A Dynamic Approach to Pay and Happiness: The Impact of Pay Trajectory on Job and Life Satisfaction

Abstract

SYMPOSIUM ABSTRACT Pay is an important resource that employees gain from employment. Interestingly, however, exactly how pay contributes to employee happiness remains unclear. One reason for this lack of clarity is that organizational behavior and management research has normally focused on pay level satisfaction and job satisfaction while ignoring the effect of pay on happiness, or subjective well-being, as an outcome variable. Therefore, stimulating critical thinking and research interest in the pay-happiness relationship is paramount. The pay-happiness symposium fulfills this need. It debuts with Edwin Locke’s talk about money and happiness from a clinical point of view. Next, it features a panorama of empirical studies that harness diverse theoretical perspectives, methods, and samples. The first empirical study proposes and tests a combined theory. Namely, happiness is a function of pay and pay comparison, rather than pay level or pay comparison alone. Next, a longitudinal study with a 10-year span of Australian data draws on Gestalt characteristics theory to examine the longitudinal impact of dynamic pay trends on job and life satisfaction. The third study with a 2-year span of European data explores autonomous motivation as a potential mechanism that links pay increases and bonuses to engagement, job satisfaction and subjective well-being. The last study uses a multilevel approach to analyze data from 158 nations and 6,465 USA ZIP code regions to determine whether regional income can influence subjective well-being over and above individual-level income. Finally, Gary Latham concludes with an insightful discussion of the pay-happiness relationship. This symposium ultimately provides an occasion to bring together organizational behavior and management researchers and psychologists to share our perspectives and to further illuminate this important relationship.