Income inequality and incentives

An article by Robert H Frank on trickle down economics in the NY Times points out that there is little correlation between high earners pay and how hard they work. This is backing for my views on directors pay.

In a defence of his ideas from Greg Mankiw’s criticisms, he mentions the importance of behavioural factors, which were the central theme of my post.

Of course, as evident from reading the comments, ideology is as important as economics here. There is a fundamental divide between egalitarians and ideological capitalists.

One thing that bothers me about the arguments on both sides is that they think that there is necessarilly a gain to someone from getting people. Again, there is evidence that longer hours do not always mean greater output.