Richard Posner explains how someone who earns $3 billion a year isn’t necessarily one hundred thousand times more capable than someone making $30,000 a year:
As the economist Sherwin Rosen showed in a famous article, in certain circumstances a very small difference in ability can translate into an enormous different in reward. The key is the reproducibility of a product or service or innovation. If one pianist is slightly better than any other, his recordings may capture the entire market for recordings of the kind of pieces he plays best because the consumer has no reason to buy his rivals’ slightly inferior recordings, provided prices are comparable… The greater output of the superior producer confers real value, but there is only a loose relation between that value and the reward to the producer. Bill Gates is extremely able, but not a thousand times abler than pikers worth a mere $50 million.