Paper discussing economic rationale of IQ-based hiring practices

Paper discussing economic rationale of IQ-based hiring practices

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I'm looking for a paper that explicitly quantifies the ROI an employer would likely derive if personnel selection involved intelligence testing and only those +2 SD in cognitive ability were hired.

There's a correlation between IQ and job performance, ranging from .20s for low complexity jobs and .50 for high complexity jobs. Hardly unity (r = 1.00) but regardless, it's still considered to be the best predictor of job performance.

A number of years ago as an undergrad I read a paper discussing the economic rationale of an employer administering an IQ test and only selecting candidates who scored +2 SD above the mean. From the pool of candidates remaining, the employer would then interview for the best candidate as per usual. The author's thinking was along the following lines:

  • Suppose you had a group of employees who you were paying an annual salary of $100,000 and their productivity was normally distributed between say, $100,000 - $300,000 (mean = $200,000).

  • By selecting those who are +2 SD in cognitive ability, the employer would increase the chances that those who are hired will return them closer to $300,000 per year.

  • Total economic gain = Number of employees x Increased return ($) x Duration of tenure

This topic is relevant to a publication I'm preparing and I've been racking my brain trying to find it. For the life of me I simply cannot find it.

Does this ring a bell for anyone? Ideally, I'd like the specific one that I'm mentioning, but failing that, something in a similar vein. Essentially: suppose you hired only those >130 IQ -- regardless of the rightfulness/wrongfulness of doing so, what I want to know is what the $ amount benefit to the employer would be.

I believe I know which paper you're referring to. My guess is the widely cited Schmidt & Hunter (1998) paper. The paper summarizes 85 years of practical and theoretical implications of research in personnel selection. To see that they address what you're asking for, here is a quote from the paper

If a superior worker is defined as one whose performance (output) is at the 84th percentile (that is, 1 SD above the mean), then a superior worker in a lower level job produces 19% more output than an average worker, a superior skilled worker produces 32% more output than the average skilled worker, and a superior manager or professional produces output 48% above the average for those jobs. These differences are large and they indicate that the payoff from using valid hiring methods to predict later job performance is quite large.

Then later they state

At one extreme, if an organization must hire all who apply for the job, no hiring procedure has any practical value. At the other extreme, if the organization has the luxury of hiring only the top scoring 1%, the practical value of gains from selection per person hired will be extremely large. But few organizations can afford to reject 99% of all job applicants.

However, a more recent paper on the subject has been published. That's the Schmidt, Oh & Shaffer (2016), which summarizes 100 years of practical and theoretical implications of research in personnel selection. This paper is an update on the former, so you may as well just look only at this latest one.


According to the World Health Organization (WHO) predictions, by 2030 depression will be the leading cause of disease burden globally. Depression is not only associated with disability and with enormous individual impairments, but also it entails high economic cost for society [1, 2].

Depression is a recurrent disorder, meaning that one individual will suffer an average of four depressive episodes during his/her life [3]. Establishing an effective treatment at the early stages of the disease is fundamental for the successful prognosis of the disorder [4]. Although several treatment options have been developed for depression, a large proportion of individuals do not have access to these treatments and some of them remain untreated [5]. Furthermore, contrary to what is suggested in international guidelines for the management of mild and moderate depression symptoms, the majority of General Practitioners (GPs) tend to prescribe antidepressant medications [6, 7].

In this context, online interventions appear as promising treatment approaches that can reach a large majority of patients [8, 9], while at the same time, representing cost-effective alternatives [10]. For clients, internet-based programs offer some advantages. These include: anonymity, avoiding the stigma associated with seeing a therapist and the option to do the treatment at any time and place, at the client’s own pace, for example, at home [11, 12]. Therapist involvement depends on the intervention, but in general, most programs aim at decreasing the therapist workload. Most internet-based treatments are framed in cognitive behavioral therapy (CBT) and are developed to treat individuals with mild to moderate depressive symptoms that are usually visited in primary care settings. In a meta-analysis of randomized-controlled trials comparing the effects of guided self-help and face-to-face psychotherapies, it was concluded that both interventions have comparable effects. Thus, recommending the implementation of guided self-help interventions in routine care [13].

In the context of the European project Preventing Depression and Improving Awareness through Networking in the European Union (PREDI-NU) [14], the European Alliance Against Depression (EAAD) created the iFightDepression (iFD) tool. The EAAD is a consortium of different countries around the world that use an evidence-based approach for improving care of depressed persons and prevent suicidal behavior [15]. IFD is an internet-based self-management tool for moderate to mild depression designed as a complementary intervention to standard care. IFD is based on cognitive behavioral therapy and structured in seven different modules.

Study objectives

The aim of this double blind, randomized controlled trial (RCT) is to examine the efficacy of the iFightDepression as an add-on to treatment as usual (TAU) for patients with mild to moderate depressive symptoms versus internet-based psychoeducation plus TAU. The primary outcome measure will be changes in depressive symptoms as measured with the Hamilton Depression Rating Scale [16]. Secondly, we aim at examining the effects of this intervention on other variables including quality of life and functioning.

Closing Comments

In my view, each of these chapters offers creative, insightful,, and highly informative overviews of a given body of literature within the working context. While each chapter addresses a circumscribed line of work, the collective vision that emerges from this Handbook provides a clear and accessible knowledge base for the continued development of the psychology-of-working perspective. As the Editor of this Handbook, I have been humbled in attracting a roster of major scholars and leaders in their respective fields to contribute to this endeavor. My hope is that readers will be as moved as I have been in reading these stellar contributions. And, hopefully, readers will feel inspired to continue the work of these scholars and of those who preceded them in creating an expansive and socially just vision of working.

I would like to thank Alice Connors-Kellgren, Saliha Kozan, and Bailey Rand for their comments on an earlier version of this draft.

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  2. Akimi

    it is possible to close a space?

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    And effectively?

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