important factor in explaining wage differentials. Employing cross-sectional regression analysis,
Herrnstein and Murray claim that “the job market rewards blacks and whites of equivalent
cognitive ability nearly equally at almost every job category.. .A Latino, black, and white of
similar cognitive ability earn annual wages within a few hundred dollars of one another”
(Herrnstein and Murray [1994], p.325, 340). Furthermore, within the same demographic group,
native intelligence dominates socio-economic background variables in explaining wage
differentials. Overall, The Bell Curve argues that the U.S. economy is a meritocracy.
Economists responded vigorously to such claims concerning the wage equation. Fisher et
al. (1996) and Cawley et al. (1996, 1999, 2001) both argue that the measure of social and family
environment used by Herrnstein and Murray (1984) is inappropriate, and that they have omitted
important variables. Hence, The Bell Curve may have under-estimated the effect of social and
family background on social outcomes. Furthermore, Herrnstein and Murray neglect in their
regressions all human capital measures, such as education, due to their belief that ability
determines schooling and job-related performance. Employing cross-sectional and panel analysis
respectively, Fisher et al. (1996) and Cawley et al. (1996, 1999, 2001) investigate the effect of
intelligence on wage differentials using a more complete set of socio-economic background
variables and human capital measures. They conclude that cognitive ability is not a dominant
factor in explaining wage differentials, with variations in measured cognitive ability explaining
only a small proportion of variance in wages across persons, and that the return to ability is not
rewarded equally across racial and gender groups.
This article explores the statistical analyses and compares the methodology of both sides
of the debate. All of the authors employ the same data set and use similar regression models, yet
they arrive at completely different conclusions. First, we replicate the cross-sectional wage