IDEAS home Printed from https://ideas.repec.org/a/sae/ilrrev/v66y2013i5p1078-1096.html
   My bibliography  Save this article

When Does Money Make Money More Important? Survey and Experimental Evidence

Author

Listed:
  • Sanford E. Devoe
  • Jeffrey Pfeffer
  • Byron Y. Lee

Abstract

The authors investigate how the amount and source of income affects the importance placed on money. Using a longitudinal analysis of the British Household Panel Survey and evidence from two laboratory experiments, they found that larger amounts of money received for labor were associated with individuals placing greater importance on money; but this effect did not hold for money not related to work. The longitudinal survey analysis demonstrated these differential effects of the source of income on money's importance while holding constant stable individual differences. The experiments provide causal evidence that the source of income has an effect on the importance of money as well as on the effort expended to earn more money. The authors' results suggest that, even as individual differences in the importance placed on money may affect peoples' income, depending on its source, income can also affect the importance people place on money.

Suggested Citation

  • Sanford E. Devoe & Jeffrey Pfeffer & Byron Y. Lee, 2013. "When Does Money Make Money More Important? Survey and Experimental Evidence," ILR Review, Cornell University, ILR School, vol. 66(5), pages 1078-1096, October.
    • Handle: RePEc:sae:ilrrev:v:66:y:2013:i:5:p:1078-1096
    DOI: 10.1177/001979391306600503
    as

