Intelligence and Income

Nurfatima Jandarova

Aldo Rustichini

Center of Excellence in Tax Systems Research, Tampere University

Department of Economics, University of Minnesota

March 22, 2024

Introduction

Contributions

  • Focus on all three characteristics

  • Robustness to functional specification

  • Polygenic score

Data

UKHLS

+ metadac

Data

Model

\(\Pi\) is the set of functions \(\pi: \mathbb{R}_+ \rightarrow [0, 1]\) that are strictly increasing, concave, continuous at 0, \(\pi(0) = 0\), \(\lim_{x \rightarrow \infty} \pi(x) = 1\).

For a given discounted college premium \(\Delta \left(W, \delta\right)\) and cost adjustment \(\Gamma(z)\)

\[ x^\star = \text{arg}\max_x \left\{\pi(x) \Delta\left(W, \delta\right) - \frac{c(x)}{\Gamma(z)}\right\} \]

Hence, \(x^\star = f^{-1}(\Delta(W, \delta)\Gamma(z))\) where \(f(x) = \frac{\pi^\prime(x)}{c^\prime(x)}\).

Model

Characterize \(P: \mathbb{R}_+ \rightarrow [0, 1]\) such that for some \(\pi: \mathbb{R}_+ \rightarrow [0, 1]\)

\[ P(A) = \pi\left(H\left(A; \pi\right)\right) \]

Estimation

Results

Results

Summary