Thursday, June 04, 2009

Are Finance Professionals overpaid?

NPR's Planet Money talks to Ariell Resheff about Resheff and Philippon's paper that looks at whether barriers to entry and a lack of transparency lead to "excessive" pay (i.e. positive rents) in the financial field. The authors suggest that deregulation played a large role in this since often neither the firm nor the so-called investors knew what they were dealing and a messed up incentive structure.

Their conclusion? Finance professionals earned abnormal rents in the 1990s and early 2000s. In other words, finance professionals (albeit not financeprofessors!) seemingly were overpaid.

Definitely worth listening to!

No comments: