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Pay Increases Make Some Employees Feel Like Failures


It might seem counterintuitive, but new research indicates that employees with neurotic tendencies can feel like failures upon receiving pay increases. Eugenio Proto of the University of Warwick and Aldo Rustichini from the University of Minnesota studied high-salary employees with high levels of neuroticism and found that if the amount of a pay raise is disappointing, they’re more likely to interpret it as a sign of failure.

“Someone who has high levels of neuroticism will see an income increase as a measure of success,” explained Proto. “When they are on a lower income, a pay increase does satisfy them because they see that as an achievement. However, if they are already on a higher income they may not think the pay increase is as much as they were expecting. So they see this as a partial failure and it lowers their life satisfaction. These results suggest that we see money more as a device to measure our successes or failures rather than as a means to achieve more comfort.”

Proto and Rustichini will present their findings at the ESRC Research Methods Festival. The researchers culled data from the German Socioeconomic Panel and the British Household Panel Survey to inform their study.

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Marissa Brassfield
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