Effort and Comparison Income: Experimental and Survey Evidence

Andrew Clark (), David Masclet and Marie-Claire Villeval ()

CEP Discussion Papers from Centre for Economic Performance, LSE

Abstract: This paper considers the effect of status or relative income on work effort, combining experimental evidencefrom a gift-exchange game with the analysis of multi-country ISSP survey data. We find a consistent negativeeffect of others' incomes on individual effort in both datasets. The individual's rank in the income distribution isa stronger determinant of effort than is others' average income, suggesting that comparisons are more ordinalthan cardinal. In the experiment, effort is also affected by comparisons over time: those who received higherincome offers or enjoyed higher income rank in the past exert lower levels of effort for a given current incomeand rank.

Keywords: Effort; comparison income; rank; peak-end; experiments (search for similar items in EconPapers)
JEL-codes: M54 J33 A13 C92 D63 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cbe and nep-exp
Date: 2008-08
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Related works:
Working Paper: Effort and Comparison Income: Experimental and Survey Evidence (2006)
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Persistent link: http://EconPapers.repec.org/RePEc:cep:cepdps:dp0886

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