IDEAS home Printed from https://ideas.repec.org/a/plo/pone00/0311593.html

Setting limits: Ethical thresholds to the CEO-worker pay gap

Author

Listed:
  • Carmen Cervone
  • Andrea Scatolon
  • Michela Lenzi
  • Anne Maass

Abstract

In the discussion about wage inequality, principles of fairness and need for incentives are juxtaposed as opposing motivations for wage inequality acceptance. While previous literature focused on ideal inequality, in two correlational and one preregistered experimental study (Ntotal = 664) we tested the hypothesis of a threshold of inequality acceptance. Participants were asked to indicate what a Chief Executive Officer should earn, ideally (i.e., ideal pay gap) and at maximum (i.e., highest acceptable pay gap), given the wage of a worker. Results showed that individuals generally indicated higher values for highest acceptable than for ideal pay gaps. Study 2 also provides evidence for a minimum degree of inequality that is deemed necessary. Additionally, across studies men preferred and tolerated greater wage inequality than women. In conclusion, these studies provide evidence for a threshold of inequality acceptance and pave the way for new research on the cognitive and motivational underpinnings of attitudes towards economic inequalities.

Suggested Citation

  • Carmen Cervone & Andrea Scatolon & Michela Lenzi & Anne Maass, 2024. "Setting limits: Ethical thresholds to the CEO-worker pay gap," PLOS ONE, Public Library of Science, vol. 19(11), pages 1-22, November.
    • Handle: RePEc:plo:pone00:0311593
    DOI: 10.1371/journal.pone.0311593
    as

