It's not a matter of cost, it's a matter of risk.
I created a startup. I expect that in one year's time its value will be zero or $1,000,000, but I don't know which. I want to hire you. Instead of a $50,000 salary, I offer 20% equity.
If you don't accept the offer, then one year from now I will have either -$50,000 or +$950,000. If you accept the offer, then one year from now I will have either $0 or $800,000. You could see that as a potential loss of $150,000, but I'd see it as either no painful debt, or still a shedload of money for me.
(For established companies, equity or share options are basically the same as creating new shares and selling the on the stock market, except possibly different tax treatment. )