Effort and Comparison Income: Experimental and Survey Evidence

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

No 2169, IZA Discussion Papers from Institute for the Study of Labor (IZA)

Abstract: This paper considers the effect of status or relative income on work effort combining experimental evidence from a gift-exchange game with ISSP survey data. We find a consistent negative effect of others’ incomes on individual effort in both datasets. The individual’s rank in the income distribution is a stronger determinant of effort than others’ average income, suggesting that comparisons are more ordinal than cardinal. We then show that effort is also affected by comparisons over time: those who received higher income offers or had higher income rank in the past exert lower levels of effort for a given current income and 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-bec, nep-cbe and nep-exp
Date: 2006-06
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Working Paper: Effort and Comparison Income: Experimental and Survey Evidence (2008)
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