Relative verbal intelligence and happiness

- We revisit the relationship between verbal IQ and happiness.
- We find a small positive correlation between the absolute level of verbal IQ and happiness.
- We also find a strong positional effect of verbal IQ on happiness.
- More verbally proficient people within their reference group are happier.

Even though higher intelligence (IQ) is often associated with many positive outcomes in life, it has become a stylized fact in the happiness literature that smarter people are not happier than their less intelligent counterparts. In this paper, we examine how relative verbal intelligence correlates with happiness and present two main findings. First, our estimations from the General Social Survey for a large representative sample of Americans suggest a small, but positive and significant correlation between verbal intelligence and happiness. Second, we find that verbal intelligence has a strong positional effect on happiness, i.e., people who have greater verbal proficiency relative to their peers in their reference group are more likely to report higher levels of happiness. The positional effect of happiness holds even when we control for a large set of socio-economic characteristics as well as relative income.