Wednesday, January 21, 2009

Does Increasing your Vocabulary Increase Your Corportate Success?

One of the topics we briefly go over is omitted variables. Omitted variables - sounds excited huh? Well, maybe not, but it is an important concept when describing (or modeling) human behavior. Let me use an example to see how this works. A few years back, an article in Fortune reported that there is a high correlation between vocabulary and corporate success, and the writer stated, "when it comes to climbing the corporate ladder, one of your best assets may actually be your big vocabulary." Hey, I'm not making this up - click on the link if you do not believe me!

The evidence to support this course of action was that 88.3% of Fortune 1000 executives scored well above average on their vocabulary compared to a control group of mainly college graduates. Additionally, 71% of manager's scored above average - better than the control group - but not as well as the executives.

To help aspiring executives along the way, a "Vocab Vixen" - I'm not making this up - has a series of CD's to help you build your vocabulary. If purchasing or listening to vocabulary CD's is too much for you the "Vocab Vixen" recommends watching The Daily Show or Frasier - I'm not making this up!

At this point if you are highly skeptical - the reason is because the analysis is omitting a variable. In other words, just because two variables are correlated does not mean that an increase in one causes a change in another. Here is an alternative explaination (model) as to why there is a high correlation between vocabulary and corporate success.

Becoming a corporate executive is not a totally random act. As an employee - other employees up the corporate ladder observe your decision making over a period of time. Some of your decisions will be very good and some will not. This is true for most entry level managers. Managers who tend to make better decisions over time are on average more intelligent than those making poor decisions. Those employees making better decisions tend to be promoted at a higher rate than those making poorer decisions. (Even if the firm requires a college degree - not all colleges are the same, nor are all college graduates - or lecturers - equally intelligent).

If higher intelligence is positively correlated with an individual's depth and breadth of vocabulary, then one finds that a better vocabulary among those who have achieved corporate success.

But, if a larger vocabulary was the real reason, why do English majors (a major requiring a broader vocabulary) typically have lower starting salaries than say those majoring in engineering or economics? Yes, I am unfairly stereotyping. If a better vocabulary really leads to corporate success - then this is a natural place to see it verified, and we do not.

You have a choice to make - believe that a better vocabulary leads to corporate success. If this is your view - you should drop out of college and start studying the dictionary or at least watching The Daily Show more often. If on the other hand you think there may be an omitted variable (possibly intelligence) then maybe reading your textbook might not be that onerous a task. You will be more knowledgeable, and also pick up a vocabulary word or two along the way.

1 comment:

Kevin said...

Your point is certainly valid, and well-taken. However, for better or for worse, "perceived intelligence" probably does more to promote top execs than actual intelligence. That is, people rise up the ladder by convincing their peers, colleagues, and superiors (i.e. other people) that they have the chops. And, generally, people tend to think that if you have the most powerful and cultivated vocabulary in the office, you are probably the best educated, most intelligent, and ultimately, the most competent.

Sad to say, it's not what you know that counts. It's what other people think you know. (insert your favorite politician here)

It ain't pretty, but in the real world, perception is reality.