How to Be Mellow about Money

This was not part of the original talk or website, but was added in August 2020.

People often talk about the decision to work at a non-profit (which includes most credible academic institutions) as being willing to accept a "discount" to one's market value. For example, here's an answer from Michell Baker (CEO of Mozilla, in the news at a time when Mozilla is laying off 250 people and shutting down key projects):

Q: Please explain how your salary of $2.5 million couldn't be put to better use as part of Emerging Technology's budget?
A: ... Executive compensation is a general topic — are execs, esp CEOs paid too much? I'm of the camp that thinks the different between exec comp and other comp is high. So then i think, OK what should mozilla do about it? My answer is that we try to mitigate this, but we won't solve this general social problem on our own. Here's what I mean by mitigate: we ask our executives to accept a discount from the market-based pay they could get elsewhere. But we don't ask for an 75-80% discount. I use that number because a few years ago when the then-ceo had our compensation structure examined, I learned that my pay was about an 80% discount to market. Meaning that competitive roles elsewhere were paying about 5 times as much. That's too big a discount to ask people and their families to commit to.
(From TheNextWeb Interview, 17 June 2020)

This way of thinking leads to what is known as the endowment effect: humans naturally perceive the value things that already have over the value of things they don't have. As a famous example from a psychology experiment by Daniel Kahneman, Jack Knetsch, and Richard Thaler: students are randomly divided into one group given a cheesy coffee mug, and another group not given one, and then allow to sell them in a market. Very few of the students given a mug are willing to sell them, at prices students not given one are willing to pay. This result has been replicated in many settings, including when the good is something imaginary (e.g., the salary one will receive in the future) not something physical you can hold.

Instead of thinking about the compensation you might receive in a job that aligns well with your values and computing the discount that is from the highest value you could receive on the market, you should think about how much of your (metaphorical) soul you would have to give up to accept the "market value" job. The price "BigEvilCo" is paying isn't the market value of your talents, it is the premium above the market value they need to pay to get someone sacrifice their values to work at their company.

Then, you should consider the (most likely quite generous) salary you would be paid in your perferred job, and if it is enough to support you and your family in a comfortable and high quality lifestyle. As long as it is, you should consider if the extra money you would get from the premium-salary-for-your-soul job would provide enough benefits to be worth giving up your soul for it, rather than starting from the premium-salary-for-your-soul compensation and considering how big a discount you would be accepting in the soul-affirming job.

This doesn't mean I think everyone who can should work for universities or other non-profits, and many of my students and lots of other people I respect and admire do end up working at gigantic companies that I think are often harmful to society. There are lots of good reasons to work for big companies, even ones who might do things that cause tremendous harm to the world. As an employee at such a company, you have an opportunity to have a huge lever to positively impact products that billions of people use, and to influence company policy in ways that make them less harmful. If you think you can do those things at BigEvilCo, that's a good reason to go there, and weigh the personal sacrifice you are making by giving up part of your soul to them against the potential good you can do by working there. But, don't go there because you'd feel like going somewhere where you can do work aligned with your values for less pay would be "working for a discount".