The motivational cost of inequality: pay gaps reduce the willingness to pursue rewards

Jan-Emmanuel De Neve, Filip Gesiarz and Tali Sharot

CEP Discussion Papers from Centre for Economic Performance, LSE

Abstract: Factors beyond a person's control, such as demographic characteristics at birth, often influence the availability of rewards an individual can expect for their efforts. We know surprisingly little how such pay-gaps due to random differences in opportunities impact human motivation. To test this we designed a study in which we arbitrarly varied the reward offered to each participant in a group for performing the same task. Participants then had to decide whether or not they were willing to exert effort to receive their reward. Unfairness reduced participants' motivation to pursue rewards even when their relative position in the distribution was high, despite the decision being of no benefit to others and reducing reward for oneself. This relationship was partially mediated by participants' feelings. In particular, large disparity was associated with greater unhappiness, which was associated with lower willingness to work - even when controlling for absolute reward and its relative value, both of which also affected decisions to pursue rewards. Our findings suggest pay-gaps can trigger psychological dynamics that hurt productivity and well-being of all involved.

Keywords: inequality; pay-gaps; motivation; effort; affect; reward (search for similar items in EconPapers)
JEL-codes: D31 D91 J22 (search for similar items in EconPapers)
Date: 2019-11-27
New Economics Papers: this item is included in nep-exp and nep-hrm
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Working Paper: The motivational cost of inequality: pay gaps reduce the willingness to pursue rewards (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:cep:cepdps:dp1664

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