Cardiovascular Consequences of Unfair Pay

27 Pages Posted: 21 Jun 2011

See all articles by Armin Falk

Armin Falk

University of Bonn - Economic Science Area; briq - Institute on Behavior & Inequality

Ingo Menrath

Heinrich Heine University Dusseldorf

Pablo Verde

affiliation not provided to SSRN

Johannes Siegrist

Heinrich Heine University Dusseldorf

Multiple version iconThere are 2 versions of this paper

Date Written: May 1, 2011

Abstract

This paper investigates physiological responses to perceptions of unfair pay. In a simple principal agent experiment agents produce revenue by working on a tedious task. Principals decide how this revenue is allocated between themselves and their agents. In this environment unfairness can arise if an agent’s reward expectation is not met. Throughout the experiment we record agents’ heart rate variability. Our findings provide evidence of a link between perceived unfairness and heart rate variability. The latter is an indicator of stress-related impaired cardiac autonomic control, which has been shown to predict coronary heart diseases in the long run. Establishing a causal link between unfair pay and heart rate variability therefore uncovers a mechanism of how perceptions of unfairness can adversely affect cardiovascular health. We further test potential adverse health effects of unfair pay using data from a large representative data set. Complementary to our experimental findings we find a strong and highly significant association between health outcomes, in particular cardiovascular health, and fairness of pay.

Keywords: Fairness, social preferences, inequality, heart rate variability, health, experiments, SOEP

JEL Classification: D03, D63, I14, C91

Suggested Citation

Falk, Armin and Menrath, Ingo and Verde, Pablo and Siegrist, Johannes, Cardiovascular Consequences of Unfair Pay (May 1, 2011). SOEPpaper No. 380, Available at SSRN: https://ssrn.com/abstract=1868888 or http://dx.doi.org/10.2139/ssrn.1868888

Armin Falk (Contact Author)

University of Bonn - Economic Science Area ( email )

briq - Institute on Behavior & Inequality

Schaumburg-Lippe-Straße 5-9
Bonn, 53113
Germany

HOME PAGE: http://www.briq-institute.org/

Ingo Menrath

Heinrich Heine University Dusseldorf

Universitätsstrasse 1
Duesseldorf, DE NRW 40225
Germany

Pablo Verde

affiliation not provided to SSRN ( email )

Johannes Siegrist

Heinrich Heine University Dusseldorf ( email )

Universitätsstrasse 1
Duesseldorf, DE NRW 40225
Germany

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