Samstag, 25. Oktober 2014

Cognitive Human Capital and Economic Growth in the 21st Century

Cognitive Human Capital and  Economic Growth in the 21st Century
Gerhard Meisenberg (2014)


This chapter explores the interdependency between economic growth and cognitive human capital, which is also described as cognitive skills or intelligence and is measured either as performance in scholastic achievement tests or IQ. It shows that unlike the mere amount of schooling, intelligence has been a robust predictor of economic growth in the recent past. Plausible mediators of the intelligence effect include greater labor productivity, better institutions, more competent management, lower fertility, and wider time horizons. 
Based on the observation of secular gains in intelligence that have become known as Flynn effects, a theory of economic growth is developed that is based on the trans-generational reinforcement between rising intelligence and economic, technological and institutional advances. It provides a parsimonious explanation for the sustained nature of economic growth since the Industrial Revolution, and a conceptual framework for more specific theories and hypotheses.
The chapter arrives at projections of economic growth for the first half of the 21st century that are based on the empiric relationship between current prosperity, human capital, and economic growth. Longer-term predictions are based on our knowledge of the conditions that are required for continued Flynn effects, and of genetic limits to human cognitive development. The conclusion is that in most countries of Europe and North America, the limits of cognitive growth are being approached or have been reached already by the younger generation. There are ongoing Flynn effects in developing countries today. These countries are now reducing the cognitive gaps separating them from the developed countries, but most of them are expected to reach their cognitive limits before the end of the 21st century. Long-term developments after the end of the Flynn effect will be driven primarily by demographic trends. Without major changes in demographic behavior, intelligence is predicted to eventually decline slowly, ending economic growth in most parts of the world within the next 3 to 4 generations.

[via E. Kirkegaard]

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