Research
My summer spent in Cambridge has seen me interacting with lots of (future) scientists - experimental psychologists, pathologists, zoologists, etc. It was interesting to discuss with them their research, and also what are the potential key areas of future biological research. Clearly, the scientists are an important aspect of society's development; they develop theories and ideas for others to use and apply to our everyday life, and in turn drive technological development. But in turns of financial rewards, they are certainly not as well paid compared to some other jobs (namely, investment banking). Is this explainable?
Well, traditional labour market theories have always suggested that high risks should come with high returns, and certainly both industries have their own risks. However, what I suppose will be true is that many will argue that bankers put in significantly higher hours (is this really true?), have a more stressful life, and of course, they work with significant sums of money which obviously entails them to higher rewards. But, scientists do work hard (depends on which workaholics I guess), and their rewards are more than just financial, and they are the ones who actually lead to life improvements (maybe not immediate changes in life), well bankers only help to direct monetary resources without leading to an improvement in society's well-being ( I admit, this is a highly contentious point which you can debate on). As such, conventional labour market theory will suggest why researchers should be paid significantly less.
However, I must point out that there is much more to this than just comparing work returns and work environments. Finance academics are the ones who lay the groundwork for bankers, for banks to earn millions, and yet they are not rewarded accordingly. In fact, what I feel is a stronger reason for why bankers are paid significantly more is because the finance industry is a highly distorted industry which strays away from conventional literature. Possibly, a whole new theory (even tournament theory, and conventional reward theory will fail to explain convincingly why bankers as a whole are paid so much more) has to develop just for the finance industry.
It is also worrying that the finance industry is drawing away the top talents from other fields such as engineering and the sciences. What would be the possible implications if this continues for another few decades? How would this affect economic growth and development?
Economists have often invoked the term "technological progress" in explaining economic growth, but even then, we have the feintest idea of what that term should encompass. Would it ever be possible to have a better measure of technlogical growth based on actual developments in science and technology (warning though, there's a lot of confounding effects here...)?
Well, traditional labour market theories have always suggested that high risks should come with high returns, and certainly both industries have their own risks. However, what I suppose will be true is that many will argue that bankers put in significantly higher hours (is this really true?), have a more stressful life, and of course, they work with significant sums of money which obviously entails them to higher rewards. But, scientists do work hard (depends on which workaholics I guess), and their rewards are more than just financial, and they are the ones who actually lead to life improvements (maybe not immediate changes in life), well bankers only help to direct monetary resources without leading to an improvement in society's well-being ( I admit, this is a highly contentious point which you can debate on). As such, conventional labour market theory will suggest why researchers should be paid significantly less.
However, I must point out that there is much more to this than just comparing work returns and work environments. Finance academics are the ones who lay the groundwork for bankers, for banks to earn millions, and yet they are not rewarded accordingly. In fact, what I feel is a stronger reason for why bankers are paid significantly more is because the finance industry is a highly distorted industry which strays away from conventional literature. Possibly, a whole new theory (even tournament theory, and conventional reward theory will fail to explain convincingly why bankers as a whole are paid so much more) has to develop just for the finance industry.
It is also worrying that the finance industry is drawing away the top talents from other fields such as engineering and the sciences. What would be the possible implications if this continues for another few decades? How would this affect economic growth and development?
Economists have often invoked the term "technological progress" in explaining economic growth, but even then, we have the feintest idea of what that term should encompass. Would it ever be possible to have a better measure of technlogical growth based on actual developments in science and technology (warning though, there's a lot of confounding effects here...)?
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