Personality counts in financial success | Local Business

“The higher your IQ, the greater the probability you will earn more than average.”

Like many people, I have believed this common money script to be true. It seems to make sense that the smarter you are, the more likely you are to succeed financially. Many of us assume there must be a correlation between higher incomes and high cognitive abilities as measured by IQ tests.

I was surprised, however, to learn that this is not the case. A study published in November 2016 in the Proceedings of the National Academy of Sciences showed that a high level of innate intelligence is no indicator of financial success.

A December 2016 article in Bloomberg cited one of the co-authors of the study, economist James Heckman. When he asks how much of the difference between people’s incomes can be tied to their IQ’s, most people guess between 25 percent and 50 percent. The actual number is about one or two percent.

The study found that personality plays a much bigger part than IQ in financial success. The personality trait that was most strongly associated with earning a high income was conscientiousness.

What, then is conscientiousness? One definition from the English Oxford Dictionary is “wishing to do one’s work or duty well and thoroughly.” A conscientious person is described as diligent, dedicated, perseverant, self-disciplined, meticulous, attentive, careful, studious, rigorous, and hard-working.

The article also warned to be careful not to confuse a high IQ with good grades. They are two very different things. It found that grades and the results of achievement tests were better than raw IQ scores at predicting success. Cognitive ability is only one factor in getting good grades. There are several non-cognitive factors that heavily influence grades, such as perseverance, good study habits, and the ability to…

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