'So Strong'

While intelligence influenced things that might naturally increase equity ownership such as wealth and income, the authors said IQ determined who owned the most stocks within those categories as well. Among the 10 percent of individuals with the highest salary, "IQ significantly predicts participation" in the stock market, they wrote. For example, people in the highest-income ranking who scored lowest on the test had a rate of equity market participation that was 15.7 percentage points lower than those with the highest IQ.

"If you look at the significance of IQ related to other factors like income or wealth, certainly it plays a very large role," Keloharju, a finance professor at Aalto, said in a phone interview. "It's very difficult to get around that problem, but the results are so strong here. We are playing with lots of different controls and lots of different specifications, and all the time things work really well."

American economist Harry Markowitz won a Nobel Prize in 1990 for his theory that owning a larger variety of assets tended to maximize returns for a certain amount of risk. The 2009 study by the Fed found that 51.1 percent of American families own stocks directly or indirectly, and of those who do, 36 percent have shares in one company.

'Difficult To Justify'

"It's difficult to justify why someone wouldn't invest in the stock market, knowing what a good deal it has been," said Linnainmaa, a co-author of the study from the University of Chicago's Booth School of Business. "The classical explanations for non-participation have been participation costs. It's not just that it may be expensive to buy stocks and mutual funds, but people may not have enough knowledge about them."

Finnish soldiers were an ideal sample because differences in race, schooling and market access are minimized, the authors said. Draftees were about 20 years old when they were given 120 questions in math, language and logic. The authors divided the results into rankings and compared them with stock-ownership records. People who don't serve in the country's military such as women weren't in the sample.

Robert Shiller

"There is an older literature on whether SAT scores of an investment manager's college helps predict his or her success," Robert Shiller, an economics professor at Yale University and co-creator of the S&P/Case-Shiller home-price index, said in an e-mail. "This paper has a much better measure of intelligence," and the "results are therefore a significant advance," he wrote.

Finnish draftees aren't representative of typical investors, said Wells Fargo's Jacobsen. IQ is a function of culture and shouldn't be generalized across borders, he said. The authors also failed to discuss whether the test given to the soldiers was a valid way to grade thinking.

"They should've been at least honest about it from the outset, and say, 'Hey, this is not about IQ and investing, this is about Finnish males that took this particular test,'" he said in a telephone interview. Finland's lack of ethnic diversity "invalidates it for extrapolating it to other cultures," he said. "That makes it that much more inappropriate to draw inferences from it about other cultures."

Fund Outflows