A Smarter World: Human Intelligence & Economic Growth From 50,000 B.C. To The Singularity

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1 City, Country Month 2014 A Smarter World: Human Intelligence & Economic Growth From 50,000 B.C. To The Singularity Peter Berezin Chief Strategist, The Bank Credit Analyst, BCA Research

2 THE OLD VIEW There has been no biological change in humans in 40,000 or 50,000 years. Everything we call culture and civilization we've built with the same body and brain. Stephen Jay Gould

3 HUMAN EVOLUTION HAS ACCELERATED 100-FOLD OVER THE PAST 10,000 YEARS BCA Research ,000 60,000 40,000 20,000 0 YEARS AGO SOURCE: PROCEEDINGS OF NATIONAL ACADEMY OF SCIENCES.

4 THE NEW VIEW We are more different genetically from people living 5,000 years ago than they were different from Neanderthals. John Hawks, Professor of Biological Anthropology and Genetics, University of Wisconsin, Madison

5 LONG-TERM DECLINE IN HOMICIDE RATES 100 ENGLAND: HOMICIDE RATE PER 100, LOCAL ESTIMATES KENT SERIES NATIONAL DATA BCA Research SOURCE: MANUEL EISNER, MODERNIZATION, SELF-CONTROL AND LETHAL VIOLENCE. THE LONG-TERM DYNAMICS OF EUROPEAN HOMICIDE RATES IN THEORETICAL PERSPECTIVE, BRITISH JOURNAL OF CRIMINOLOGY (41:4), 2001.

6 SURVIVING CHILDREN IN PRE-INDUSTRIAL ENGLAND SURVIVAL OF THE RICHEST? MARRIED ALL BCA Research Over 1000 ASSETS BEQUEATHED ( ) SOURCE: GREGORY CLARK AND GILLIAN C. HAMILTON, SURVIVAL OF THE RICHEST: THE MALTHUSIAN MECHANISM IN PRE-INDUSTRIAL ENGLAND, JOURNAL OF ECONOMIC HISTORY (66:3), 2006.

7 POSITIVE CORRELATION BETWEEN IQ AND WEALTH US$ 120, ,000 MEDIAN INCOME AND NET WORTH OF YOUNG BABY BOOMERS BY IQ TEST SCORE: NET WORTH (LS) INCOME (RS) US$ 50,000 40,000 80,000 60,000 40,000 30,000 20,000 20,000 10,000 BCA Research & BELOW & ABOVE IQ TEST SCORE SOURCE: JAY L. ZAGORSKY, DO YOU HAVE TO BE SMART TO BE RICH? THE IMPACT OF IQ ON WEALTH, INCOME AND FINANCIAL DISTRESS, INTELLIGENCE (35:5), SEPTEMBER-OCTOBER 2007.

8 IQ TEST SCORE THE FLYNN EFFECT GREAT BRITAIN NETHERLANDS ISRAEL NORWAY BELGIUM BCA Research 2014 SOURCE: JAMES R. FLYNN, SEARCHING FOR JUSTICE: THE DISCOVERY OF IQ GAINS OVER TIME, AMERICAN PSYCHOLOGIST (54:1), 1999.

9 HEALTHIER BODIES = HEALTHIER MINDS CM 180 MEAN HEIGHT OF EUROPEAN MEN BY BIRTH COHORT: BCA Research 2014 GERMANY GREAT BRITAIN FRANCE ITALY SOURCE: T.J. HATTON AND B.E. BRAY, LONG RUN TRENDS IN THE HEIGHTS OF EUROPEAN MEN, 19TH AND 20TH CENTURIES, ECONOMICS AND HUMAN BIOLOGY (8), 2010.

10 IQ TEST SCORE IQ AND DISEASE BURDEN 100 IQ VERSUS BURDEN OF INFECTIOUS DISEASE IN 184 COUNTRIES BCA Research DISEASE BURDEN SOURCE: CHRISTOPHER EPPIG, UNIVERSITY OF NEW MEXICO.

11 END OF THE FLYNN EFFECT? US$ 11,000 REAL EXPENDITURE PER PUPIL* (IN DOLLARS) (LS) NAEP AVERAGE SCALE SCORE FOR MATH AND READING** (RS) ,000 9, , ,000 6, BCA Research * FOR ELEMENTARY AND SECONDARY STUDENTS. IN CONSTANT DOLLARS. SOURCE: U.S. DEPARTMENT OF EDUCATION, NATIONAL CENTER FOR EDUCATION STATISTICS (2012), DIGEST OF EDUCATION STATISTICS, 2011 (NCES ), TABLE 191 AND CHAPTER 2. ** SCALE FROM 0 TO 500. SOURCE: NATIONAL ASSESSMENT OF EDUCATIONAL PROGRESS, U.S. DEPARTMENT OF EDUCATION, INSTITUTE OF EDUCATION SCIENCES. BREAK IN SERIES REFLECTS SHIFT TO REVISED ASSESSMENT FORMAT.

12 LET S JUST FIX THE SCHOOLS : A REALITY CHECK The panel did not find any empirical studies that reached the rigor necessary to determine that specific turnaround practices produce significantly better academic outcomes. U.S. Department of Education, May 2008

13 THE RISE OF THE MACHINES

14 CALCULATIONS PER SECOND PER $1,000 THE POWER OF EXPONENTIAL CHANGE ELECTROMECHANICAL SOLID- STATE RELAY VACUUM TUBE TRANSISTOR INTEGRATED CIRCUIT PENTIUM 4 CORE I7 (4 TH GEN) CORE 2 QUAD PROCESSING CAPACITY OF A HUMAN BRAIN PROCESSING CAPACITY OF A MOUSE BRAIN COLLOSSUS UNIVAC I DEC PDP-1 IBM 1130 COMPAQ DESKPRO 386 ALTAIR DEC APPLE II PDP-10 PENTIUM III PENTIUM II IBM PC IBM AT PENTIUM CORE 2 DUO OPTICAL, QUANTUM, DNA, COMPUTING? HOLLERITH TABULATOR ANALYTICAL ENGINE IBM TABULATOR NATIONAL ELLIS 3000 IBM SSEC BELL CALCULATOR MODEL 1 IBM 704 SOURCE: RAY KURZWEIL, THE SINGULARITY IS NEAR: WHEN HUMANS TRANSCEND BIOLOGY, P.67, THE VIKING PRESS, DATAPOINTS AFTER 2000 REPRESENT BCA ESTIMATES.

15 SMARTER AND SMALLER

16 THE GENETIC REVOLUTION

17 HOBBIE-J LOOKING UP MURINE

18 SEQUENCING COSTS HAVE PLUMMETED $100,000,000 SEQUENCING COST PER GENOME $10,000,000 $95,000,000 $3,000,000 $1,000,000 $100,000 $10,000 $5,000 BCA Research SOURCE: NHGRI GENOME SEQUENCING PROGRAM. AVAILABLE AT: ACCESSED SEPTEMBER 3, 2014.

19 INVESTMENT CONCLUSIONS Focus on BRAIN stocks (Biotech, Robotics, Artificial Intelligence, Nanotechnology), as well as: Areas that are being transformed by emerging information technologies (Transport, Energy, Manufacturing) Prepare to live forever (Immortality has arrived; we just don t know it)