Power Law in Executive Salaries

http://www.economist.com/finance/displaystory.cfm?story_id=12851150
This article from the Economist is entitled “The Bright Young Things of Economics,” referring to leading economists who have received their phD within the past 10 years. One of the economists named is Xavier Gabaix who has a particular interest in power laws. It gives a few examples of where power law patterns can be found, including city sizes and executive pay. The article notes how “the relationship between executive pay and company size also obeys a power law: companies twice the size tend to pay their chief executives roughly 25% more.” This leads to an interesting observation that “an executives small edge in managerial skill is amplified, because his talents go to work on a bigger canvas. The article goes on to give a more detailed explanation behind power laws in executive pay.

http://www.google.com/url?sa=U&start=7&q=http://www.bowdoin.edu/~tpietrah/PAPERS/talk2.doc&ei=gvvrSfOdLqHGMsap0egF&usg=AFQjCNE_k0EqijhzYI0k6vclQMx0AASGoA

This PDF file explores the power law in baby names. It seems that as more people have a certain name, the chances of a person having that name and being famous or successful increases. Thus as the rich gets richer or the baby name gets more exposed, more people are more likely to give their newborn baby that name in hopes that they will be as successful.