Modern day Silicon Valley is built on somewhat of a gold rush mentality. Why do you think people move out here and put up with much of the locally curated insanity? Because they think they have a chance to strike it rich. Maybe even really, really rich. And they're right; they probably have a better chance here than anywhere else in the world. Startup equity is what keeps people plugged into this particular Matrix. I love Silicon Valley but I recognize it for what it is.
Maybe, much like employers offering medical benefits as a way to compete on compensation with each other, it's a differentiator that used to make sense at one point but has since spiraled out of control.
Actually, you can calculate the value of an equity packages, since the 1980's we've been able to intelligently price options (see: Black-Scholes) - but it's a matter of being able to wrap a good probability distribution around future outcomes.
I suggest that the current packages are roughly reasonable. If anything, what staffers need to do is understand them a little better.