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Do Workers Enjoy Procedural Utility?

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  • Matthias Benz
  • Alois Stutzer

Abstract

People are likely to obtain utility not only from actual outcomes, but also from the conditions which lead to these outcomes. This paper empirically tests the notion of procedural utility for the context of work relationships. Using a large survey among British workers, we find substantial procedural effects on the utility workers derive from their pay. Utility from pay is not only strongly influenced by economic outcomes (the pay levels workers get for given inputs), but also by the way pay is determined. The findings are robust to a series of alternative explanations.

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Bibliographic Info

Paper provided by Institute for Empirical Research in Economics - University of Zurich in its series IEW - Working Papers with number 127.

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Handle: RePEc:zur:iewwpx:127

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Keywords: outcome utility; procedural utility; pay procedure; work relationship; pay satisfaction;

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References

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  1. Oswald, Andrew, 1997. "Happiness and Economic Performance," The Warwick Economics Research Paper Series (TWERPS) 478, University of Warwick, Department of Economics.
  2. Bruno S. Frey & Alois Stutzer, 2000. "Happiness, Economy and Institutions," CESifo Working Paper Series 246, CESifo Group Munich.
  3. DiTella, Rafael & MacCulloch, Robert & Oswald, Andrew J., 2001. "Preferences over inflation and unemployment: Evidence from surveys of happiness," ZEI Working Papers B 03-2001, ZEI - Center for European Integration Studies, University of Bonn.
  4. Rabin, Matthew, 1993. "Incorporating Fairness into Game Theory and Economics," American Economic Review, American Economic Association, American Economic Association, vol. 83(5), pages 1281-1302, December.
  5. Kahneman, Daniel & Knetsch, Jack L & Thaler, Richard, 1986. "Fairness as a Constraint on Profit Seeking: Entitlements in the Market," American Economic Review, American Economic Association, American Economic Association, vol. 76(4), pages 728-41, September.
  6. Andrew E. Clark and Andrew J. Oswald, . "Satisfaction and Comparison Income," Economics Discussion Papers, University of Essex, Department of Economics 419, University of Essex, Department of Economics.
  7. Kahneman, Daniel & Wakker, Peter P & Sarin, Rakesh, 1997. "Back to Bentham? Explorations of Experienced Utility," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 112(2), pages 375-405, May.
  8. Clark, Andrew E & Oswald, Andrew J, 1994. "Unhappiness and Unemployment," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 104(424), pages 648-59, May.
  9. Ernst Fehr & Simon Gaechter, . "Fairness and Retaliation: The Economics of Reciprocitys," IEW - Working Papers, Institute for Empirical Research in Economics - University of Zurich 040, Institute for Empirical Research in Economics - University of Zurich.
  10. Viscusi, W Kip, 1993. "The Value of Risks to Life and Health," Journal of Economic Literature, American Economic Association, American Economic Association, vol. 31(4), pages 1912-46, December.
  11. Easterlin, Richard A, 2001. "Income and Happiness: Towards an Unified Theory," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 111(473), pages 465-84, July.
  12. Marc Le Menestrel, 2001. "A Process Approach to the Utility for Gambling," Theory and Decision, Springer, Springer, vol. 50(3), pages 249-262, May.
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Cited by:
  1. Carlo Borzaga & Ermanno Tortia, 2004. "Worker involvement in entrepreneurial nonprofit organizations. Toward a new assessment of workers' perceived satisfaction and fairness," Department of Economics Working Papers, Department of Economics, University of Trento, Italia 0409, Department of Economics, University of Trento, Italia.
  2. Ermanno Tortia, 2006. "Worker satisfaction and perceived fairness: result of a survey in public, and non-profit organizations," Department of Economics Working Papers, Department of Economics, University of Trento, Italia 0604, Department of Economics, University of Trento, Italia.

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