Monetary Reference Points of Managers: An Empirical Investigation of Status Quo Preferences and Social Comparisons

Christian Grund and Johannes Martin

No 7097, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: We assemble two reference point based concepts of utility in our empirical study: the own previous status quo and social comparisons. We explore the relative relevance of these concepts for total compensation as well as for different parts of the compensation package of managers. Making use of a unique panel data set of managers of the German chemical sector, we find that social comparisons of compensation indeed affect reported job satisfaction. Managers compare their total compensation (and fixed salary) with others in the chemical sector and report lower satisfaction scores when they earn less than similar managers. We find hardly any evidence for the relevance of status quo preferences.

Keywords: status quo preferences; social comparisons; reference points; job satisfaction; compensation (search for similar items in EconPapers)
JEL-codes: J28 J31 M5 (search for similar items in EconPapers)
Pages: 45 pages
Date: 2012-12
New Economics Papers: this item is included in nep-hrm
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Published - revised version published in: Scottish Journal of Political Economy, 2017, 64, 70-84

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