The Impact of Education on Fluid Intelligence

Abstract

Fluid intelligence, which refers to the ability of a person to solve novel problems independent of previously acquired knowledge, is a highly crucial factor in learning and has a big impact on educational and professional success. However, the impacts of formal education on fluid intelligence has been neglected in the literature. In this paper, we apply an exogenous variation in years of schooling to explore the impacts of education on fluid intelligence. From 1971 to the end of 1973, the global price of crude oil increased over 400%. Such an increase in oil price improved the revenue of the Indonesian government from oil production. Indonesia invested most of the new income on central government’s construction projects famous as “Presidential Instructions” (INPRES), which aimed to improve regional equity in the country. The largest INPRES program, known as Sekolah Dasar INPRES, also remains the largest school construction project in history. The government built over 60 thousand elementary schools all over the country from 1973 to 1978. Duflo (2001) studies the impacts of the program on years of education. We have received INPRES data from Duflo and combined it with the Indonesian Family Life Survey (IFLS), which contains individual cognitive ability tests. This dataset represents 83% of the population of 13 out of 26 Indonesian provinces. The results show positive and statistically significant impacts of years of schooling on the fluid intelligence of both females and males.