    Download full text from publisher

    File URL: https://journals.plos.org/plosone/article?id=10.1371/journal.pone.0311593
    Download Restriction: no
    File URL: https://journals.plos.org/plosone/article/file?id=10.1371/journal.pone.0311593&type=printable
    Download Restriction: no
    File URL: https://libkey.io/10.1371/journal.pone.0311593?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Pedersen, Rasmus T. & Mutz, Diana C., 2019. "Attitudes Toward Economic Inequality: The Illusory Agreement," Political Science Research and Methods, Cambridge University Press, vol. 7(4), pages 835-851, October.
    2. Alexander W. Cappelen & Knut Nygaard & Erik Ø. Sørensen & Bertil Tungodden, 2015. "Social Preferences in the Lab: A Comparison of Students and a Representative Population," Scandinavian Journal of Economics, Wiley Blackwell, vol. 117(4), pages 1306-1326, October.
    3. Robert Cummins, 2003. "Normative Life Satisfaction: Measurement Issues and a Homeostatic Model," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 64(2), pages 225-256, November.
    4. Eriksson, Tor, 1999. "Executive Compensation and Tournament Theory: Empirical Tests on Danish Data," Journal of Labor Economics, University of Chicago Press, vol. 17(2), pages 262-280, April.
    5. Katherine McAuliffe & Peter R. Blake & Nikolaus Steinbeis & Felix Warneken, 2017. "The developmental foundations of human fairness," Nature Human Behaviour, Nature, vol. 1(2), pages 1-9, February.
    6. Martin J. Conyon & Simon I. Peck & Graham V. Sadler, 2001. "Corporate tournaments and executive compensation: Evidence from the U.K," Strategic Management Journal, Wiley Blackwell, vol. 22(8), pages 805-815, August.
    7. Ernst Fehr & Klaus M. Schmidt, 1999. "A Theory of Fairness, Competition, and Cooperation," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 114(3), pages 817-868.
    8. Christina Starmans & Mark Sheskin & Paul Bloom, 2017. "Why people prefer unequal societies," Nature Human Behaviour, Nature, vol. 1(4), pages 1-7, April.
    9. David H. Weng & Haibin Yang, 2024. "Is Red or Blue More Likely to Narrow the Gap? The Effect of CEO Political Ideology on CEO‐Employee Pay Disparity," Journal of Management Studies, Wiley Blackwell, vol. 61(3), pages 1074-1109, May.
    10. Donald E. Gibson & Barbara S. Lawrence, 2010. "Women's and Men's Career Referents: How Gender Composition and Comparison Level Shape Career Expectations," Organization Science, INFORMS, vol. 21(6), pages 1159-1175, December.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Christine Harbring & Bernd Irlenbusch, 2005. "Incentives in Tournaments with Endogenous Prize Selection," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 161(4), pages 636-663, December.
    2. Martins, Pedro S., 2008. "Dispersion in wage premiums and firm performance," Economics Letters, Elsevier, vol. 101(1), pages 63-65, October.
    3. Filip Gesiarz & Jan-Emmanuel De Neve & Tali Sharot, 2020. "The motivational cost of inequality: Opportunity gaps reduce the willingness to work," PLOS ONE, Public Library of Science, vol. 15(9), pages 1-18, September.
    4. Bai, Peiwen & Cheng, Wenli, 2020. "Relative earnings and firm performance: Evidence from publicly-listed firms in China, 2005–2012," International Review of Economics & Finance, Elsevier, vol. 66(C), pages 279-290.
    5. Kerschbamer, Rudolf & Müller, Daniel, 2020. "Social preferences and political attitudes: An online experiment on a large heterogeneous sample," Journal of Public Economics, Elsevier, vol. 182(C).
    6. Ahrens, Steffen & Snower, Dennis J., 2014. "Envy, guilt, and the Phillips curve," Journal of Economic Behavior & Organization, Elsevier, vol. 99(C), pages 69-84.
    7. Pei-Hsun Hsieh & Reuben Kline, 2025. "Deservingness heuristics drive redistributive choices, but weights on recipient effort vary," Humanities and Social Sciences Communications, Palgrave Macmillan, vol. 12(1), pages 1-12, December.
    8. Thomas Epper & Julien Senn & Ernst Fehr, 2023. "Social preferences across subject pools: students vs. general population," ECON - Working Papers 435, Department of Economics - University of Zurich, revised Jan 2024.
    9. Carr, Michael D., 2011. "Work hours and wage inequality: Evidence from the 2004 WERS," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 40(4), pages 417-427, August.
    10. Md. Rajibul Alam & Yoko Kijima, 2024. "Incentives to Improve Government Agricultural Extension Agent Performance: A Randomized Controlled Trial in Bangladesh," Economic Development and Cultural Change, University of Chicago Press, vol. 72(3), pages 1295-1316.
    11. Maria Rouziou, 2019. "The contingent value of pay inequalities in sales organizations: integrating literatures in economics, management, and psychology," AMS Review, Springer;Academy of Marketing Science, vol. 9(3), pages 184-204, December.
    12. Simon Gächter & Daniele Nosenzo & Martin Sefton, 2012. "The Impact of Social Comparisons on Reciprocity," Scandinavian Journal of Economics, Wiley Blackwell, vol. 114(4), pages 1346-1367, December.
    13. Lucio Esposito & Shatakshee Dhongde & Christopher Millett, 2021. "Smoking habits in Mexico: Upward and downward comparisons of economic status," Review of Development Economics, Wiley Blackwell, vol. 25(3), pages 1558-1575, August.
    14. Kristina M. Bott & Alexander Cappelen & Erik Ø. Sørensen & Bertil Tungodden, 2017. "You've Got Mail: A Randomised Field Experiment on Tax Evasion," Working Papers 2017-051, Human Capital and Economic Opportunity Working Group.
    15. Vecchi, Martina, 2022. "Groups and socially responsible production: An experiment with farmers," Journal of Economic Behavior & Organization, Elsevier, vol. 196(C), pages 372-392.
    16. Kräkel, Matthias, 2004. "Emotions and Incentives," Bonn Econ Discussion Papers 14/2004, University of Bonn, Bonn Graduate School of Economics (BGSE).
    17. Marcelo Bérgolo & Gabriel Burdín & Santiago Burone & Mauricio de Rosa & Matías Giaccobasso & Martín Leites, 2020. "Dissecting Inequality-Averse Preferences," Documentos de Trabajo (working papers) 20-19, Instituto de Economía - IECON.
    18. Espín, Antonio M. & Correa, Manuel & Ruiz-Villaverde, Alberto, 2022. "Economics students: Self-selected in preferences and indoctrinated in beliefs," International Review of Economics Education, Elsevier, vol. 39(C).
    19. Jorien L. Pruijssers & Pursey P. M. A. R. Heugens & J. Oosterhout, 2020. "Winning at a Losing Game? Side-Effects of Perceived Tournament Promotion Incentives in Audit Firms," Journal of Business Ethics, Springer, vol. 162(1), pages 149-167, February.
    20. Bao, Te & Li, Xun & Xia, Congling, 2024. "Life is too short to be small: An experiment on mortality salience and prosocial behavior," China Economic Review, Elsevier, vol. 86(C).

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:plo:pone00:0311593. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: plosone (email available below). General contact details of provider: https://journals.plos.org/plosone/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.