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I think this study has the same problem as the argument that hedge funds are a waste of time because hedge funds don't make money on average. Imaging the averag

I think this study has the same problem as the argument that hedge funds are a waste of time because hedge funds don't make money on average. Imaging the average return of hedge funds was 50%, what would happen? people would open up more and more less and less competent hedge funds until it was a flat return and no longer attractive. You're measuring the results post (arguably) a market force which has impacted the results. If paying managers more than the current average showed obvious results, the average would go up. You also have correlation/causation. I'm not sure if i'm pro bosses mental pay or whether I think it makes any difference just don't buy this argument/study.

jimbokun 8y ago
"I think this study has the same problem as the argument that hedge funds are a waste of time because hedge funds don't make money on average." Maybe they are a waste of time, on average?
- zimablue 8y ago
  Not making money on average like I'm trying to say is a true but meaningless statement. But there's a difference between the statement: "I can't make money on average by putting money into this system (this system isn't undervalued)" and "This system is worthless" which is kind of conflated. Like the system will always expand to the point that there's no free cash on the table, so looking at it and saying "on average paying more for CEOs or putting money into a random hedge fund doesn't move the dial" has no bearing on whether executive pay being high or hedge funds existing is keeping money off the table (if they were smaller/lower there would be gain to expanding). The gradient at the equilibrium is always zero, "We found that paying developers more or less doesn't impact the average success of a firm". Yeah because there's an equilibrium where the firms/market has decided roughly what a developer costs, and everyone is paid close to that. That's not an argument that developer pay should be wildly less, because if the average was moved to "developers make $10k per year" than at THAT point, far from the equilibrium, you'd see a big gradient that firms who paid developers more (ergo probably got better devs) did far better.

jimbokun 8y ago

"I think this study has the same problem as the argument that hedge funds are a waste of time because hedge funds don't make money on average." Maybe they are a waste of time, on average?

zimablue 8y ago
Not making money on average like I'm trying to say is a true but meaningless statement. But there's a difference between the statement: "I can't make money on average by putting money into this system (this system isn't undervalued)" and "This system is worthless" which is kind of conflated. Like the system will always expand to the point that there's no free cash on the table, so looking at it and saying "on average paying more for CEOs or putting money into a random hedge fund doesn't move the dial" has no bearing on whether executive pay being high or hedge funds existing is keeping money off the table (if they were smaller/lower there would be gain to expanding). The gradient at the equilibrium is always zero, "We found that paying developers more or less doesn't impact the average success of a firm". Yeah because there's an equilibrium where the firms/market has decided roughly what a developer costs, and everyone is paid close to that. That's not an argument that developer pay should be wildly less, because if the average was moved to "developers make $10k per year" than at THAT point, far from the equilibrium, you'd see a big gradient that firms who paid developers more (ergo probably got better devs) did far better.