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The Financial Test Of High Intelligence

The Financial Test Of High Intelligence post image

Do you pass the financial test of intelligence?

People with high IQs are more patient in financial matters, research finds.

They are willing to wait longer to increase their money and to endure the risks involved.

The survey of 1,000 people in Germany tested how long people would wait for a series of rewards, analogous to putting it into a savings account.

For example, people were given $100 to have now, or they could choose to wait one year to get more.

Would you wait one year to get $110, $120 or $150?

Or would you rather just have the $100 right now?

Professor Armin Falk, study co-author, summarised the results:

“The more intelligent the test subjects were, the more patient and tolerant of risk they were.”

Impatient people generally wanted a higher reward for waiting one year to get their money.

Intelligent people did not demand so much reward for taking the risk.

It seems that intelligence, risk tolerance and patience are closely related.

It is important to see the connections between risk and reward.

Professor Falk said:

 “Anyone who does not have this ability may be better advised to follow the principle of ‘A bird in the hand is worth two in the bush.'”

The study was published in the American Economic Review (Dohmen et al., 2010).