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Eugen Tarnow

 

    Analytical Thoughts

      Earnings correlate less and less with cognitive ability - at least for Finnish men - or is it just Nokia?

      Eugen G Tarnow  June 25 2017 06:59:47 AM
      By Eugen Tarnow, Ph.D.
      Avalon Business Systems, Inc.
      http://AvalonAnalytics.com

      Evidence just arrived showing that earnings at 30 are correlating less and less with cognitive ability. At least among Finish men since the year 2000.  (See Jokela, M., Pekkarinen, T., Sarvimäki, M., Terviö, M., & Uusitalo, R. (2017). Secular rise in economically valuable personality traits. Proceedings of the National Academy of Sciences, 201609994.)

      Finnish men were tested for their personality traits and their cognitive abilities as they were ready to join the armed forces draft.  Below is displayed the correlations within each cohort of the test results with earnings at 30.  

      Image:Earnings correlate less and less with cognitive ability - at least for Finnish men - or is it just Nokia?

      So right around the tech bubble, the correlation of cognitive ability with pay peaked.

      But wait.  Finland is known to be a one-company country (see http://www.economist.com/node/21560867 ).  This is what happened to Nokia stock around the tech bubble:

      Image:Earnings correlate less and less with cognitive ability - at least for Finnish men - or is it just Nokia?

      Could it be that the earnings findings just pick up what is going on at Nokia?  


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