Forum Post: Financial services pay...is it skill, talent, or something else?
Posted 12 years ago on Oct. 23, 2011, 7:37 p.m. EST by slewis
(7)
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Some folks might be interested in the points about hazards of confidence in Dan Kahneman's NY times magazine book excerpt:
http://www.nytimes.com/2011/10/23/magazine/dont-blink-the-hazards-of-confidence.html
Note that a number of discussions around 1% pay revolve around attracting 'talent' to financial services...as if what they did had anything to do with their 'success' or 'failure'. From data and research, Kahneman shows that success in financial services has almost nothing to do with 'skill' or 'talent', and is essentially luck. People should know this about Wall Street, because they typically are very confident in their belief that they deserve to be rewarded obscenely. Kahneman shows that's not true.
The typical pay is waaaay above average and those who move up to the $500k plus salaries are those who will step on anything and everything. That's why I haven't made it to that level and why I don't care either.
I think Kahneman's basic point is this: whether it's true or not (and his analysis of real data shows it's not), people believe the story that talent/skill is related to success...in financial services and elsewhere.
But in financial services this wrong belief is a big deal as it makes possible the belief that 'they deserve it'.
I agree with you that those that make over $500 could probably be characterized as willing to step on anything...and so I think the argument can and should be made (publicly) that they are not deserving (i.e. it's not because of their talent or skill, or experience).