Do Workers Enjoy Procedural Utility?

Zurich IEER Working Paper No. 127

28 Pages Posted: 20 Nov 2002

See all articles by Matthias Benz

Matthias Benz

University of Zurich - Department of Economics

Alois Stutzer

University of Basel - Faculty of Business and Economics; IZA Institute of Labor Economics

Abstract

People are likely to obtain utility not only from actual outcomes, but also from the conditions which lead to these outcomes. This paper empirically tests the notion of procedural utility for the context of work relationships. Using a large survey among British workers, we find substantial procedural effects on the utility workers derive from their pay. Utility from pay is not only strongly influenced by economic outcomes (the pay levels workers get for given inputs), but also by the way pay is determined. The findings are robust to a series of alternative explanations.

Keywords: outcome utility, procedural utility, pay procedure, work relationship, pay satisfaction

JEL Classification: D60, D63, J28, J30, M12

Suggested Citation

Benz, Matthias and Stutzer, Alois, Do Workers Enjoy Procedural Utility?. Zurich IEER Working Paper No. 127. Available at SSRN: https://ssrn.com/abstract=336581 or http://dx.doi.org/10.2139/ssrn.336581

Matthias Benz (Contact Author)

University of Zurich - Department of Economics ( email )

Zuerich, 8006
Switzerland

Alois Stutzer

University of Basel - Faculty of Business and Economics ( email )

Peter Merian-Weg 6
4002 Basel
Switzerland
0041 61 267 3361 (Phone)
0041 61 267 3340 (Fax)

HOME PAGE: http://www.wwz.unibas.ch/stutzer/

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

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