I think it can depend on the size of the operation, and your mindset. If I'm employee #100 at a well-funded startup, I'd tend to agree with you and value equity as a risk adjusting factor. But if I'm employee #5, I probably would take a pay cut in exchange for a significant chunk of equity - if I was even considering such a risky operation, I probably wouldn't be in a place in my life where job security was especially important to me.