There is a lot of debate over the sources of growing inequality. The common answer from economists is that we are moving to a tech-generated winner take all economy.
Some economists, perhaps most famously, though by no means solely, Paul Krugman, have endorsed the idea that changing social norms about what executives can be payed are key. In this telling unions and their ability to enforce such norms may be an important player.
However, only mildly in jest I’d like to offer another explanation – the proliferation of norepinephrine based stimulants. My sense is that in the old days caffeine, nicotine and cocaine were the only widely used stimulants.
- Caffeine has a wide variety of effects but the one most likely linked to increased productivity is a downstream dopamine effect.
- Nicotine likewise is multifaceted but its stimulant effects seem to act primarily through a dopamine pathway.
- Cocaine is unquestionably a dopamine reuptake inhibitor and a powerful one at that. If its potential for abuse wasn’t so high it would be the “super-drug”
However, what’s newer on the scene are norepinephrine based drugs. The street forms are speed, meth and the various derivatives. However, the slew of popular energy drinks also work this pathway, as does ephedra, as does ephedrine, as does pseudoephedrine (sudafed) – though not nearly as effectively.
Perhaps, most importantly Adderall and other ADD drugs work this pathway.
Unlike the dopamine drugs which target the reward system, the norepinephrine based drugs target the “fight or flight” response more directly. They AMP you up for lack of a better term and markedly increase focus.
The increase in work level from an norepinephrine hyped person is obvious. However, I might expect that the increase in productivity is many times greater. There seems to be increasing returns from having a single individual work on a single project over short periods of time. The communication delays between people and the memory loss when stretching projects is likely to be significant.
Causal empiricism tells me that the difference in the work effort produced by a “lazy” employee and a “motivated” employee is at absolute best a factor of 2 or 3. However, the increase in work product from a motivated employee could realistically be a factor of 20 or more.
This means there are enormous returns to being motivated and motivation can to some extent be simulated by norepinephrine based drugs.
Moreover, casual data collection also tells me that the use of such drugs in one form or another is massively widespread among high earners.
Am I arguing that Adderall is the ultimate cause of the increase in inequality – of course not. However, I am interested in what extent it is a factor.

4 comments
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Thursday ~ December 9th, 2010 at 3:04 pm
Hal
You really should read “Winner Takes All Politics” – http://amzn.to/f2XyOo
Pretty sure the case laid out by Pierson and Jacker that Economist seem to completely ignore the political aspects of this is spot on.
Would be interesting to here your review sometime. Pretty sure that any political effects swamp any chemical class effects. But who knows.
Thursday ~ December 9th, 2010 at 7:19 pm
jazzbumpa
Karl -
You have an implicit assumption that rewards are proportional to performance (or output.)
I think this is absurd. consider professional golf. The money difference between the top 5, say, and numbers 201 to 205 on the tour is enormous. But there average score are actually pretty close. Look at the pay scale of major vs minor league sports, and superstars vs journeymen within a sport.
Pay to performance (real or hyped) is some power function, not linear.
In the business world it’s even worse. It’s not performance that gets big pay. the poster child is Bob Nardeli, who ruined the hardware staore before he ruined the car company.
Hi earner pay as a multiple of grunt pay is not in any way a reflectpin of performance or value generated. It is the power of entrenched oligarchy.
Spend some time with corporate execs. You’ll see. On average, they’re not that damned good.
Cheers!
JzB
Thursday ~ December 9th, 2010 at 10:53 pm
Johnnie Linn
I am working on a hypothesis that the inequality of distribution of income in a tournament is an inverse function of the number of “dimensions” of the sport. The more dimensions, or ways or styles of winning, the greater number of “niches”, each of which is occupied by a winner. There is a greater number of winners, but their shares of winnings are more nearly uniform.
The way of testing this hypothesis is to come up with a way of measuring the dimensions of a sport. Factor analysis has done this for decathletes: the likely number of skills needed is four.
Leeds and von Almenn, in their book _The Economics of Sports_, point out that the winnings distributions of NASCAR drivers is much more nearly uniform that that of golfers. NASCAR drivers are all in the field together and must interact more. If Tiger Woods muffs a chip shot, it does not result in the death or injury of half a dozen other golfers.
Friday ~ December 10th, 2010 at 8:39 pm
Kosta
Interesting hypothesis; it could very well be that the proliferation of performance-enhancing drugs like Adderal and Ritalin may account for some of the inequality that is observed. especially as the affluent are more likely to have access to these drugs. But a couple of point of clarification. Adderral (and all amphetamines) affect more than just the epinephrine system. From Wikipedia: “amphetamine exerts its behavioral effects by modulating several key neurotransmitters in the brain, including dopamine, serotonin, and norepinephrine.”
Also, amphetamines (speed) have been widely available for many generations. Bennies and greenies were common street names for amphetamines in the 1950s through 1980s. Amphetamines are featured prominently in Beat Generation writings (e.g. Jack Kerouac’s On the Road).
But while amphetamines and cocaine have been readily available for quite some time, the last 20 years has the discovery and commercialization of numerous other compounds which improve both concentration and mood. In the future, these new compounds may contribute to the inequality you’ve identified.