    Download full text from publisher

    File URL: https://journals.sagepub.com/doi/10.1177/001979391306600503
    Download Restriction: no
    File URL: https://libkey.io/10.1177/001979391306600503?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Terry L. Besser, 1995. "Rewards and Organizational Goal Achievement: A Case Study of Toyota Motor Manufacturing In Kentucky," Journal of Management Studies, Wiley Blackwell, vol. 32(3), pages 383-399, May.
    2. Andrew E. Clark & David Masclet & Marie Claire Villeval, 2010. "Effort and Comparison Income: Experimental and Survey Evidence," ILR Review, Cornell University, ILR School, vol. 63(3), pages 407-426, April.
    3. Andrew Clark, 2005. "What Makes a Good Job? Evidence from OECD Countries," Palgrave Macmillan Books, in: Stephen Bazen & Claudio Lucifora & Wiemer Salverda (ed.), Job Quality and Employer Behaviour, chapter 1, pages 11-30, Palgrave Macmillan.
    4. Richard H. Thaler, 2008. "Mental Accounting and Consumer Choice," Marketing Science, INFORMS, vol. 27(1), pages 15-25, 01-02.
    5. Tor Eriksson & Sabrina Teyssier & Marie‐Claire Villeval, 2009. "Self‐Selection And The Efficiency Of Tournaments," Economic Inquiry, Western Economic Association International, vol. 47(3), pages 530-548, July.
    6. Thaler, Richard H & Shefrin, H M, 1981. "An Economic Theory of Self-Control," Journal of Political Economy, University of Chicago Press, vol. 89(2), pages 392-406, April.
    7. Clark, Andrew E., 1999. "Are wages habit-forming? evidence from micro data," Journal of Economic Behavior & Organization, Elsevier, vol. 39(2), pages 179-200, June.
    8. Uri Gneezy & Aldo Rustichini, 2000. "Pay Enough or Don't Pay at All," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 115(3), pages 791-810.
    9. Daniel Kahneman & Jack L. Knetsch & Richard H. Thaler, 1991. "Anomalies: The Endowment Effect, Loss Aversion, and Status Quo Bias," Journal of Economic Perspectives, American Economic Association, vol. 5(1), pages 193-206, Winter.
    10. Edward P. Lazear, 1991. "Labor Economics and the Psychology of Organizations," Journal of Economic Perspectives, American Economic Association, vol. 5(2), pages 89-110, Spring.
    11. Sendhil Mullainathan & Marianne Bertrand, 2001. "Do People Mean What They Say? Implications for Subjective Survey Data," American Economic Review, American Economic Association, vol. 91(2), pages 67-72, May.
    12. Lowenstein, George & Prelec, Drazen, 1991. "Negative Time Preference," American Economic Review, American Economic Association, vol. 81(2), pages 347-352, May.
    13. Stephen Bazen & Claudio Lucifora & Wiemer Salverda (ed.), 2005. "Job Quality and Employer Behaviour," Palgrave Macmillan Books, Palgrave Macmillan, number 978-0-230-37864-3, December.
    14. Loewenstein, George F & Sicherman, Nachum, 1991. "Do Workers Prefer Increasing Wage Profiles?," Journal of Labor Economics, University of Chicago Press, vol. 9(1), pages 67-84, January.
    15. Shefrin, Hersh M & Thaler, Richard H, 1988. "The Behavioral Life-Cycle Hypothesis," Economic Inquiry, Western Economic Association International, vol. 26(4), pages 609-643, October.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Ruttan, Rachel L. & Lucas, Brian J., 2018. "Cogs in the machine: The prioritization of money and self-dehumanization," Organizational Behavior and Human Decision Processes, Elsevier, vol. 149(C), pages 47-58.
    2. Ningyu Tang & Jingqiu Chen & Kaili Zhang & Thomas Li-Ping Tang, 2018. "Monetary Wisdom: How Do Investors Use Love of Money to Frame Stock Volatility and Enhance Stock Happiness?," Journal of Happiness Studies, Springer, vol. 19(6), pages 1831-1862, August.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. DeVoe, Sanford E. & Pfeffer, Jeffrey & Lee, Byron Y., 2012. "The Effect of Income on the Importance of Money: Survey and Experimental Evidence," Research Papers 2125, Stanford University, Graduate School of Business.
    2. Isabelle Brocas & Juan D. Carrillo, 2008. "The Brain as a Hierarchical Organization," American Economic Review, American Economic Association, vol. 98(4), pages 1312-1346, September.
    3. Andrew E. Clark & Paul Frijters & Michael A. Shields, 2006. "Income and happiness: Evidence, explanations and economic implications," PSE Working Papers halshs-00590436, HAL.
    4. Eduard Marinov, 2017. "The 2017 Nobel Prize in Economics," Economic Thought journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 6, pages 117-159.
    5. Committee, Nobel Prize, 2017. "Richard H. Thaler: Integrating Economics with Psychology," Nobel Prize in Economics documents 2017-1, Nobel Prize Committee.
    6. Bowman, David & Minehart, Deborah & Rabin, Matthew, 1999. "Loss aversion in a consumption-savings model," Journal of Economic Behavior & Organization, Elsevier, vol. 38(2), pages 155-178, February.
    7. Miklós Antal & Ardjan Gazheli & Jeroen C.J.M. van den Bergh, 2012. "Behavioural Foundations of Sustainability Transitions. WWWforEurope Working Paper No. 3," WIFO Studies, WIFO, number 46424, April.
    8. Milkman, Katherine L. & Beshears, John, 2009. "Mental accounting and small windfalls: Evidence from an online grocer," Journal of Economic Behavior & Organization, Elsevier, vol. 71(2), pages 384-394, August.
    9. Koch, Alexander K. & Nafziger, Julia, 2016. "Goals and bracketing under mental accounting," Journal of Economic Theory, Elsevier, vol. 162(C), pages 305-351.
    10. Konstantinos Pouliakas, 2010. "Pay Enough, Don't Pay Too Much or Don't Pay at All? The Impact of Bonus Intensity on Job Satisfaction," Kyklos, Wiley Blackwell, vol. 63(4), pages 597-626, November.
    11. Alberto Prati & Claudia Senik, 2020. "Feeling good or feeling better?," Working Papers halshs-02545228, HAL.
    12. Dohmen, Thomas, 2014. "Behavioral labor economics: Advances and future directions," Labour Economics, Elsevier, vol. 30(C), pages 71-85.
    13. James M. Poterba & Steven F. Venti, 1998. "Personal Retirement Saving Programs and Asset Accumulation: Reconciling the Evidence," NBER Chapters, in: Frontiers in the Economics of Aging, pages 23-124, National Bureau of Economic Research, Inc.
    14. Laszlo Goerke, 2020. "An Efficiency-Wage Model with Habit Concerns about Wages," CESifo Working Paper Series 8428, CESifo.
    15. Rajagopal, Priyali & Rha, Jong-Youn, 2009. "The mental accounting of time," Journal of Economic Psychology, Elsevier, vol. 30(5), pages 772-781, October.
    16. Karlsson, Niklas & Garling, Tommy & Selart, Marcus, 2024. "Effects of mental accounting on intertemporal choice," SocArXiv 2gne9, Center for Open Science.
    17. Claudia Senik & Andrew E. Clark, 2007. "La croissance rend-elle heureux ? La réponse des données subjectives," PSE Working Papers halshs-00588314, HAL.
    18. Daniele SCHILIRÒ, 2013. "Bounded Rationality: Psychology, Economics And The Financial Crises," Theoretical and Practical Research in the Economic Fields, ASERS Publishing, vol. 4(1), pages 97-108.
    19. Christiaensen , Luc & Pan, Lei, 2012. "On the fungibility of spending and earnings -- evidence from rural China and Tanzania," Policy Research Working Paper Series 6298, The World Bank.
    20. Reinstein, David & Reiner, Gerhard, 2009. "Desert and Tangibility: Decomposing House Money Effects in a Charitable Giving Experiment," Economics Discussion Papers 2937, University of Essex, Department of Economics.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sae:ilrrev:v:66:y:2013:i:5:p:1078-1096. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: SAGE Publications (email available below). General contact details of provider: http://www.ilr.cornell.edu .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.