What Determines Our Wealth?

If we want to establish a model that what determine people's wealth, we would put many variables for this regression model, such as, job, age, gross family wealth...as many explanatory variables as you can image.

• Wealth vs. IQ

In the model of wealth, I bet the one you won't miss is IQ. Specifically, it is reasonable to expect that positive relation between people's wealth and their IQ. It seems always true that the smarter you are, the more you tend to earn.

However, surprisingly, it is not the case! In the article "You Don't Have to Be Einstein to Get Rich", Ohio State economics Professor, Jay Zagorsky even concludes that, "Intelligence is not a factor for explaining wealth. "

(above: the normal distribution of human being's IQ)

Profssor Zagorsky's findings in his research show that, "in fact, people at the middle of the smarts spectrum have the fewest money problems."

The reason why smarter people is not richer is that, their anticipation on future high income encourages them to spend more and save less today. However, Professor Zagorsky suggests, it is not a good lifetime investment strategy.

If you don't believe the result as I did, take a look at the article.

• Wealth vs. Weight

It seems Professor Zagorsky has lots of unusual thoughts on people's wealth. In his another research, he adds another interesting and weird variable to our model, weight. In the article, "Dieting Linked to Increased Wealth, Study Finds", he concludes that the lighter your body is, the heavier your wealth will become, generally.

For example, white women who dropped their body mass index score (BMI) – a standard measure of obesity – by 10 points saw a wealth increase of $11,880. White men saw an increase of $12,720 for a similar drop, while black women increased wealth by $4,480.

A more general study shows that, a one unit increase in a young person's BMI was associated with a $1,300 or 8 percent reduction in wealth. But the changes varied dramatically by ethnicity and gender. Interestingly, your wealth won't get a dramatic change until you lose lots of weight.


(above: a golden wealth pig money pot. In Chinese culture, fat pig figure symbolizes wealthy, upper-class, which sort of contradicts with Professor Zagorsky research results.)

Disappointingly, the study does not show how weight affects wealth or vice versa. One possible explanation on the relation between wealth and weight is associated with people's aesthetic judgment: overweighted people is discriminated, and beauty is admired in employment.

Now, do you have any new idea on wealth? Let me know.