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This article is for informational purposes only – please read our Terms and Conditions.
Falling intelligence
The term IQ, or Intelligence Quotient, generally describes a score on a test that rates an individual’s cognitive ability as compared to the general population. IQ testing was formally named in 1912 and has developed over time to derive a total score from a set of standardised tests or subtests designed to assess human intelligence. For much of the 20th century IQ scores have drifted higher, by about 3% a year, something which became known as the Flynn Effect, named after the scientist who discovered the trend. In his research, published in 1981, Flynn showed IQ scores had risen steadily, with an 18-point gap over two generations. He concluded that this was down to culture – society had become more intelligent as it got to grips with bigger ideas.
More recent studies, however, have highlighted this trend has gone into reverse. The World Economic Forum has highlighted a paper published by the Ragnar Frisch Centre for Economic Research in Oslo, which looked at the IQ test results of more than 730,000 Norwegian men. They all reported for national service between 1970 and 2009, for which a mandatory IQ test takes place. Analysis revealed that the men born in 1962 had higher scores than those born in 1991. Indeed, the study showed the Flynn Effect continued until 1975, when IQ levels abruptly began to decline, and steeply — some seven IQ points per generation. Similar studies in Britain, France and the Netherlands have shown the same results.
What is causing the drop in IQ?
The Norwegian researchers also showed that familial intelligence declined throughout the same timeframe, indicating the reason or reasons behind the ‘decline in intelligence’ was not due to a sudden increase in less-intelligent people having more children, but rather to environmental factors. They hypothesised these could be linked to nutrition, how education systems have changed or the current media environment. Other studies present a case that as technology does more tasks for us, we become less intelligent. Few will be surprised to learn our interaction with mobile devices is impacting how we approach mathematics and literacy. A recent Financial Times article (“Have humans passed peak brain power”) reports a sharp decrease in those who read for pleasure, suggesting this is ‘likely to be a result of the ongoing transition away from text and towards visual media — the shift towards a “post-literate” society.’
In the same vein, researchers have been trying to explain another growing trait currently manifesting itself; the erosion of sustained mental focus. The culprit appears to be our newly passive relationship with information rather than self-directed exploration. Web surfing is good (active learning); scrolling is bad (passive churning through a torrent of algorithm-sourced content).
This all seems a bit ironic
Thinking about declining human intelligence ‘scores’ does seem rather ironic at a time when humans are developing artificial intelligence powerful enough to dramatically expand our collective capabilities. In fact, as a society we have spent the last 20 years adapting to a range of digital tools outsourcing memory and routine processing. This, in turn, has liberated cognitive function to address more demanding challenges, such as the development of AI and capturing its utility. Today, it seems appropriate to argue IQ should not solely be measured by individual performance on standardised tests, but our ability to most effectively harness and deploy cutting edge tech and AI. Could we also contend human cognitive function is going through an accelerated evolutionary transition and we have already reached the stage of ‘augmented intelligence’. Before we entirely disappear into a rabbit hole of speculation, academics are already suggesting the time is approaching when we will be able to connect our brains to neural interfaces which will collect our intellectual skills into something resembling a “super-brain cloud”. A kind of ‘two minds are better than one’ on steroids.
Heading into unchartered waters
When we sit and think about the implications of AI, be it through a private enterprise lens, an ethics lens or financial markets lens (to name just a few) we are clearly trying to navigate through ‘unchartered waters.’ Figuratively, this phrase describes a new, unfamiliar, or unknown situation or experience. As money managers, we believe unchartered waters also aptly describes the investment environment we currently face. Geopolitically, the older order that we grew up in professionally has changed and the framework in which the new one will operate has yet to clearly emerge. This means everything from rewired supply chains to new trade corridors and security partnerships, sudden changes in regulation, new national priorities and constantly shifting rules of the game. It could take several years before discernible new patterns emerge.
