Are top CEOs underpaid? (2019)
marginalrevolution.com
marginalrevolution.com
https://tylercowen.com/dd-product/big-business/
The two papers referenced appear to be:
Taylor 2013: https://www.sciencedirect.com/science/article/abs/pii/S03044...
Taylor 2013 (an appendix diving into the math): https://finance-faculty.wharton.upenn.edu/luket/wp-content/u...
Nguyen and Nielsen 2014: http://www.kaspermeisnernielsen.com/WDT_MS.pdf
I was not able to immediately identify the reference to the worker compensation statistic referred to as "Isen 2012".
It's "Dying to Know: Are Workers Paid Their Marginal Product?" a working paper by Adam Isen.
Once a quarter or so the local director would buy pizza for our team. Maybe 12 pizzas altogether from a national chain pizza place. Later on "to save money" they said they wouldn't do that. Once a quarter... cost cutting.
So on the appointed day I just bought pizza and told the team to come on down to the break room and enjoy. Maybe $200 in pizza or such, we were going to have our little break as far as I was concerned.
Later some crappy manager complained that I did that, the director was reportedly not pleased. Fortunately nothing came of it, like bro of all the people to complain about ...
Depending on how long ago (inflation) and what other expenses got cut, the cost savings might actually be meaningful.
You can also further assume bulk discounts are irrelevant because not all teams will have parties at the same time.
12 pizzas. Let’s say large. That’s 12 slices each? Average person eats let’s say 3 slices (some won’t eat, some have one, some have four, some, like me, have brains that are perpetually stuck on Grad School and will embezzle slices until there’s no leftovers). So 144 slices could do maybe 48 (let’s say 50 people). So that’s give or take $4 per person.
That’s one of those “a travel booking error worth of money brings a subjective amount of joy, and the only wrong move would be to stop unless the team wants it to stop” things.
Which is absolutely ripe for some Director of Couch Spelunking to earn their Golden Monocle award for making the spreadsheet show brackets around budgets and win a trip to Boise.
200/12 is the cost of a pizza.
Unless you are buying everyone a pizza divide a pizza by 6 or 7 and you end up at $50,000 plus this is a cost you can deduct.
You are buying that many pizzas you can get a huge discount.. probably get those costs down by half. $25,000...
You won’t get a bulk discount because you won’t be buying it for the entire company at the same time. Different teams have different team building events/times.
So about $16 per pizza.
There's no mention of how many team members were having pizza. Probably not one each though.
We can thus assume that if all teams did something similar (why would you only allow some teams and not others), the dollars add up and that is how you look at it from a company perspective. Not the one team’s spend, but the overall spend.
Nobody said that but you. Everyone else reads “12 pizzas”, not people. rkomorn even quoted it for you, and you apparently read right past it…again.
How do you know the team has 12 members? Are you basing that on the number of pizzas OP bought?
Stop right there. This entire statement here is wrong.
To estimate how many people the *12 pizzas* were for, we can use a standard rule of thumb:
### General pizza math:
* A *large pizza* usually has *8 slices*. * Most people eat *2–3 slices*.
So:
* *12 pizzas × 8 slices = 96 slices total* * If people ate:
* **2 slices each** → feeds **48 people**
* **3 slices each** → feeds **32 people**
Since this was for a *team* within a 5,000-employee company — probably a local team (not the whole company) — the number of people was likely in the *25–40* range.
### Final Estimate:
*12 pizzas would reasonably feed about 30 to 40 people*, assuming average appetites.
You need more than you think as not all pizzas will be the same flavour. The vegetarian ones will get eaten immediately by people who aren’t vegetarian. Then the complaints roll in.
Apply this to various other pizza type.
Order 1 pizza for every two people.
If it turns out there's a huge population of like gluten free, you say "Ah my bad" and correct the next time.
Other teams got a lot more actually, others none.
It’s obviously going to be flawed unless it’s a very basic job. The peripheral costs are the devil. Eg: Stationary, payroll costs, uniform, software licences, swipe cards, coffee, water, rent.
However mine is an awful lot higher than the CEOs (as a percentage, not in dollars).
Without HR/hiring, the other departments don't exist since they all need to be staffed. Without management, nobody knows what to do. Without facilities/IT/building manager, nobody has internet or water or desks or chairs.
And so on and so forth. Everyone is essential, and everyone also has an overinflated idea of their own importance and an underinflated idea of the importance of others.
Tell us more…
Not sure if I'm missing a facetious tone
\lim_{v\to+0}v
\lim_{v\to-\infinity}vJust like how WAymo is building the single best AI brain at driving, we need the same for CEOs. One CEO mind to run it all!
Original report:
https://www.jstor.org/stable/24550350
Direct link to pdf h/t @chao-:
The article states that workers take home a higher portion of the value they create.