Intelligence and defense spending: a cross-country evidence

This paper investigates the association between intelligence and military expenditure, across 159 nations during the 1990-2013 period. The econometric results we provide are surprising. On one hand, we fail to confirm that intelligence has monotonic effect on military spending. However, the results also suggest a novel type of intelligence-military spending nexus. In particular, the regression estimates show that there is inverted U-shaped relationship between IQ and military expenditure. From a policy perspective these findings suggest that cognitive development that increases military expenditures is sustainable so long as defense sector has positive spillovers on economic and social well-being