2 The Foundations of the New Upper Class
At the Bottom of It All: The Increasing Market Value of Brains
Cognitive ability has become increasingly valuable in the job market, significantly shaping professional success over the last century. In the early 1990s, Bill Gates highlighted the importance of intellectual talent in business, particularly how it impacts software and technology. While cognitive ability is just one element among many that contribute to career advancement, such as hard work and social skills, it is often misunderstood as being less significant.
Cognitive ability is particularly crucial in fields that require advanced skills, especially in a technology-driven economy. For example, exceptional mathematical talent now opens up high-paying opportunities in programming and finance, which were scarce a century ago. The legal profession has undergone similar changes; today's corporate lawyers can command high fees for their expertise on complex deals and regulations that significantly impact larger corporations financially.
Moreover, as businesses have grown in size and complexity, the stakes have risen, amplifying the demand for skilled individuals who can navigate intricate decisions. This trend has led to a noticeable increase in compensation for managerial and professional roles since 1960. The wealth accumulation has resulted in a new upper class, with individuals earning significantly higher incomes and living distinct, isolated lifestyles compared to the broader population.
Income distribution data from families illustrates this divide. While many at the lower end of the spectrum have not experienced significant financial improvements, those at the top have seen considerable growth. The top earners, especially in influential roles such as lawyers, CEOs, and academics, earn well into the high-six figures or more. Even individuals who might feel financially constrained due to high living costs often belong to the highest income tiers when considering their overall earnings.
The concept of "status-income disequilibrium" describes a common experience among professionals like educators and journalists. They may hold prestigious roles and influence but struggle financially in high-cost cities compared to the wealthier elite they often encounter. Nonetheless, even the lesser-paid members of this new upper class typically earn very high incomes.
The ability to accumulate wealth has not only reinforced economic divides but also enabled the new upper class to adopt an exclusive lifestyle, marked by their choice of neighborhoods and the goods and services they use. This dynamic has created a more clearly defined and isolated upper class, one that lives differently and often apart from the rest of society.
The Mechanism: The College Sorting Machine
The college sorting machine is a system that brings together people with distinct tastes and preferences and plays a big role in making up the new upper class. Although many people in this upper class have college degrees, having just a degree doesn’t define their culture. The key point is how high cognitive ability interacts with education, especially at elite colleges.
Cognitive ability drives people to seek out others like them, leading to natural segregation. This is especially true for students who are exceptionally smart. When they are young, these talented individuals often feel isolated because their interests might not match those of their peers. For example, a math prodigy might struggle to find friends who appreciate his talents, while other students who are good at sports or have strong social skills easily connect with their classmates. Although these gifted students may find ways to cope by adapting their interests, they often wish they could be around others who understand them.
Over the past fifty years, the increase in college education has given these gifted individuals more chances to meet each other. A major change happened in the 1950s when cognitive stratification among colleges emerged. In the early years, elite colleges mostly accepted students from wealthy backgrounds, regardless of their cognitive abilities. Studies show that the average IQ of students at prestigious schools was close to the national average until the late 1950s. However, by the 1960s, these schools saw a significant rise in the quality of their students as SAT scores increased sharply.
This shift resulted in a small number of colleges attracting many high-ability students. By 1997, just a few schools enrolled a large chunk of the top-performing students in the country on standardized tests. In contrast, less prestigious colleges often attracted students with average abilities. This leads to concerns about what happens to exceptionally talented students when they only interact with one another, which may limit their exposure to diverse opinions and experiences.
Even though admissions practices have changed to bring in a variety of backgrounds, elite schools still mainly attract upper-middle-class students. Initiatives like affirmative action have made some progress in diversifying these schools, but most students still come from wealthy families. A high percentage of students at top universities are from the top quarter of socioeconomic status, while very few are from the bottom quarter.
The pool of applicants for elite colleges tends to be skewed toward students from wealthy families, especially those in the Northeast. Factors such as family income, attending private schools, and geographic location affect a student's chances of applying to top schools. Even within this group, the admissions process often favors students who have certain advantages, such as being related to alumni or donors, which means they have preferential treatment.
As a result, even if colleges based admissions only on hard data like test scores and grades, the makeup of these incoming classes would still be mostly upper-middle-class. This is because the majority of students who achieve high SAT scores come from families with higher education levels. This cycle reinforces the idea that cognitive ability is closely tied to socioeconomic status, making it harder for students from less wealthy families to break into elite education. In summary, the college sorting machine has created a system where high cognitive ability often goes hand in hand with being part of the upper class, which makes it difficult for those from lower socioeconomic backgrounds to succeed.
