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Performance pay or redistribution? Cultural differences in just-world beliefs and preferences for wage inequality

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  • Frank, Douglas H.
  • Wertenbroch, Klaus
  • Maddux, William W.

Abstract

We identify and test a specific psychological mechanism underlying cross-national differences in preferences for performance-based versus redistributive compensation systems. We posit that individuals’ beliefs in the inherent justness and deservedness of individual outcomes (i.e., just world beliefs: JWBs) can help explain individual and culture-level variation in preferences for these compensation systems. Study 1 demonstrates a general correlation between the JWBs of a culturally diverse sample of former managers and their preferences for performance versus equal pay for an individual task. Study 2 shows that American participants exhibit stronger preferences for individual performance pay versus redistributive pay than do French participants, a difference that is mediated by cultural differences in JWBs. Study 3 holds national culture constant and replicates these effects by experimentally manipulating JWBs, demonstrating the causal nature of JWBs in determining preferences for performance-based versus redistributive compensation systems. Implications for organizational incentive systems, culture, and work motivation are discussed.

Suggested Citation

  • Frank, Douglas H. & Wertenbroch, Klaus & Maddux, William W., 2015. "Performance pay or redistribution? Cultural differences in just-world beliefs and preferences for wage inequality," Organizational Behavior and Human Decision Processes, Elsevier, vol. 130(C), pages 160-170.
    • Handle: RePEc:eee:jobhdp:v:130:y:2015:i:c:p:160-170
    DOI: 10.1016/j.obhdp.2015.04.001
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    2. Prince, Nicholas R. & Bruce Prince, J. & Kabst, Rüediger, 2020. "National culture and incentives: Are incentive practices always good?," Journal of World Business, Elsevier, vol. 55(3).
    3. Susanne Burri & Daniela Lup & Alexander Pepper, 2021. "What Do Business Executives Think About Distributive Justice?," Journal of Business Ethics, Springer, vol. 174(1), pages 15-33, November.
    4. Begoña Cabeza & Koen Decancq, 2018. "Effort or Luck? Believing in the role of effort during the Spanish economic recession," Working Papers 1818, Herman Deleeck Centre for Social Policy, University of Antwerp.
    5. Gabriele Paolacci & Gizem Yalcin, 2020. "Fewer but poorer: Benevolent partiality in prosocial preferences," Judgment and Decision Making, Society for Judgment and Decision Making, vol. 15(2), pages 173-181, March.
    6. repec:cup:judgdm:v:15:y:2020:i:2:p:173-181 is not listed on IDEAS
    7. Leo Ahrens, 2020. "Unfair Inequality and the Demand for Redistribution," LIS Working papers 771, LIS Cross-National Data Center in Luxembourg.
    8. Ziano, Ignazio & Lembregts, Christophe & Pandelaere, Mario, 2022. "People weigh salaries more than ratios in judgments of income inequality, fairness, and demands for redistribution," Journal of Economic Psychology, Elsevier, vol. 89(C).

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