Study: Bankers’ High Pay Justified

Despite a scorny perception, it turns out most investment bankers are actually paid what they're worth.

New research out of Harvard Business School and the University of Zurich found a direct relationship between talent and compensation for investment bankers. Unlike some industries, the people who are the most talented investment bankers — and therefore thought of as the most valuable — are compensated the most. 

The study was first profiled in The Wall Street Journal earlier this week.

Studying bankers from France, the researchers set out to understand why bankers were paid at such a high premium compared to other professions. As it turned out, large paychecks were not random; they were given out to those considered the best at their jobs.

According to The Journal article:

"To study the link between talent and wages, the researchers drew upon data from French engineering schools. To enter the schools, students must take an extensive series of written and oral tests. The researchers categorized the country’s 240 engineering schools into nine tiers, ranked by selectivity, based on the exam scores of the students. They also drew upon a large salary survey of alumni of the schools, which includes industry, position, employer and salary."

The researchers ultimately found the finance industry paid larger premiums to talented workers than other industries.