The Perpetuator: Homogamy
Homogamy is when people with similar traits, like education or cognitive ability, marry and have children together. Educational homogamy happens when couples have similar educational backgrounds, while cognitive homogamy occurs when they have similar levels of intelligence.
In recent years, cognitive homogamy has been increasing. In the past, people usually married someone from their own town or neighborhood, which sometimes led to couples having similar intelligence. However, as more people started to go to college, the chances of college graduates marrying each other increased. Studies show that, from 1940 to 2003, both educational and cognitive homogamy have grown, meaning college graduates are now more likely to marry other college graduates, and high school dropouts often marry other dropouts.
This change can be seen in the rise of couples where both partners hold college degrees. In 1960, only about 3 percent of couples had both partners graduated from college. By 2010, that number jumped to 25 percent. This increase in couples with similar education has played a major role in forming a new social class. Along with this educational growth, cognitive homogamy has also increased because going to college involves passing various tests that measure cognitive ability. Therefore, those who attend college typically have higher intelligence.
While educational success and IQ are related, education does not greatly affect a person's IQ after elementary school. Studies indicate that average IQs for different levels of education have stayed consistent, particularly among white Americans since the 1980s. This suggests that higher levels of education also mean higher average IQs, especially for those who graduate from prestigious schools.
College also plays a significant role in bringing similar people together. Graduates from elite colleges often marry others from the same elite backgrounds, leading to greater similarity in intelligence and culture within marriages. When couples share similar educational and cognitive traits, they tend to have common interests, which can lead to a more uniform culture in their families. For example, families who are alike in education and intelligence are more likely to have similar tastes and lifestyles.
Increasing educational and cognitive homogamy helps wealthy families maintain their status over generations. The saying "shirtsleeves to shirtsleeves in three generations" means that simply having money isn’t enough for continued success; intelligence also matters. When parents have both wealth and high cognitive ability, they are more likely to pass these advantages down to their children, helping them achieve better education and career success.
The chances of children doing well in school are closely linked to their parents' intelligence. Children of college-educated parents are much more likely to earn college degrees themselves. In contrast, children from families with lower educational levels face more obstacles in achieving higher education and securing good jobs.
As a result of these trends, a large number of exceptionally smart children are expected to come from upper-middle-class families, especially those already part of the elite. This shows a significant social issue: fewer highly intelligent individuals are likely to come from lower-income backgrounds because cognitive ability and educational achievement are becoming more closely linked over generations.
At the Bottom of It All: The Increasing Market Value of Brains
Cognitive ability has become increasingly valuable in the job market, significantly shaping professional success over the last century. In the early 1990s, Bill Gates highlighted the importance of intellectual talent in business, particularly how it impacts software and technology. While cognitive ability is just one element among many that contribute to career advancement, such as hard work and social skills, it is often misunderstood as being less significant.
Cognitive ability is particularly crucial in fields that require advanced skills, especially in a technology-driven economy. For example, exceptional mathematical talent now opens up high-paying opportunities in programming and finance, which were scarce a century ago. The legal profession has undergone similar changes; today's corporate lawyers can command high fees for their expertise on complex deals and regulations that significantly impact larger corporations financially.
Moreover, as businesses have grown in size and complexity, the stakes have risen, amplifying the demand for skilled individuals who can navigate intricate decisions. This trend has led to a noticeable increase in compensation for managerial and professional roles since 1960. The wealth accumulation has resulted in a new upper class, with individuals earning significantly higher incomes and living distinct, isolated lifestyles compared to the broader population.
Income distribution data from families illustrates this divide. While many at the lower end of the spectrum have not experienced significant financial improvements, those at the top have seen considerable growth. The top earners, especially in influential roles such as lawyers, CEOs, and academics, earn well into the high-six figures or more. Even individuals who might feel financially constrained due to high living costs often belong to the highest income tiers when considering their overall earnings.
The concept of "status-income disequilibrium" describes a common experience among professionals like educators and journalists. They may hold prestigious roles and influence but struggle financially in high-cost cities compared to the wealthier elite they often encounter. Nonetheless, even the lesser-paid members of this new upper class typically earn very high incomes.
The ability to accumulate wealth has not only reinforced economic divides but also enabled the new upper class to adopt an exclusive lifestyle, marked by their choice of neighborhoods and the goods and services they use. This dynamic has created a more clearly defined and isolated upper class, one that lives differently and often apart from the rest of society.
The Mechanism: The College Sorting Machine
The college sorting machine is a system that brings together people with distinct tastes and preferences and plays a big role in making up the new upper class. Although many people in this upper class have college degrees, having just a degree doesn’t define their culture. The key point is how high cognitive ability interacts with education, especially at elite colleges.
