Setting limits: Ethical thresholds to the CEO-worker pay gap.

Abstract

In the discussion about wage inequality, principles of fairness and need for incentives are juxtaposed as opposing motivations for wage inequality acceptance. While previous literature focused on ideal inequality, in two correlational and one preregistered experimental study (Ntotal = 664) we tested the hypothesis of a threshold of inequality acceptance. Participants were asked to indicate what a Chief Executive Officer should earn, ideally (i.e., ideal pay gap) and at maximum (i.e., highest acceptable pay gap), given the wage of a worker. Results showed that individuals generally indicated higher values for highest acceptable than for ideal pay gaps. Study 2 also provides evidence for a minimum degree of inequality that is deemed necessary. Additionally, across studies men preferred and tolerated greater wage inequality than women. In conclusion, these studies provide evidence for a threshold of inequality acceptance and pave the way for new research on the cognitive and motivational underpinnings of attitudes towards economic inequalities.