One of the clearest facts about economic beliefs is that more educated people think more like economists. A lot of economists say their experience in academia completely contradicts this, but (a) the highly-educated folks who hang around universities are heavily self-selected for leftism, and (b) however bad the economic beliefs of the typical college graduate are, the economic beliefs of the typical high school drop-out are far worse.

Once people accept the reality of this pattern, many leap to the assumption that education is a proxy for income or wealth. But this is incorrect, too. The effect of education on economic beliefs remains about as strong after you statistically control for income (as well as job security, income growth, gender, age, and race).

No one, however, has explored the possibility that seems most plausible to me: More educated people think more like economists because they are unusually intelligent. Until now, that is. Today I submitted a new paper, “Economic Beliefs, Intelligence, and Ability Bias: Evidence from the General Social Survey,” co-authored with Stephen C. Miller, to the Economic Journal. Long story short: Not only does controlling for intelligence reduce the estimated effect of education on economic beliefs; intelligence turns out to be the single strongest overall predictor of economic beliefs.

Education still has a large independent effect on beliefs – especially beliefs about the international economy. But controlling for intelligence, the average magnitude of the effect of education falls by about one-third. This change is particularly impressive because the General Social Survey’s IQ test only has ten questions, which biases estimates of the effect of IQ downward. The true effect of intelligence is probably even larger, and the true effect of education is probably even smaller.

What does all this mean? The simplest explanation is also the best: Basic economics is true, and smart people are more likely to believe what is true. Psychometricians already know that almost all forms of knowledge are positively correlated. Now we can officially add economic knowledge to the list.