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Cardiovascular Consequences of Unfair Pay

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  • Falk, Armin
  • Menrath, Ingo
  • Verde, Pablo Emilio
  • Siegrist, Johannes

Abstract

This paper investigates physiological responses to perceptions of unfair pay. In a simple principal agent experiment agents produce revenue by working on a tedious task. Principals decide how this revenue is allocated between themselves and their agents. In this environment unfairness can arise if an agent's reward expectation is not met. Throughout the experiment we record agents' heart rate variability. The latter is an indicator of stress-related impaired cardiac autonomic control, which has been shown to predict coronary heart diseases in the long run. Establishing a causal link between unfair pay and heart rate variability therefore uncovers a mechanism of how perceptions of unfairness can adversely affect cardiovascular health. We further test potential adverse health effects of unfair pay using data from a large representative data set. Complementary to our experimental findings we find a strong and highly significant association between health outcomes, in particular cardiovascular health, and fairness of pay.

Suggested Citation

  • Falk, Armin & Menrath, Ingo & Verde, Pablo Emilio & Siegrist, Johannes, 2011. "Cardiovascular Consequences of Unfair Pay," CEPR Discussion Papers 8463, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:8463
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    Cited by:

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    2. Dulleck, Uwe & Fooken, Jonas & Newton, Cameron & Ristl, Andrea & Schaffner, Markus & Torgler, Benno, 2016. "Tax compliance and psychic costs: Behavioral experimental evidence using a physiological marker," Journal of Public Economics, Elsevier, vol. 134(C), pages 9-18.
    3. Thomas Buser & Anna Dreber & Johanna Mollerstrom, 2017. "The impact of stress on tournament entry," Experimental Economics, Springer;Economic Science Association, vol. 20(2), pages 506-530, June.
    4. Schneck, Stefan, 2014. "My Wage is Unfair! Just a Feeling or Comparison with Peers?," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 1(3), pages 245-273.
    5. Halko, Marja-Liisa & Sääksvuori, Lauri, 2017. "Competitive behavior, stress, and gender," Journal of Economic Behavior & Organization, Elsevier, vol. 141(C), pages 96-109.
    6. Dulleck, Uwe & Fooken, Jonas & Newton, Cameron & Ristl, Andrea & Schaffner, Markus & Torgler, Benno, 2016. "Tax compliance and psychic costs: Behavioral experimental evidence using a physiological marker," Journal of Public Economics, Elsevier, vol. 134(C), pages 9-18.
    7. Thomas Buser & Anna Dreber & Johanna Mollerstrom, 2015. "Stress Reactions cannot explain the Gender Gap in Willingness to compete," Tinbergen Institute Discussion Papers 15-059/I, Tinbergen Institute.
    8. repec:qut:qubewp:001 is not listed on IDEAS
    9. Alison Macintyre & Ho Fai Chan & Markus Schaffner & Benno Torgler, 2021. "National Pride and Tax Compliance: A Laboratory Experiment Using a Physiological Marker," CREMA Working Paper Series 2021-07, Center for Research in Economics, Management and the Arts (CREMA).
    10. repec:qut:qubewp:wp003 is not listed on IDEAS
    11. Jonas Fooken & Markus Schaffner, 2013. "The role of psychological and physiological factors in decision making under risk and in a dilemma," QuBE Working Papers 010, QUT Business School.
    12. Carsten Sauer & Peter Valet & Stefan Liebig, 2013. "The Impact of within and between Occupational Inequalities on People's Justice Perceptions towards Their Own Earnings," SOEPpapers on Multidisciplinary Panel Data Research 567, DIW Berlin, The German Socio-Economic Panel (SOEP).

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    More about this item

    Keywords

    Fairness; Social preferences; Inequality; Heart rate variability; Health; Experiments; Soep;
    All these keywords.

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement

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