Which professions are paid too much given their value to society?

Many jobs have spillover effects on the rest of society. For instance, the value of new treatments discovered by biomedical researchers is far greater than what they or their employers get paid, so they have positive spillovers. Other jobs have negative spillovers, such as those that generate pollution.

A forthcoming paper, by economists at UPenn and Yale, reports a survey of the economic literature on these spillover benefits for the 11 highest-earning professions.

There’s very little literature, so all these estimates are very, very uncertain, and should be not be taken literally. But it’s interesting reading – it represents a survey of what economists think they know about this topic, and it’s surprisingly little.

Here are the bottom lines – see more detail on the estimates below. (Note that we already discussed an older version of this paper, but the estimates have been updated since then.)

We calculated mean income for 2005 in an earlier article. We increased income by 30% to account for nominal wage growth since then.

The paper uses the expressions spillover and ‘externality’. An ‘externality’ is a technical term for a ‘cost or benefit that affects a party who did not choose to incur that cost or benefit.’ The authors of the paper call it an ‘externality’ when someone who buys a service does (or does not) benefit after taking account of the cost of purchasing it. This is a nonstandard usage,

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The payoff and probability of obtaining venture capital

Venture capital has facilitated the growth of many companies including Apple, Google and Facebook. But is venture capital a key to success for most startups? In this post, we answer three component questions:

  1. What are the likely outcomes for companies backed by venture capital?

  2. What fraction of companies attract venture capital?

    a) How many startups and venture capital deals are there?

    b) What proportion of applicants to venture capitalists say they accept?

  3. How much work is it to apply for venture capital?

We found that:

  • According to the data of Professors Hall and Woodward, the average venture capital-backed founder exits with $5.8 million of equity.

  • Roughly 1% of companies that aspire to obtain venture capital obtain it.

  • Finding out whether you will receive venture capital can take months to years of work.

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How much do Y Combinator founders earn?

Paul Graham


We’re interested in estimating how much tech entrepreneurs earn, since it’s one of our top recommended careers, and this is in part because it seems particularly high earning (enabling high donations, and potentially indicating the creation of a lot economic value). As part of this, we wanted to find out: if you can get into Y Combinator, how much will you earn? We’re particularly interested in Y Combinator because it’s the best known seed accelerator, and the data is available. In summary, here’s what we found:

  • The total value of Y Combinator companies is $26 billion, of which the founders own $8 billion.
  • Most of the returns have gone to a tiny minority of super-successes. The founders of AirBnB, Dropbox and Stripe are worth about US$7 billion, about 80% of all founders’ equity, although they account for 0.5% of the companies.
  • Outside of the most successful companies, it was still possible to earn significant returns. 12% of companies from the first five years of Y Combinator are now worth US$40 million or more, and a further 10% have sold for US$5-40 million. The remainder probably earned little more than their (low) salaries.
  • On average, founders from the first five years of Y Combinator are now worth US$18 million after 5-9 years, giving past average earnings of US$2.5 million per year
  • When it invests in its companies, Y Combinator values them at US$1.7 million, of which each founding team owns $1.6 million. This implies that founders must earn (in cash or equity) substantially more than $100,000 per year on average.
  • We expect the average earnings going forward to be less than $2.5 million per founder per year because of competitors to Y Combinator and regression to the mean.
  • Y Combinator accept 2.5% of applications.
  • Your personal expected earnings from applying to Y Combinator depend on your chance of being accepted and your chance of creating the next AirBnB or Dropbox.

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Biographies of Top Entrepreneurs

Lots of the people we coach want to know how to become a successful technological entrepreneur. One approach to this difficult question is to assess which unusual traits are common among the most successful tech entrepreneurs. In this post, we review the biographies of the ten richest tech entrepreneurs. Here is what we found:

  • All attended American Universities, though only half graduated (3 to start companies but 2 dropped out before they started their companies), and none have postgraduate qualifications.

  • 8 of the 10 entrepreneur’s Wikipedia page had stories or achievements demonstrating exceptional tech skills or interest in technology. (Azim Premji (Wipro) and Lawrence Ellison (Oracle)) are the only two whose Wikipedia pages do not demonstrate exceptional talent/interest in tech.

  • Fewer demonstrated early interest in business – Jeff Bezos and Michael Dell being the only exceptions

  • Only three took a job after finishing university and before starting a company.

