Performance Pay or Redistribution? Cultural Differences in Just-World Beliefs and Preferences for Wage Inequality

Frank, Douglas H.; Wertenbroch, Klaus; Maddux, William W.

doi:10.2139/ssrn.2559613

Cited by 11 publications

(16 citation statements)

References 88 publications

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“…Furthermore, two studies present evidence that suggests a negative correlation between just-world beliefs, i.e. being convinced that people generally get what they deserve, and the DFR (Benabou and Tirole 2006;Frank, Wertenbroch, and Maddux 2015).…”

Section: Prior Researchmentioning

confidence: 99%

Theorizing the impact of fairness perceptions on the demand for redistribution

Ahrens

2019

Political Research Exchange

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Prior research shows that fairness judgements regarding the income distribution have a substantive impact on redistribution preferences. Those who perceive incomes as unfair demand more redistribution. However, the association is undertheorized in previous studies. This article adds to the literature by offering a comprehensive theoretical explanation of why incomes are perceived as unfair and how this influences the demand for redistribution. Based on equity theory from social psychology, it is argued that individuals develop a preference for redistribution if they consider their own income and incomes in general to be disproportional to relevant exchanged inputs. They assess proportionality by using social comparisons with observable reference groups such as colleagues, family members or other labour market participants. Multilevel models with survey data from 39 diverse countries support this theory. Individuals who perceive their own income as disproportional in comparison to their efforts and those who perceive incomes in general as disproportional demand more redistribution. These findings have several implications for research on political economy and social policy. Most importantly, they explain the inconclusive results of empirical tests of rational choice theories such as the medianvoter hypothesis.

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Section: Prior Researchmentioning

confidence: 99%

Theorizing the impact of fairness perceptions on the demand for redistribution

Ahrens

2019

Political Research Exchange

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“…Running Head: PERCEIVED INCOME INEQUALITY Different countries may have different tolerance levels for inequality (Kiatpongsan & Norton, 2014;Wright, 2017). The objective of this study is to replicate previous results (obtained with an American sample) in a different country (France), with lower levels of support for income inequality (Frank, Wertenbroch, & Maddux, 2015), lower levels of overall actual economic inequality (World Bank, 2019b), and overall lower standards of living (World Bank, 2019a). Furthermore, Kuziemko et al (2014) show that while inequality may be seen as problem, preferences for redistributionsuch as support for higher marginal tax rates are rather inelastic.…”

Section: Discussionmentioning

confidence: 77%

People weigh Salaries More than Ratios in Judgments of Income Inequality, Fairness, and Demands for Redistribution

Ziano¹,

Lembregts²,

Pandelaere³

2019

Preprint

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Public companies are mandated to publish compensation data (CEO compensation, median employee salary, and their ratios). We examine how people perceive income inequality and salary fairness in companies when they are confronted with varying levels of CEO compensation, median employee pay, and their ratios. Four experiments (total n = 2,121, three preregistered) show that median employee salaries mainly drive judgments of income inequality and compensation fairness (of both employees and the CEO), because employee pay is easier to evaluate than CEO compensation and ratios. In support of an evaluability explanation, we find a bigger impact of CEO compensation and ratios on salary fairness and economic inequality judgments in joint evaluation – which makes them easier to evaluate – than in separate evaluation. These results have implications about the understanding of economic inequality by the public and for the way policymakers should regulate the presentation of compensation data.

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“…Through a series of experimental studies, he shows that this need leads us to explain away injustices, for example by unfairly blaming victims, or by fabricating stories that explain why lucky winners supposedly deserve their good luck. In a more recent study, Frank et al (2015) show that just world beliefs affect individual and societal support for redistributive principles. They begin with the observation that individuals and societies that are more sceptical of redistribution have much higher faith in the just world notion that effort and success are tightly linked in their society.…”

Section: Do Executives Believe That Societies and Companies Are Predomentioning

confidence: 95%

What Do Business Executives Think About Distributive Justice?

2020

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While there exist extensive literatures on both distributive justice and senior executive pay, and a number of authors (notably the French economist Thomas Piketty) have addressed the implications of high pay for distributive justice, the existing literature fails to address what senior executives themselves think about distributive justice and whether they consider high income inequalities to be morally acceptable. We address this gap by analysing a unique dataset comprising the views of over 1000 senior executives from across the world, which was constructed using a survey instrument designed by the authors based on a thought experiment resembling John Rawls’s original position. We report four main findings. First, executives conceptualise distributive justice in a pluralistic manner, endorsing different and sometimes apparently conflicting philosophical principles: to explain how this plurality can be accounted for we propose a novel field-theory framework for conceptualising beliefs about distributive justice. Second, executives support similar philosophical approaches at both society and company levels of analysis, thus countering the idea that companies should leave matters of distributive justice exclusively for governments to deal with via the tax system. Third, executives believe that they live in societies and work for companies that fall short of desirable distributive justice outcomes. Fourth, the distributive justice views of the executives in our sample fall into four distinct clusters that are correlated with certain socio-demographic markers. Finally, we note the distinction between distributive justice beliefs and behaviours, from which we derive a number of managerial and public policy implications.

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Performance Pay or Redistribution? Cultural Differences in Just-World Beliefs and Preferences for Wage Inequality

Cited by 11 publications

References 88 publications

Theorizing the impact of fairness perceptions on the demand for redistribution

Theorizing the impact of fairness perceptions on the demand for redistribution

People weigh Salaries More than Ratios in Judgments of Income Inequality, Fairness, and Demands for Redistribution

What Do Business Executives Think About Distributive Justice?

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