Why Rich Parents Raise Smarter Children

Over at the Economix blog, Catherine Rampell produces the following graph, which shows the relationship between SAT test score and family income:

Greg Mankiw calls this the "Least Surprising Correlation of All Time" and writes:

Of course! But so what? This fact tells us nothing about the causal impact of income on test scores. [...] This graph is a good example of omitted variable bias, a statistical issue discussed in Chapter 2 of my favorite textbook. The key omitted variable here is parents' IQ. Smart parents make more money and pass those good genes on to their offspring. [...] It would be interesting to see the above graph reproduced for adopted children only. I bet that the curve would be a lot flatter.

And sure, it wouldn't be surprising to find a correlation between high IQ and high income. And it wouldn't be surprising to learn that "intelligence" is partially inheritable. But the vaguely deterministic suggestion that smart parents "make more money and pass those good genes on to their offspring" is a laughably crude description of how real life works.

I don't know of any large studies that test the relationship between test scores and socioeconomic status in adopted children. But the closest adoption study described in Richard Nisbett's Intelligence and How to Get It: Why Schools and Cultures Count (I'll put the full citation at the bottom) has this to say about IQ and socioeconomic status (SES):

The obvious point to make here is that children born to wealthy parents and raised by downscale families have almost exactly the same IQ range as children born to downscale parents and raised by wealthy families. Nisbett uses this to make what I thought would have been an entirely uncontroversial point -- namely, that "both genes and class-related environmental effects are powerful contributors to intelligence"

And is it really hard to figure out why those "class-related environmental effects" should make a difference? Better schools, better nutrition, better health care, better test preparation and better neighborhoods all come to mind. I'm sure an intelligent guy like Greg Mankiw can figure that out.

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(John Sides reports on some other studies and makes some good points here. The chart above is drawn from Capron & Duyme, "Assessment of Effects of Socioeconomic Status on IQ in a Full Cross-Fostering Study" (1989).)