricula that must be completed tends to self-select people who are inclined to such pursuits*. But the relative high pay of an engineering grad coming out of school isn’t based necessarily on their brainpower, but on the relative scarcity of people entering the profession. I went to a university campus similar to education city and got good grades which were achieved by hard work. I majored in Electrical Engineering and minored in Philosophy. The employability of each degree was a critical factor in choosing AGAINST philosophy as a major, even though I did (and do) enjoy it.

Why do NBA players get paid so much money, while elementary school teachers get paid far less — even though it’s pretty clear that the latter are far more “important” to our society? Because the demand for NBA players is very high but the supply is very small. The demand for elementary school teachers is high, but the supply is also very high.

Perhaps this is one of Ezra Klein’s biases, but I personally don’t “assume the physical trades stupid”. I’ve worked on construction sites during summers back in college, and there was a pretty wide variance of intelligence between the group of people I worked with. It’s not as if their jobs were devoid of brainpower, though. If you can’t read a plan and you build it wrong, you need to build it again (and account for the materials and time you wasted in the process). While I’m sure many of those folks might have hit an IQ wall when it came to multivariate calculus, we could discuss politics, the economy, world events, and most of them were as clear or cogent as Ezra Klein or I on the subject — or had the aptitude to be so. And you know what? They were no-bullshit people and a hell of a lot more pleasurable to be around than many of the self-absorbed materialistic douchebags I knew making big bucks in the mortgage industry here in SoCal during the boom.

I’d suppose that this is a long post devoted to the idea that if Americans understood basic economics, we could dispense with the idea that making a lot of money proves that you’re smarter than people who make less. There are cases where that’s true, but it really comes down to a question of marketable skills, the demand for those skills, and the number of people willing and able to supply them. Intelligence is an enabler of certain marketable skills, but it is not the skill itself.

* I’d point out that design engineering is a very brainpower-dependent field — but that it also self-selects people who can solve differential equations but can’t hold a productive conversation that doesn’t involve World of Warcraft. Many engineers I know would fail miserably if you tried to shoehorn them into a different intelligence-based field — like a professorship of History. It is for that reason that I suggest more that it is supply-and-demand rather than brainpower, because brainpower is not necessarily fungible across all disciplines.