Xavier Gabaix on The Shape of Big Things

Cities, firms, market crashes and CEO pay all follow the same statistical shape. Xavier Gabaix has spent his career working out why.

He is the Pershing Square Professor of Economics and Finance at Harvard, a mathematician by training from the École Normale Supérieure, and a winner of the Fischer Black Prize.

We talk about what that shared shape means for anyone who treats big companies as a problem to be corrected. We get into how a few very large firms can move a whole national economy, and why the standard objection, that individual shocks cancel out, fails. We finish on the cost of thinking, which he has measured, and what becomes of that cost once the thinking can be handed to a machine.

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Mentioned in this episode
Xavier Gabaix, “Zipf’s Law for Cities: An Explanation” (QJE, 1999): https://doi.org/10.1162/003355399556133
Xavier Gabaix, “Power Laws in Economics and Finance” (Annual Review of Economics, 2009): https://doi.org/10.1146/annurev.economics.050708.142940
Xavier Gabaix, “Power Laws in Economics: An Introduction” (JEP, 2016): https://doi.org/10.1257/jep.30.1.185
Xavier Gabaix and Augustin Landier, “Why Has CEO Pay Increased So Much?” (QJE, 2008): https://doi.org/10.1162/qjec.2008.123.1.49
Xavier Gabaix, “The Granular Origins of Aggregate Fluctuations” (Econometrica, 2011): https://doi.org/10.3982/ECTA8769
Xavier Gabaix and Ralph Koijen, “Granular Instrumental Variables” (JPE, 2024): https://www.journals.uchicago.edu/doi/10.1086/728743
Xavier Gabaix and Thomas Graeber, “The Complexity of Economic Decisions” (NBER, 2024): https://www.nber.org/papers/w33109
Xavier Gabaix, “A Theory of Complexity Aversion” (working paper, 2025): https://papers.ssrn.com/sol3/papers.cfm?abstract_id=5185671
Xavier Gabaix’s publications: https://xgabaix.scholars.harvard.edu/publications

Scaling Theory is a podcast by Thibault Schrepel on the laws that govern how things grow, from companies and cities to AI and law.
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