Implications for portfolios
As risk drivers have accelerated through the year and guardrails erode, we have been diligent in sticking to our principles. First and foremost, we believe investing is a long-term assignment – that prudent participation with thoughtful diversification is a powerful way to compound returns over time. Indeed, time is an extremely valuable asset when the range of economic outcomes appears more complex than ever. However, forecasting the future is a fiendishly difficult task, and we believe portfolios that emphasise our highest conviction views while maintaining diversification across assets classes, geographies and sectors will serve us well. This last quarter has proved to be a rewarding case in point with favoured allocations to segments such as metals & mining, Asia equities, as well as liquid alternative strategies specialising in technology, and utilities & infrastructure delivering strongly.
These successful investment decisions have relied on a combination of research, experience and intuition; we are humble enough to acknowledge luck will have played a role too. Nuanced human judgement and adaptability are types of intelligence AI developers find more difficult to replicate. As we move into unchartered waters – in more ways than one – these human skills, used in tandem with enhanced technology resources, will provide the foundation for future success.
Sources:
Fordham Global Foresight Newsletter 24 September 2025
Capital International (Jersey) Limited and APW Investors Limited are subsidiaries of Capital International Group Limited and are regulated by the Jersey Financial Services Commission. In South Africa, Capital International (Jersey) Limited is authorised as a Financial Services Provider (FSP No.51164).
The views, thoughts and opinions expressed within this article are those of the author, and not those of Capital International Group Limited (Group) and/or any of its subsidiary companies and as such are neither given nor endorsed by the Group or any company within the Group. Information in this article does not constitute investment advice or an offer or an invitation by or on behalf of any company within the Group to buy or sell any product or security or to make a bank deposit. Any reference to past performance is not necessarily a guide to the future. The value of investments may go down as well as up and may be adversely affected by currency fluctuations. The Group, its subsidiary companies, clients, and officers may have a position in, or engage in transactions in any of the investments mentioned. Opinions constitute views as at the date of issue thereof and are subject to change.
Unchartered Waters
This article is for informational purposes only – please read our Terms and Conditions.
Falling intelligence
The term IQ, or Intelligence Quotient, generally describes a score on a test that rates an individual’s cognitive ability as compared to the general population. IQ testing was formally named in 1912 and has developed over time to derive a total score from a set of standardised tests or subtests designed to assess human intelligence. For much of the 20th century IQ scores have drifted higher, by about 3% a year, something which became known as the Flynn Effect, named after the scientist who discovered the trend. In his research, published in 1981, Flynn showed IQ scores had risen steadily, with an 18-point gap over two generations. He concluded that this was down to culture – society had become more intelligent as it got to grips with bigger ideas.
More recent studies, however, have highlighted this trend has gone into reverse. The World Economic Forum has highlighted a paper published by the Ragnar Frisch Centre for Economic Research in Oslo, which looked at the IQ test results of more than 730,000 Norwegian men. They all reported for national service between 1970 and 2009, for which a mandatory IQ test takes place. Analysis revealed that the men born in 1962 had higher scores than those born in 1991. Indeed, the study showed the Flynn Effect continued until 1975, when IQ levels abruptly began to decline, and steeply — some seven IQ points per generation. Similar studies in Britain, France and the Netherlands have shown the same results.
What is causing the drop in IQ?
The Norwegian researchers also showed that familial intelligence declined throughout the same timeframe, indicating the reason or reasons behind the ‘decline in intelligence’ was not due to a sudden increase in less-intelligent people having more children, but rather to environmental factors. They hypothesised these could be linked to nutrition, how education systems have changed or the current media environment. Other studies present a case that as technology does more tasks for us, we become less intelligent. Few will be surprised to learn our interaction with mobile devices is impacting how we approach mathematics and literacy. A recent Financial Times article (“Have humans passed peak brain power”) reports a sharp decrease in those who read for pleasure, suggesting this is ‘likely to be a result of the ongoing transition away from text and towards visual media — the shift towards a “post-literate” society.’
