College Majors, IQ, and Income

New post by Randy Olson on college majors, IQ, and gender. I encourage all readers to read the whole post, which is quite informative. I did leave a comment on his post to note what seems to be a mistake in the SAT to IQ conversions on the part of one of his sources. This mistake led to a systematic overestimation of average IQs in the various majors. Here is my comment:


"SAT to IQ conversion seems to be off. Here is a good site for SAT to IQ conversions:

http://www.iqcomparisonsite.com/SATIQ.aspx

The smartest major, physics and astronomy, have an average SAT score of 1270. This seems plausible. However, your source converts that 1270 to an IQ of 133.

As the source I provided above shows, the actual conversion of a 1270 SAT score to IQ should be 128-130 depending on the IQ test you use.

Because this post is about the relative IQs of majors, this doesn’t actually have any impact on your argument. But, it is important to note that it seems there was an error on the part of the source when converting SAT to IQ.

My suspicion is that it has something to do with how they handled selection bias. Of course, I could be wrong.

Overall, though, good post."

I'm interested in how this all relates to the expected income of the various majors. Luckily, Bryan Caplan has already provided some numbers on the wage premium of the various majors. I like Caplan's data because it controls for an important factor: pre existing ability bias. After this control, Caplan finds the wage premium by major to be:

Earnings Compared to H.S. Grads

Major	Males	Females
Electrical engineering	+63%	+72%
Computer Science	+61%	+63%
Mechanical engineering	+61%	+72%
Finance	+61%	+55%
Economics	+60%	+59%
Accounting	+53%	+53%
Mathematics	+53%	+50%
Nursing	+52%	+59%
Chemistry	+48%	+47%
General business	+46%	+46%
Political science/gov't	+46%	+47%
Biology	+44%	+43%
Communications	+37%	+45%
History	+35%	+37%
Sociology	+35%	+36%
Liberal arts	+34%	+36%
English language/lit.	+34%	+37%
Anthro./archaeology	+32%	+36%
Fine Arts	+25%	+29%
General Education	+24%	+30%

Note that this is not a comparison of the average expected income by major. Instead, this is a comparison of how much benefit (in terms of income) is derived from a given major.

Not surprisingly, engineering and computer science have the largest wage premiums. This is followed by economics, finance, and accounting. At the bottom of the list, we see english, fine arts, and general education. 

For once, the data seems to confirm conventional wisdom. STEM and business type degrees really do payoff a lot more than traditional liberal arts degrees.

Another piece of conventional wisdom is that the traditional liberals arts majors are just as smart or smarter than the STEM and business type majors despite the income differences. Here is the link to the SAT scores by major data. As noted above, the SAT to IQ conversion seems to be off, but that applies for all majors, so the relative order and differences between majors in terms of IQ should be correct. Of course, the SAT data should be correct too.

My reading of the chart is that, once again, conventional wisdom is confirmed. Liberal arts students are just as smart as STEM and business type majors. They just would rather study philosophy or english in college and make less money later on in life. At least, that is my theory.

This post was pretty off the cuff and written at 5 AM, so it is by no means organized or well written. But, if anything, I hope I at least exposed some readers to good data on majors, income, and IQ.

On the New Commonwealth Fund Report

The new Commonwealth Fund analysis of international health care systems is out and, not surprisingly, the USA ranks dead last out of 11 nations. Despite my contrarian nature, I'm not a defender of the USA health care system, but I do think that, relatively speaking, the USA gets a worse rap than it deserves. "Relatively speaking" is an important word. In an absolute sense, the system really is as bad as commonly believed. But, in a relative sense, other systems are vastly overestimated due to bad reasoning and, yes, zombies. It is also true that, as bad as the USA system is, even our system deserves a bit more credit than it gets at times. A few thoughts on the actual report:

1.) The study ranks the UK as being the best health care system of the 11 countries. This should be an immediate red flag that this analysis is more driven by an ideological preconceptions than a quest for an objective comparison. I could be wrong. But, the emphasis on "health care equity" certainly isn't helping their case. Neither is the fact that data on how long people in the UK have to wait for elective surgery (a measure that they probably wouldn't do all that well on) is missing from the study.

2.) Progressives are claiming this study as a slam dunk for their health care policy views. After all, the socialized UK system is on top and the USA system is at the bottom. But, a look at the in between rankings muddies up the picture. Switzerland, with a heavy reliance on private medicine and cost sharing (neither of which progressives are very big on), comes in at second place. Canada, with a single payer system, comes in at second to last, right above the USA.

3.) One of the biggest problems with these international health care system comparisons that supposedly "show" how bad the USA system is that they don't measure the best thing about the USA system: innovation. Yes, we spend a lot more money (more than we need to), and we don't get a ton of value. But, our decentralized system also offers more room for experimentation than the tighter models of Europe. The problem here is that the benefits from this innovation benefit the whole globe, so it doesn't show up in international comparisons of health care systems. Indeed, in some ways, these other health care systems that are supposedly so much better than ours "free ride" off of our innovation, and then brag about how they do so well with less money. Excellent (old) article on this by Tyler Cowen here.



I also plan on responding to TIE and Krugman about the idea of zombie arguments in the very near future. Stay tuned.