    • Jeff Bezos, worked in multiple computer science-related jobs

    • Larry Ellison, worked for a data company while developing his product

    • Paul Allen, worked in programming before starting Microsoft

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Assessing the social value produced by founding Google


80,000 Hours has outlined some reasons tech entrepreneurship could be a particularly promising career path. One relevant factor is that the technology sector is a candidate for a sector of the economy that produces significantly more social value than its total earnings. Some reasons for this are:

  • Anecdotally, people report that they benefit substantially more from certain technologies than they pay for them. For example, Google provides services to Google users at the very low cost of unobtrusive advertisements, and Google users benefit substantially relative to this cost.

  • Technological innovation has been a large driver of economic growth, and economic growth helps people who haven’t been born yet, who don’t pay for past technological innovation.

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In which career can you make the most difference?



Previously, we introduced a way to assess career opportunities in terms of their potential for positive impact, but which careers actually do best on these criteria? In this post, we’ll apply an adapted version of this framework to some career paths that seem particularly promising for recent graduates. Using what we’ve learned over the past two years of research and coaching over 100 people, we’ll provide a ranked list of options.


  • If you’re looking to build career capital, consider entrepreneurship, consulting or an economics PhD.
  • If you’re looking to pursue earning to give, consider high-end finance, tech entrepreneurship, law, consulting and medicine. These careers are all high-earning in part due to being highly demanding. Our impression is that software engineering, being an actuary and dentistry are somewhat less demanding but also highly paid.
  • If you’d like to make an impact more directly, consider party politics, founding effective non-profits, working inside international organisations, government or foundations to improve them, and doing valuable academic research.
  • If you’d like to advocate for effective causes, consider party politics, journalism, and working in international organisations, policy-oriented civil service or foundations.
  • Some career paths that look promising overall are: tech entrepreneurship, consulting, party politics, founding effective non-profits and working in international organisations.
  • Some paths we think are promising but are largely neglected by our members and would like to learn more about are: party politics, working in international organisations, being a program manager at a foundation, journalism, policy-oriented civil service and marketing.

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Should more altruists consider entrepreneurship?


One thing you might consider, if you’re aiming to do the most good with your career, is going into entrepreneurship. In this post I’ll summarise our reasons for thinking for-profit entrepreneurship[^1] is a promising career path for altruists, and outline our plans for research which will form the later parts of this blog series.

In summary:

  • For-profit entrepreneurship is potentially one of the highest earning careers, making it an attractive option for earning to give
  • It seems more promising than other high-earning careers for doing good directly, because you have the option to sell products that help the world, and contribute to innovation in the economy
  • Furthermore, we think that startups may be one of the best ways to build career capital early on in your career

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Entrepreneurship: a game of poker, not roulette

Follow-up to: Salary or startup? How do-gooders can gain more from risky careers

In a previous post, I discussed how high-risk, high-reward careers can be a better deal for those who want to do good: if you strike it rich, buying a tenth car will add very little to your personal quality of life, but vaccinating a tenth child will help that child about as much as the first one. This matters in practice: most venture-backed startups fail, but the average (mean) financial gain to founders is measured in millions.

However, it would be a mistake to think of the returns to entrepreneurship as predictably stemming from just showing up and taking a spin at the wheel of startup roulette. Instead, entrepreneurship is more like poker: a game where even the best players cannot predictably win over a single night, but measurable differences predict that some will earn much more than others on average. By paying attention to predictors of entrepreneurial success (whether good news or bad), you can better tell whether you have a winning hand or should walk away for a different game. And even if the known predictors don’t bear on your own situation, knowing about these predictors can dispel the “lottery illusion”, and can let you know that success is not magic, and that it is worth investing in skill, hard work, strategy, and an understanding of the game.

Let’s take a look at some of those predictors…


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Salary or startup? How do-gooders can gain more from risky careers

Consider Sam, a software engineer at Google. His employer ranks highly in both quality-of-life and salary rankings. Sam is a great coder, and passionate about his work. But Sam is not satisfied: he is sorely tempted to take his savings and launch his own company. There are costs in taking the plunge: entrepreneurship would mean working harder, and investing time and money into a venture that might easily fail with nothing to show for it. On the other hand, success would mean bringing his vision to life, and potentially a financial payoff far beyond what he could hope for as a salaried employee.

Considering just these factors, Sam isn’t sure which way to go, like many other talented technologists. But if one of Sam’s goals is making a big impact on the lives of others, that can tip the balance towards entrepreneurship. Here’s how…

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