Bell Curve

84 The Emergence ofa Cognitive Elite The Economic Pressure to Partition 85the range illustrated in the figure below. Given that information, wemay estimate the expected output difference between two dentistswho score at the 50th and 84th percentiles on an intelligence test asbeing worth $30,000 a year.[501 The corresponding difference betweentwo receptionists who score at the 50th and 84th percentiles in in.tefligence is $750 a year. And this is what we meant by an "interacetion effect": the wage of the dentist is only four times that of thereceptionist. But the value to the employer of hiring brighter dentistsis forty times greater than the value of hiring comparably brighterIn a realelife situation, the value of a test (or any other selection pro.cedure) depends on another factor: How much choice does the employerhave!52 There is no point in spending money on an intelligence test ifonly one applicant shows up. If ten applicants show up for the job, how.ever, a test becomes attractive. The figure below illustrates the economicbenefit of testing with different levels of competition for the job(from one to fifty applicants per job) and different tests (from a veryThe advantages of hiring by test scorePercentage increase in productivity150%~0% 11 , I I0 10 20If the test's validity is .6+If the test's validity is .4If the test's validity is .2II30 40 50Number of applicants for each jobipoor one with a validity of .2 to a very strong one with a validity of .6).["'If everyone is hired, then, on average, the hired person is just at the averagelevel of proficiency, which is a standard score of 0, But as soon aseven two applicants are available per position, the value of testing risesquickly. With just two applicants per position, the employer gains 16 to48 percent in productivity, depending on the validity of the test.[541 Thecurve quickly begins to flatten out; much of the potential value of testinghas already been captured when there are three applicants per job.The figure above is an answer to those who claim that a correlation of,say, .4 is too small to bother A validity of .4 (or even .6) may beunimportant if allnost all applicants are hired, but even a correlation of.2 (or still smaller) may be important if only a small proportion getshired.The Macroeconomic Costs of Not TestingSince the pivotal Supreme Court decision of Griggs v. Duke Power Co,in 1971, no large American employer has been able to hire from the topdown based on intelligence tests. Estimates vary widely for how muchthe American economy loses by not doing so, from what Hunter andHunter conclude is a minimum loss of $80 billion in 1980 (and in 1980dollars) to what the Hartigan committee thought was a maximum lossof $13 billion for that year.56 The wide range reflects the many impon.derables in rnaking these calculations. For one thing, many attributes ofan applicant other than a test score are correlated with intelligenceeducationallevel, for example. Schooling captures some, but not all, ofthe predictive value of intelligence. Or consider an employer using fam.ily connections to hire instead of tests. A bright worker is likely to havea bright sister or brother. But: the average IQ score difference betweensiblings is eleven or twelve points, so, again, test scores would predictproficiency better than judging an applicant by the work of a brother orsister.Modeling the economic impact of testing has additional complexities.It has been noted that the applicant pool would gradually get depletedof the top scorers when every successive employer tries to hiretop down.59 As the smart people are hired and thereby removed fromthe applicant pool, the validity of a test for those still on the job marketmay change because of, for example, restriction of range. The eco+