How world leader's salaries stack up?

Ivana Kottasova and Megan Pendergrass from CNN has published a report titled "How world leader's salaries stack up", which compares the paid of prime ministers and presidents of the big developed and emerging economies. While the pros and the cons of being a prime ministers and presidents are beyond the monetary value in the salaries, we are curios whether the figures hold any economical meaning related to the countries' economy.

From an employer's standpoint, we would like explore whether the following areas has impact on the leader's salaries.

1. Responsibility

It is a rather challenging task to quantify and compare the responsibility between different world leaders. However, we will try to look into whether there any relationship between their salaries and 1) the number of people that they are caring for; 2) the size of their economy; and 3) the size of their countries.

Unfortunately, we cannot find any meaningful correlations. Perhaps, managing a 59 million population is as tough as managing 1.3 billion population.


2. Performance

We use the domestic approval rating as a benchmark for the world leader's performance. Although approval rating is not the only parameter determine whether the leader is successful and effective, in a civil society we cannot get too far away from the public opinion.

The following is what we founded:

Although the approval rating have negative correlation with the world leaders salary, it only explains about 40% of the phenomenon (R^2 = 0.44). However, it appears that higher salaries do not lead to better performance.

3. National Paid Scale

Then we turn to whether the world leader's salaries are correlated with the national paid scale. We use the average production of a countryman (GDP per capital) multiply by how much more a wealth countryman made (UN R/P 10% x 1/2) to act as the benchmark of the world leader's salaries. The world leader's salaries is directly correlated to that (with R^2 > 0.5)

Conclusion:

The world leader's salaries are independent of their responsibility, and higher salaries do not transform to better performance. But the world leader's salaries are highly correlated to the national paid scale.

Reference:

1. Harvard Kenndy School Reflections on a Survey of Global Perceptions of International Leaders and World Powers
2. HKU Public Opinion Program
3. Wikipedia list of countries by income equality
4. The World Bank GDP per capita (current US$)