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Comment by rlanday | Hacker News Reader

No, many people believe the value of money in non-linear but most of those people believe that the marginal utility of each additional dollars diminishes as your wealth increases, rather than increasing. I.e. even if you might earn more money on average at a startup (which the article claims isn’t the case), it still wouldn’t be worth it because it’s better to earn a decent salary from a big company with high probability. Who seriously believes that the marginal value of money increases as you have more?

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Interesting that while I agree that the marginal value decreases I also feel (literally feel) that somehow having say an order of magnitude more would somehow be qualitatively different (and better). Funny to see my own biases play tricks (?) on me!

Paradoxically, I think that you feel that way _because_ of the decreasing marginal value of money. Superfluous income is disposable income, and spending money in a way entirely of your choosing is pleasurable.

Especially if you're already making enough to get by, the value of the money you're already making is "priced in" to your subconscious analysis. Thus, the next order of magnitude of income really is qualitatively different.

> Superfluous income is disposable income

Only if you don't rent a nicer/closer apartment. (OTOH, lower commute times are associated with happiness).

Of course, this is a good interpretation! Cheers.

I think one could define a metric in which average result is higher for startup employees than for BigCo employees.

Someone with $100M has access to politics/investments/etc that most people earning $250k/yr don't. So while the average monetary payout is smaller (1% chance at $100M is equal to a 50% chance at 2M), average social currency is much higher. (1% chance at the social power that comes with $100M vs 0% chance in the BigCo job).

You'll only make $100M of you're a founder of one of the very few really large, successful companies. It's a 1 in 10,000 chance or worse, not 1 in 10. (And mean value of $100M at 0.01% right now is only $10k)

Unless you think that marginal value decreases at quite an exponential rate, an order of magnitude more would probably be noticeably better. That's a huge difference (e.g. the difference between minimum wage and well-to-do, between well-to-do and rich).

Until maybe ~$100M net worth, for me personally, I think an order of magnitude difference would indeed be qualitatively different / better.

Who seriously believes that the marginal value of money increases as you have more?

There are plausible arguments that money can often have increasing marginal utility for poor people. Google "bee sting theory of poverty".

That's not really the relevant range for this discussion.

With $1M net worth (expect $40k/year annuity,) you'd have to live frugally to be truly independent, especially of you have a family. With $5M net worth, you could live well, independently.

A 9-5 is unlikely to let you save $1M, much less $5M, unless you're high level in a big company. If you're very early in a big success, you can get there.

However, in many ways, employee 15 and up is the worst of both worlds. Small stock grant, sub market salary and benefits.

Caveat lector: author is talking about USA.

I also believe that the marginal utility of additional dollars decreases, but I prefer the startup value prop for me. My personal calculation is something like this, where "value" is some personal average of marginal utility:

Big co: $50k extra from $100k -> $150k = $50k * 1 value / dollar * 100% = 50k value

Startup: $10M extra from $100k -> $10M = $10M * 0.25 value / dollar = 2.5M value * 5% chance of success = 125k value

There's also the intangible value of having hope for big success.

The entire point of the article in question is that startup employees make less on average, so forgive me if I'm a bit skeptical of your claim that the startup job will pay on average a full order of magnitude more.

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