[darawk]

I think this is exactly right. Being successful in the top 0.1% is not actually rational. Even if you're brilliant, your chance of succeeding at that level is low. A truly rational person seeks out the best risk-adjusted return, not the best absolute return. If you're a technical minded person, making 300k/year in a software job is about the best risk-adjusted return of any profession I can think of.

[andi999]

Well the risk is you have to move to the US to get that kind of salary in a software job.

[klipt]

And the cost of living is so high that despite the fantastic salary most software engineers in Silicon Valley will never buy a house there.

Great place to make money before retiring elsewhere though.

[edanm]

Well yes, but many other countries have similar math when it comes to software engineering salaries as opposed to other fields. In most places, going into software is a good thing to do moneywise.

[andi999]

Germany not. Software is more on the lower end of high skilled work, definitely not at the top end.

[edanm]

Interesting. Still, am I correct that lower end of high skilled work is still middle-upper class in terms of income?

[andi999]

I find it difficult to find reliable numbers (since I work in a different industry), but it seems median entry salary for IT graduate is 40k€, which is 25k€ nett anually. I also find the middle-upper class difficult for germany (since salary upper class doesnt mean you are asset upperclass aka rich).

Personally I would say 25k€ nett is middle class; but here everybody wants to belong to the middle class so it usually has a wide stretch.

Big companies are unionized so salarys do not get that big, but are considered higher then in non-unionized companies.

How is the situation in the US?

[lanstin]

What is the optimal risk adjustment ratio? And it is chosen by reason or by personal preference? Many software engineers are a bit risk averse and just do what they are told to do. Many entrepreneurs would rather experience the rushes of a business roller-coaster and walk away with no money than just sit and program as told.

[darawk]

There is no optimal ratio per se. You just divide gain by risk and maximize that quantity. This is a scale invariant function, at least, with respect to its maximum.

[lanstin]

I think you must be omitting variables, or simply trying to maximize dollars or some other approximately ordered quantity rather than maximize subjective fulfillment in life.

[darawk]

Which variables are being omitted? Certainly there are other variables relevant to a quality life than money. But the rules apply to any utility function you might come up with. You want to maximize risk-adjusted return.