Are You Satisfied With Your Pay When You Compare? It Depends on Your Love of Money, Pay Comparison Standards, and Culture
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- Luna-Arocas, R. & Tang, T.L. J Bus Ethics (2015) 128: 279. doi:10.1007/s10551-014-2100-4
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We develop a theoretical model of income and pay comparison satisfaction with two mediators (love of money and pay comparison standards), examine the direct and the indirect paths of our model, and treat culture (the US vs. Spain) as a moderator. Based on 311 professors in the US and Spain, we demonstrate a positive direct path and a negative indirect path. Our subsequent multi-group analysis illustrates: For American professors, their direct path shows that income is directly related to high pay comparison satisfaction. Their indirect path reveals the following new insights: Professors with high income have a strong love of money orientation, set their pay equity comparison standards (deserved pay and other’s salary) significantly higher than their own salary, and as a consequence, have low pay comparison satisfaction. For Spanish professors, love of money is not related to their pay comparison standards which are slightly (non-significantly) higher than their own self-reported income. Neither the direct nor the indirect path is significant. The standardized total effect of income to pay satisfaction is positive for American professors, but negligible for Spanish professors. Are you satisfied with your pay when you compare? Our results demonstrate that pay comparison satisfaction depends on not only one’s income but also one’s love of money and pay equity comparison standards which may vary across cultures.
KeywordsProfessors’ incomeMoney attitudeLove of moneyPay comparison standardsPay comparison satisfactionInternal and external referentDeserved payOther’s payThe USSpainCross-cultural
Out of 10 job preferences, men ranked pay fifth in importance and women ranked it seventh (Jurgensen 1978). Although men and women did not consider pay as the most important factor for themselves, they all considered pay as the number one most important preference for others. Over the years, pay has increased its importance for people around the world (Harpaz 1990; Heneman and Judge 2000; Mitchell and Mickel 1999). Managers use money to attract, retain, and motivate employees in organizations (Chiu et al. 2002; Milkovich et al. 2014). Pay satisfaction is important because pay dissatisfaction leads to turnover (Hom and Griffeth 1995; Tang et al. 2000), unionization efforts (Laws and Tang 1999), and unethical or deviant behaviors (Greenberg 1993; Kish-Gephart et al. 2010).
Money is an instrument of commerce and a measure of value. However, the meaning of money is in the eye of the beholder. Satisfaction with money is relative, but experience with consumption is absolute (Hsee et al. 2009). People with financial hardship are obsessed with money (Lim and Teo 1997). For example, children from poor economic backgrounds overestimate the size of a coin (Bruner and Goodman 1947). In dual-career families, both paternal and maternal money anxiety influences college students’ money anxiety (Lim and Sng 2006). In the compensation literature, equity theory (Adams 1963) and discrepancy theory (Lawler 1971; Rice et al. 1990) do not examine “individual differences” explicitly.
To understand pay satisfaction, one construct that researchers cannot overlook is the meaning of money (Rynes and Gerhart 2000). Research suggests that the number one predictor of management professors’ pay is the number of job changes (Gomez-Mejia and Balkin 1992). Professionals with high love of money motive take a pro-active stance and change jobs frequently to get paid at the market rate and have high pay (Tang et al. 2000). To the best of our knowledge, very little or no research has examined the following issues in exploring pay satisfaction: Do high love of money people set high pay equity comparison standards? Do high pay equity comparison standards lead to low pay satisfaction? Are there cross-cultural differences?
Theory and Hypotheses
The Love of Money
In the literature, scholars have investigated the affective, behavioral, and cognitive (ABC) components of attitudes (Bagozzi et al. 1979). There are numerous money constructs and measures (Furnham and Argyle 1998; Srivastava et al. 2001). Most studies of money attitudes are idiosyncratic and offer very little theory (Mitchell and Mickel 1999) with some exceptions (Furnham 1984; Yamauchi and Templer 1982). Mitchell and Mickel (1999) concluded that the Money Ethic Scale (MES, Tang 1992, 1993, 1995; Tang and Gilbert 1995) is one of the three most carefully developed and systematically used money attitudes. Since their review, the Love of Money Scale, a subset of the Money Ethic Scale, and the Monetary Intelligence (MI, money smart) construct have been empirically tested in more than three dozen countries around the world.
