Thursday, November 19, 2009

Intelligence, Education, and Startup Success

From van der Sluis's "Successful entrepreneurship and human capital" (2007):

"We find that an individual's level of general intelligence increases both entrepreneurs' and employees' incomes to the same extent. But entrepreneurs and employees benefit differently from specific areas of intelligence. The earning power of both groups is affected positively by social and technical intelligence. Both types of intelligence render stronger returns for entrepreneurs than for employees. Mathematical intelligence is also beneficial for both groups, though only for the upper end of the mathematical intelligence distribution. Only employees benefit from clerical intelligence. Verbal intelligence does not have a strongly significant effect on earnings for either group."
The biggest surprises for me here are:
  • No statistically significant benefit from verbal intelligence, and
  • No statistically significant benefit to entrepreneurs from clerical intelligence, which includes the ability to accomplish simple tasks quickly.
Formal education seems to aid entrepreneurs even more than employees; in "Why are the returns to education higher for entrepreneurs than for employees?", van der Sluis advances a hypothesis:
"We find (indirect) support for the argument that the higher RTE for entrepreneurs is due to fewer (organizational) constraints faced by entrepreneurs when optimizing the profitable employment of their education."