Oct

21

 A recent study shows that Asians need about 50 points higher on the SAT to get into college than White students and 100 more than Black students. It is well known that Asians have a higher IQ by 5 points than Westerners. This is tested in numerous academic papers. Also, well known is that the more intelligent the CEO, the better the performance of his company or hedge fund. One hypothesizes therefore that the companies whose CEO's are Asian will show superior performance to those headed by your average non-Asian Harvard Business School Graduate, (although if they haven't taken the mandatory ethics course there, they are more likely to be caught in flexionic pursuits that the elite schools are so good at whitewashing). What is the support for all these statements? and: How could they be tested?

One knows that this is the most rancorous subject under the sun, and I have lost many friends when I was foolish enough to discuss this in the past, and point them to the incontrovertible evidence about individual differences from a Galtonesque perspective, but let us please try to keep it civil, and stick to the scientific literature (none of this armchair stuff about this or that study being culturally biased as the more culture free the tests, the greater the differences) and no anecdotes, but predictions and tests and references.

Alex Castaldo adds:

Since the Chair does not give footnotes, it is not easy to find the sources for his information.

I believe the "50 point study" may be the one mentioned by Steve Sailer's blog.

An IQ figure of "6 points higher" is given in the Rushton Jensen review paper.

Russ Sears comments:

I have doubts to the usefulness of CEO's IQ test as over-performance of a companies stock. It is not that CEO's do not need to be smart, it is simply that there are enough smart people around and business is tough enough that those that made it have been culled out and vetted pretty completely. Show me the numbers, I am a skeptic.

Further, while creativity to overcoming obstacles in ones life may suggest carry-over into a CEO's performance. I doubt that overcoming one political rigid standard of race by offsetting another no doubt equally rigid political standard for entry into elite colleges would translate into the creativity needed for a successful business. Rather it signals the willingness to conform for acceptance. You mention Asian, but how many of the Asian's admitted for instance are women, versus men? Any stock study of CEO IQ education and minority must consider that education by minority race in the USA is widely distorted by the politically preferred sex of a student. May I suggest that one takes the list of Jewish Noble winners find how many come from the ivy league schools and compare this percentage to the non-Jews. Yes, the ivy league alumnus have a smaller world than most. But may I suggest those with the creativity to overcome this lack of sheepskin, are those that would out perform.

Here are some reasons why I believe IQ can be a handicap to a CEO…

1. Those great at answering questions that others already have the answers, a test situation, often find it uncomfortable and difficult to switch to asking questions that the answers are not known. The ability to ask questions that others did not is a key to make a difference.
2. Necessity is the mother of invention and desperation is the mother of risks taking. A well paying job, is often the road-block to starting a business. Probable failure is hard to choose when you have almost certain path to mild success. Yet it is the probable failures that succeed that skyrockets company. And vise-a-visa its the probable successful businesses that are blind-sided by innovation.
3. Like Reagan, often the most brilliant performers as a team are those that want to work with the smartest minds, they do not have to be the smartest guy in the room. The successful CEO does not have to ask the right question, he simply has to ask the right person to ask the right question.
4. High IQ people perform best with less stress, they can choke more in stress, does the Peter Principle apply to them under stress?

There are a couple thoughts that come to mind that could be tested.

1. New Research has shown that the brain does develop new cells, These baby brain cells are produced by cardiovascular exercise. Further, test after test suggest that cardio improves your creativity. Do CEO's that exercises out perform? There was a study of CEO gulf handicaps, is there a similar study of say 5k times? Are there other test of creativity, say CEO's that are talented pianist, CEO's that are writers do they out perform? Do CEO rising from the operational side ( engineers, IT etc) outperform those that come from the marketing side?

2. A few years ago it was suggested that many CEO's are dyslexic, Could a twice exceptional CEO (high IQ but learning disability) out or under perform?

There are a couple thoughts that come to mind that could be tested.

Victor Niederhoffer adds:

For those interested in a factual, scientific discussion of environment versus innate influences, rather than armchair speculations so grievously present in our environment, and so dysfunctional to proper thinking about markets if similarly believed or proposed, I would recommend this article and the references cited thereto.

Also note the same kind of commentary there relating to making all individual differences consistent with the idea that has the world in its grip, and the purpose of life being self sacrifice.


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