Evidence for the practical validity of IQ comes from examining the correlation between IQ scores and life outcomes.
Economic and social correlates of IQ :
Economic and social correlates of IQ in the USA :
Research shows that general intelligence plays an important role in many valued life outcomes. In addition to academic success, IQ correlates with job performance (see below), socioeconomic advancement (e.g., level of education, occupation, and income), and "social pathology" (e.g., adult criminality, poverty, unemployment, dependence on welfare, children outside of marriage). Recent work has demonstrated links between general intelligence and health, longevity, and functional literacy. Correlations between g and life outcomes are pervasive, though IQ and happiness do not correlate. IQ and g correlate highly with school performance and job performance, less so with occupational prestige, moderately with income, and to a small degree with law-abidingness.
General intelligence (in the literature typically called "cognitive ability") is the best predictor of job performance by the standard measure, validity. Validity is the correlation between score (in this case cognitive ability, as measured, typically, by a paper-and-pencil test) and outcome (in this case job performance, as measured by a range of factors including supervisor ratings, promotions, training success, and tenure), and ranges between −1.0 (the score is perfectly wrong in predicting outcome) and 1.0 (the score perfectly predicts the outcome). See validity (psychometric). The validity of cognitive ability for job performance tends to increase with job complexity and varies across different studies, ranging from 0.2 for unskilled jobs to 0.8 for the most complex jobs.
A meta-analysis (Hunter and Hunter, 1984) which pooled validity results across many studies encompassing thousands of workers (32,124 for cognitive ability), reports that the validity of cognitive ability for entry-level jobs is 0.54, larger than any other measure including job tryout (0.44), experience (0.18), interview (0.14), age (−0.01), education (0.10), and biographical inventory (0.37).
Because higher test validity allows more accurate prediction of job performance, companies have a strong incentive to use cognitive ability tests to select and promote employees. IQ thus has high practical validity in economic terms. The utility of using one measure over another is proportional to the difference in their validities, all else equal. This is one economic reason why companies use job interviews (validity 0.14) rather than randomly selecting employees (validity 0.0).
However, legal barriers, most prominently the US Civil Rights Act, as interpreted in the 1971 United States Supreme Court decision Griggs v. Duke Power Co., have prevented American employers from using cognitive ability tests as a controlling factor in selecting employees where (1) the use of the test would have a disparate impact on hiring by race and (2) where the test is not shown to be directly relevant to the job or class of jobs at issue. Instead, where there is not direct relevance to the job or class of jobs at issue, tests have only been legally permitted to be used in conjunction with a subjective appraisal process. The U.S. military uses the Armed Forces Qualifying Test (AFQT), as higher scores correlate with significant increases in effectiveness of both individual soldiers and units, and Microsoft is known for using non-illegal tests that correlate with IQ tests as part of the interview process, weighing the results even more than experience in many cases.
Some researchers have echoed the popular claim that "in economic terms it appears that the IQ score measures something with decreasing marginal value. It is important to have enough of it, but having lots and lots does not buy you that much." (Detterman and Daniel, 1989)
However, some studies suggest IQ continues to confer large benefits even at very high levels. Ability and performance for jobs are linearly related, such that at all IQ levels, an increase in IQ translates into a concomitant increase in performance (Coward and Sackett, 1990). In an analysis of hundreds of siblings, it was found that IQ has a substantial effect on income independently of family background (Murray, 1998).
Other studies question the real-world importance of whatever is measured with IQ tests, especially for differences in accumulated wealth and general economic inequality in a nation. IQ correlates highly with school performance but the correlations decrease the closer one gets to real-world outcomes, like with job performance, and still lower with income. It explains less than one sixth of the income variance. Even for school grades, other factors explain most the variance. One study found that, controlling for IQ across the entire population, 90 to 95 percent of economic inequality would continue to exist. Another recent study (2002) found that wealth, race, and schooling are important to the inheritance of economic status, but IQ is not a major contributor and the genetic transmission of IQ is even less important. Some argue that IQ scores are used as an excuse for not trying to reduce poverty or otherwise improve living standards for all. Claimed low intelligence has historically been used to justify the feudal system and unequal treatment of women (but note that many studies find identical average IQs among men and women; see sex and intelligence). In contrast, others claim that the refusal of high-IQ elites to take IQ seriously as a cause of inequality is itself immoral.