Cognitive Capitalism: Economic Freedom Moderates the Effects of Intellectual and Average Classes on Economic Productivity

Nonlinear Effects of Cognitive Ability on Economic Productivity

Abstract. Cognitive capitalism theory argues that the positive effects of cognitive ability on economic productivity should increase nonlinearly, with increases in ability amplifying increases in productivity. The theory was tested using country-level indicators of cognitive ability and productivity. Cognitive ability was based on international student assessments (e.g., Program for International Student Assessment, PISA), and productivity was based on economic inputs (e.g., scientific achievements and competitiveness) and outputs (e.g., gross domestic product). As predicted, the effects of cognitive ability on all productivity measures increased nonlinearly at higher levels of ability, suggesting that higher ability levels disproportionately boost a nation’s productivity. The findings are discussed in light of standard theories of cognitive ability (e.g., Spearman’s law of diminishing returns and differentiation theories), and suggest that interventions that boost cognitive ability can have large, amplifying effects on economic productivity.