Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/51987
Authors: 
Falk, Armin
Menrath, Ingo
Verde, Pablo Emilio
Siegrist, Johannes
Year of Publication: 
2011
Series/Report no.: 
Discussion paper series // Forschungsinstitut zur Zukunft der Arbeit 5720
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.
Subjects: 
fairness
social preferences
inequality
heart rate variability
health
experiments
SOEP
JEL: 
D03
D63
I14
C91
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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