Distributive justice and pay satisfaction: A field test of an equity theory prediction

Abstract

Equity theory predicts that one's inputs and outcomes are evaluated in relation to the inputs and outcomes of others. Inequity can result from getting fewer outcomes or more outcomes than relevant others. For example, workers may feel dissatisfied with their wages if they are either overpaid or underpaid relative to their coworkers. Although the “underpaid” hypothesis has received a good deal of research support, the “overpaid” hypothesis has not. In fact, research on the latter prediction has been confined almost exclusively to laboratory experiments. This paper presents the results of three field tests of the overpaid/underpaid predictions of equity theory. Three national probability samples, involving many different kinds of workers and companies, show a curvilinear relationship between perceptions of equity and pay level satisfaction. The data show that both being underpaid and overpaid relative to comparison standards results in greater pay dissatisfaction than those who are compensated equitably. As predicted by Adams (1965), however, the threshold for overpayment inequity is higher than that for underpayment. Results are consistent across different measures within and across studies. Implications of the results are discussed.