IQ and Hiring: Does the Law Matter?
6th April 2013
Bryan Caplan lays out some inconvenient truth.
The key problem, though, is that on the market, unpopular true views naturally spread via selection and imitation. If IQ tests are really better employment screens than education, then the few employers who hire based on IQ gain a big competitive advantage. They survive and grow, their flexible competitors copy them, and their rigid competitors shrink and die. That’s one of the reasons why markets are better than democracy.
If this sounds like mere econo-dogma, consider the rise of index funds. In the 60s, a few academics noticed that dart-throwing chimps could match the performance of fancy investment managers. Most people thought these academics were crazy. Since the academics were largely correct, however, the few people who listened to them got rich and revolutionized their industry. If index funds were illegal, the majority would never have gotten its richly deserved comeuppance.