Cardiovascular Consequences of Unfair Pay

28 Pages Posted: 20 Jul 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

Johannes Siegrist

Heinrich Heine University Dusseldorf

Pablo Emilio Verde

Heinrich Heine University Dusseldorf

Multiple version iconThere are 2 versions of this paper

Date Written: June 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. 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: experiments, fairness, health, heart rate variability, inequality, social preferences, SOEP

JEL Classification: C91, D03, D63

Suggested Citation

Falk, Armin and Menrath, Ingo and Siegrist, Johannes and Verde, Pablo Emilio, Cardiovascular Consequences of Unfair Pay (June 2011). CEPR Discussion Paper No. DP8463, Available at SSRN: https://ssrn.com/abstract=1889986

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

Johannes Siegrist

Heinrich Heine University Dusseldorf ( email )

Universitätsstrasse 1
Duesseldorf, DE NRW 40225
Germany

Pablo Emilio Verde

Heinrich Heine University Dusseldorf

Universitätsstrasse 1
Duesseldorf, DE NRW 40225
Germany

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