are trapped in a linear world. Their analysis is all about playing around with various (partial) correlation coefficients. Maybe somebody could tell them that the correlation coefficient measures the strength of the linear association between two variables.

>>If the heritability of IQ were 0.5 and ...

I just skimmed through their paper but on page 9 they write that a rough estimate (which enters the equation DeLong referes to) of the direct and indirect (including schooling) effect of IQ on earnings is 0.266, which has to be interpreted (if I understand them correctly) as "a one standard deviation increase in IQ (afaik 1 sd = 15 points) leads to a 27 percent of a standard deviation increase in earnings". I don't have any troubles with semilog transformations, but I don't see the benefit of normalizing earnings. I can only guess that the estimated effect is probably too small.

This is the only figure (yes, no scatterplots at all) in the whole paper (Intergenerational Income Transition Probabilities):

Somehow I do not have the impression that parent's and children's incomes are bivariate normal distributed... Also interesting: "The income of the children was measured when they were aged 26 [sic] or older. Great! Proper comparisons should be made around age 50.