| ▲ | CEOs capture about 68–73 percent of the value they bring to their firms(marginalrevolution.com) |
| 59 points by delichon 17 hours ago | 43 comments |
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| ▲ | chao- 15 hours ago | parent | next [-] |
| This is from 2019. It is a very short excerpt from a 2019 book, which is mentioned at the end, but oddly the link is not to the book itself: 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". |
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| ▲ | mellosouls 14 hours ago | parent [-] | | I was not able to immediately identify the reference 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. |
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| ▲ | duxup 16 hours ago | parent | prev | next [-] |
| Long time ago I was just an IC at some company, 5k employees. 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 ... |
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| ▲ | b_e_n_t_o_n 15 hours ago | parent | next [-] | | Cost cutting like that is purely performative, so buying the pizzas yourself just makes them look bad. | |
| ▲ | phendrenad2 13 hours ago | parent | prev | next [-] | | You disrupted part of the "I did <pointless thing> and accomplished <fudged metric>" (but he probably reported that anyway) | |
| ▲ | andsoitis 15 hours ago | parent | prev [-] | | That amounts to just over $300,000 per year for all 5,000 employees. $200/12 x 5000 x 4 = $333,333.33 Depending on how long ago (inflation) and what other expenses got cut, the cost savings might actually be meaningful. | | |
| ▲ | mb7733 14 hours ago | parent | next [-] | | Your calculations are off unless it's assumed each employee eats an entire pizza. Not to mention bulk discount. | | |
| ▲ | andsoitis 14 hours ago | parent [-] | | They said they spend $200 to throw a party for the team of 12. It doesn’t matter whether or not everyone ate it. They spent the money. You can also further assume bulk discounts are irrelevant because not all teams will have parties at the same time. | | |
| ▲ | mikestew 14 hours ago | parent [-] | | Read the original comment slowly this time, and notice what the “12” refers to. There’s only one “12”, should be easy. | | |
| ▲ | Waterluvian 13 hours ago | parent [-] | | Napkin math to get a feel for scale: 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. |
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| ▲ | nobodyandproud 11 hours ago | parent | prev | next [-] | | ChatGPT (I gave no hints in my prompt): 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**
### Most likely case: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. | | |
| ▲ | lostlogin 8 hours ago | parent [-] | | Better than AI: ask someone who has ordered lots of piazza recently. 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. | | |
| ▲ | rkomorn 5 hours ago | parent [-] | | Haven't ordered any piazza recently. Last one I saw was Mike Piazza at a Mets game, so it's been a while. |
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| ▲ | ipaddr 14 hours ago | parent | prev | next [-] | | Those calculations are off. 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... | | |
| ▲ | andsoitis 14 hours ago | parent [-] | | If you had to pay $200 for pizza for 12, then to buy pizza for 5,000 the cost is 200/12 x 5000. 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. | | |
| ▲ | rkomorn 14 hours ago | parent [-] | | You sure? OP says "Maybe 12 pizzas altogether from a national chain pizza place." and then says they spent $200 or so. So about $16 per pizza. There's no mention of how many team members were having pizza. Probably not one each though. | | |
| ▲ | andsoitis 14 hours ago | parent [-] | | The point is to have a party for a team of 12, they were spending $200. It does not matter whether it was all eaten, they spent that amount for the team. 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. | | |
| ▲ | mikestew 14 hours ago | parent | next [-] | | The point is to have a party for a team of 12 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. | |
| ▲ | rkomorn 14 hours ago | parent | prev | next [-] | | Maybe I'll try this as a question: How do you know the team has 12 members? Are you basing that on the number of pizzas OP bought? | |
| ▲ | nobodyandproud 10 hours ago | parent | prev | next [-] | | > The point is to have a party for a team of 12 Stop right there. This entire statement here is wrong. | |
| ▲ | marcusb 13 hours ago | parent | prev [-] | | > Maybe 12 pizzas altogether |
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| ▲ | duxup 13 hours ago | parent | prev [-] | | It was just a local tradition with one team. Other teams got a lot more actually, others none. | | |
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| ▲ | figassis 16 hours ago | parent | prev | next [-] |
| Almost every average to high performance employee captures less than the value they bring. Companies are not going to pay you 100% of your value as that is always seen as bad deal by the company. They want to feel like they're saving. Why else would you need to negotiate comp? |
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| ▲ | estearum 15 hours ago | parent | next [-] | | Isn't that the subtext? IMO 70%+ seems really really high, especially for larger firms which, by definition, provide a massive amount of leverage to senior leaderships' decision-making. | | |
| ▲ | lostlogin 8 hours ago | parent [-] | | It’s interesting to do the calculation for one’s own work. 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). | | |
| ▲ | estearum an hour ago | parent [-] | | I don't think the peripheral costs are even the bulk of it. The real value of the company is problem selection, brand recognition, coordination, hiring, and elimination of non-value add problems (e.g. an early stage CEO spends a huge amount of their time managing government registrations, which is later managed elsewhere in the company but not by 99.999% of employees) |
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| ▲ | pkcsecurity 15 hours ago | parent | prev | next [-] | | It’s not just “seen as a bad deal by the company” - a business can’t give 100% of the value back to the employee because it has this pesky thing called “profits” it has to worry about :) | | | |
| ▲ | andsoitis 15 hours ago | parent | prev [-] | | > Companies are not going to pay you 100% of your value Tell us more… | | |
| ▲ | wnc3141 13 hours ago | parent [-] | | If at your ceramics firm, you make and sell a mug with a ten dollar margin, if you then require ten dollars of wages for that time, then why did the company bother putting the capital at risk? Not sure if I'm missing a facetious tone |
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| ▲ | mellosouls 15 hours ago | parent | prev | next [-] |
| By "value" this means a function of the stock value that is lost when a CEO dies. Original report: https://www.jstor.org/stable/24550350 Direct link to pdf h/t @chao-: http://www.kaspermeisnernielsen.com/WDT_MS.pdf |
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| ▲ | refurb 10 hours ago | parent | prev | next [-] |
| Whoever can measure accurately how much value a CEO brings to their firm deserves a Nobel Prize. |
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| ▲ | digitalPhonix 5 hours ago | parent [-] | | Because it requires the invention of new techniques for measuring infinitesimally small quantities? (Sorry) | | |
| ▲ | soraminazuki 4 hours ago | parent [-] | | Mathematicians have your back. \lim_{v\to+0}v
Or if we're talking about long term impacts to society: \lim_{v\to-\infinity}v
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| ▲ | downrightmike 16 hours ago | parent | prev | next [-] |
| Time to automate them with AI and dramatically boost profits! Just 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! |
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| ▲ | ionwake 16 hours ago | parent | prev | next [-] |
| doubt |
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| ▲ | derbOac 15 hours ago | parent [-] | | Yeah this is the sort of thing I'd want to read the primary studies of, and they'd better be rigorous. I doubt they are. |
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| ▲ | scaramanga 15 hours ago | parent | prev [-] |
| CEOs: the real victims of capitalism. |
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| ▲ | lostlogin 8 hours ago | parent | next [-] | | Can down voters explain? The article states that workers take home a higher portion of the value they create. | |
| ▲ | 8 hours ago | parent | prev [-] | | [deleted] |
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