Cognitive ability drives people to seek out others like them, leading to natural segregation. This is especially true for students who are exceptionally smart. When they are young, these talented individuals often feel isolated because their interests might not match those of their peers. For example, a math prodigy might struggle to find friends who appreciate his talents, while other students who are good at sports or have strong social skills easily connect with their classmates. Although these gifted students may find ways to cope by adapting their interests, they often wish they could be around others who understand them.
Over the past fifty years, the increase in college education has given these gifted individuals more chances to meet each other. A major change happened in the 1950s when cognitive stratification among colleges emerged. In the early years, elite colleges mostly accepted students from wealthy backgrounds, regardless of their cognitive abilities. Studies show that the average IQ of students at prestigious schools was close to the national average until the late 1950s. However, by the 1960s, these schools saw a significant rise in the quality of their students as SAT scores increased sharply.
This shift resulted in a small number of colleges attracting many high-ability students. By 1997, just a few schools enrolled a large chunk of the top-performing students in the country on standardized tests. In contrast, less prestigious colleges often attracted students with average abilities. This leads to concerns about what happens to exceptionally talented students when they only interact with one another, which may limit their exposure to diverse opinions and experiences.
Even though admissions practices have changed to bring in a variety of backgrounds, elite schools still mainly attract upper-middle-class students. Initiatives like affirmative action have made some progress in diversifying these schools, but most students still come from wealthy families. A high percentage of students at top universities are from the top quarter of socioeconomic status, while very few are from the bottom quarter.
The pool of applicants for elite colleges tends to be skewed toward students from wealthy families, especially those in the Northeast. Factors such as family income, attending private schools, and geographic location affect a student's chances of applying to top schools. Even within this group, the admissions process often favors students who have certain advantages, such as being related to alumni or donors, which means they have preferential treatment.
As a result, even if colleges based admissions only on hard data like test scores and grades, the makeup of these incoming classes would still be mostly upper-middle-class. This is because the majority of students who achieve high SAT scores come from families with higher education levels. This cycle reinforces the idea that cognitive ability is closely tied to socioeconomic status, making it harder for students from less wealthy families to break into elite education. In summary, the college sorting machine has created a system where high cognitive ability often goes hand in hand with being part of the upper class, which makes it difficult for those from lower socioeconomic backgrounds to succeed.
The Perpetuator: Homogamy
Homogamy is when people with similar traits, like education or cognitive ability, marry and have children together. Educational homogamy happens when couples have similar educational backgrounds, while cognitive homogamy occurs when they have similar levels of intelligence.
In recent years, cognitive homogamy has been increasing. In the past, people usually married someone from their own town or neighborhood, which sometimes led to couples having similar intelligence. However, as more people started to go to college, the chances of college graduates marrying each other increased. Studies show that, from 1940 to 2003, both educational and cognitive homogamy have grown, meaning college graduates are now more likely to marry other college graduates, and high school dropouts often marry other dropouts.
This change can be seen in the rise of couples where both partners hold college degrees. In 1960, only about 3 percent of couples had both partners graduated from college. By 2010, that number jumped to 25 percent. This increase in couples with similar education has played a major role in forming a new social class. Along with this educational growth, cognitive homogamy has also increased because going to college involves passing various tests that measure cognitive ability. Therefore, those who attend college typically have higher intelligence.
While educational success and IQ are related, education does not greatly affect a person's IQ after elementary school. Studies indicate that average IQs for different levels of education have stayed consistent, particularly among white Americans since the 1980s. This suggests that higher levels of education also mean higher average IQs, especially for those who graduate from prestigious schools.
College also plays a significant role in bringing similar people together. Graduates from elite colleges often marry others from the same elite backgrounds, leading to greater similarity in intelligence and culture within marriages. When couples share similar educational and cognitive traits, they tend to have common interests, which can lead to a more uniform culture in their families. For example, families who are alike in education and intelligence are more likely to have similar tastes and lifestyles.
Increasing educational and cognitive homogamy helps wealthy families maintain their status over generations. The saying "shirtsleeves to shirtsleeves in three generations" means that simply having money isn’t enough for continued success; intelligence also matters. When parents have both wealth and high cognitive ability, they are more likely to pass these advantages down to their children, helping them achieve better education and career success.
The chances of children doing well in school are closely linked to their parents' intelligence. Children of college-educated parents are much more likely to earn college degrees themselves. In contrast, children from families with lower educational levels face more obstacles in achieving higher education and securing good jobs.
As a result of these trends, a large number of exceptionally smart children are expected to come from upper-middle-class families, especially those already part of the elite. This shows a significant social issue: fewer highly intelligent individuals are likely to come from lower-income backgrounds because cognitive ability and educational achievement are becoming more closely linked over generations.