In the same vein, researchers have been trying to explain another growing trait currently manifesting itself; the erosion of sustained mental focus. The culprit appears to be our newly passive relationship with information rather than self-directed exploration. Web surfing is good (active learning); scrolling is bad (passive churning through a torrent of algorithm-sourced content).
This all seems a bit ironic
Thinking about declining human intelligence ‘scores’ does seem rather ironic at a time when humans are developing artificial intelligence powerful enough to dramatically expand our collective capabilities. In fact, as a society we have spent the last 20 years adapting to a range of digital tools outsourcing memory and routine processing. This, in turn, has liberated cognitive function to address more demanding challenges, such as the development of AI and capturing its utility. Today, it seems appropriate to argue IQ should not solely be measured by individual performance on standardised tests, but our ability to most effectively harness and deploy cutting edge tech and AI. Could we also contend human cognitive function is going through an accelerated evolutionary transition and we have already reached the stage of ‘augmented intelligence’. Before we entirely disappear into a rabbit hole of speculation, academics are already suggesting the time is approaching when we will be able to connect our brains to neural interfaces which will collect our intellectual skills into something resembling a “super-brain cloud”. A kind of ‘two minds are better than one’ on steroids.
Heading into unchartered waters
When we sit and think about the implications of AI, be it through a private enterprise lens, an ethics lens or financial markets lens (to name just a few) we are clearly trying to navigate through ‘unchartered waters.’ Figuratively, this phrase describes a new, unfamiliar, or unknown situation or experience. As money managers, we believe unchartered waters also aptly describes the investment environment we currently face. Geopolitically, the older order that we grew up in professionally has changed and the framework in which the new one will operate has yet to clearly emerge. This means everything from rewired supply chains to new trade corridors and security partnerships, sudden changes in regulation, new national priorities and constantly shifting rules of the game. It could take several years before discernible new patterns emerge.
Implications for portfolios
As risk drivers have accelerated through the year and guardrails erode, we have been diligent in sticking to our principles. First and foremost, we believe investing is a long-term assignment – that prudent participation with thoughtful diversification is a powerful way to compound returns over time. Indeed, time is an extremely valuable asset when the range of economic outcomes appears more complex than ever. However, forecasting the future is a fiendishly difficult task, and we believe portfolios that emphasise our highest conviction views while maintaining diversification across assets classes, geographies and sectors will serve us well. This last quarter has proved to be a rewarding case in point with favoured allocations to segments such as metals & mining, Asia equities, as well as liquid alternative strategies specialising in technology, and utilities & infrastructure delivering strongly.
These successful investment decisions have relied on a combination of research, experience and intuition; we are humble enough to acknowledge luck will have played a role too. Nuanced human judgement and adaptability are types of intelligence AI developers find more difficult to replicate. As we move into unchartered waters – in more ways than one – these human skills, used in tandem with enhanced technology resources, will provide the foundation for future success.
Sources:
Fordham Global Foresight Newsletter 24 September 2025
Capital International (Jersey) Limited and APW Investors Limited are subsidiaries of Capital International Group Limited and are regulated by the Jersey Financial Services Commission. In South Africa, Capital International (Jersey) Limited is authorised as a Financial Services Provider (FSP No.51164).
The views, thoughts and opinions expressed within this article are those of the author, and not those of Capital International Group Limited (Group) and/or any of its subsidiary companies and as such are neither given nor endorsed by the Group or any company within the Group. Information in this article does not constitute investment advice or an offer or an invitation by or on behalf of any company within the Group to buy or sell any product or security or to make a bank deposit. Any reference to past performance is not necessarily a guide to the future. The value of investments may go down as well as up and may be adversely affected by currency fluctuations. The Group, its subsidiary companies, clients, and officers may have a position in, or engage in transactions in any of the investments mentioned. Opinions constitute views as at the date of issue thereof and are subject to change.
Russell Waite
Investment Director