Author(s)

Michael Grabinski, Galiya Klinkova

Department of Business and Economics, Neu-Ulm University, Wileystr, Neu-Ulm, Germany.

The motivation of this paper is to show how to use the information from given distributions and to fit distributions in order to confirm models. Our examples are especially for disciplines slightly away from mathematics. One minor result is that standard deviation and mean are at most a more or less good approximation to determine the best Gaussian fit. In our first example we scrutinize the distribution of the intelligence quotient (IQ). Because it is an almost perfect Gaussian distribution and correlated to the parents’ IQ, we conclude with mathematical arguments that IQ is inherited only which is assumed by mainstream psychologists. Our second example is income distributions. The number of rich people is much higher than any Gaussian distribution would allow. We present a new distribution consisting of a Gaussian plus a modified exponential distribution. It fits the fat tail perfectly. It is also suitable to explain the old problem of fat tails in stock returns.

Fat Tail, Income Distribution, Chaos, Finance, IQ

Grabinski, M. and Klinkova, G. (2020) Scrutinizing Distributions Proves That IQ Is Inherited and Explains the Fat Tail. Applied Mathematics, 11, 957-984. doi: 10.4236/am.2020.1110063.