Using a formative theoretical framework, Monetary Intelligence (MI) examines the relationships between people’s affective (MI-A), behavioral (MI-B), and cognitive (MI-C) money attitudes and various theoretical appropriate constructs and provides the following novel findings. On the one hand, individuals with positive love of money motive (MI-A) and negative stewardship behavior (MI-B) have high unethical behavioral intentions (Chen et al. 2013; Tang and Sutarso 2013). The affective love of money motive (MI-A) predicts cheating behavior in laboratory experiments (Chen et al. 2013). In the context of materialism, money is Power. People consider money as Power (MI-C) and have poor (negative) Budgeting skills (MI-B) focus on materialism, attempting to show off and impress others (Lemrová et al. 2013). University students with negative love of money motive (MI-A) make ethical decisions in the beginning of a semester and have high academic achievement (final course grade) at the end of the semester, providing predictive validity (Tang 2014). On the other hand, managers with negative affective love of money motive (MI-A), positive stewardship behavior (MI-B), and moderate cognitive values (MI-C) have high pay satisfaction and life satisfaction (Tang et al. 2013). Monetary Intelligence is a type of social intelligence which involves individuals’ ability to monitor their own motives, behaviors, and cognitions and use the information to guide their thinking and actions in their everyday lives.
It is important to study money attitudes and pay satisfaction because pay reflects one’s justice perceptions (Milkovich et al. 2014). Research in cognitive neuroscience suggests that "reasoned action" and "impulsive emotion" activate different areas of the brain (Greene et al. 2001; Hofmann et al. 2009). On the one hand, feelings of pay satisfaction enhance work performance (Shaw et al. 2002) and promote reflective and logical thinking. On the other hand, feelings of pay dissatisfaction provoke long, angry, and destructive emotions (Baumeister et al. 2001) which excite some individuals to act impulsively (Loewenstein et al. 2001) and steal in the name of justice (Colquitt et al. 2001; Greenberg 1993) to get even. In summary, pay satisfaction and pay dissatisfaction cause reflective and impulsive reactions, respectively (Greene et al. 2001). Pay dissatisfaction may lead to many negative and undesirable consequences such as unethical intentions and corruption (Tang and Chiu 2003; Tang et al. 2011).
In this study, we specifically select the Love of Money construct (LOM) (a subset of the Money Ethic Scale, or Monetary Intelligence) for the following reasons: The love of money is a multidimensional individual difference variable representing one’s general attitudes toward money—Factors Good (affective), Motivator (behavioral), Equity (cognitive), and Success (cognitive) (Tang et al. 2005). Factor Good reflects one’s positive attitude or affect toward money. Most people love money and want to be rich; few want to be poor. Most people think that money is good. Factor Motivator is the behavioral component. Regarding improving performance in organizations, “no other incentive or motivational technique comes even close to money” (Locke et al. 1980, p. 381). Factor Equity deals with internal equity, external competitiveness, and individual equity in the compensation literature (Milkovich et al. 2014). It focuses on one’s preference for equity, but not for equality. Factor Success taps on the notion that money is a sign of one’s success and achievement (Rubenstein 1981). The combination of these four sub-constructs reflects one’s personal aspiration for money and cognitive frame of reference and contributes to our understanding of one’s pay equity standards and pay comparison satisfaction. Research suggests that individuals with a strong love of money orientation tend to take high risks (Jia et al. 2013; Tang et al. 2008) and change jobs frequently (Tang et al. 2000).
Equity theory (Adams 1963) suggests: Individuals compare their output/input ratio with that of a comparison other and determine their satisfaction (Liu and Tang 2011). Regarding the taxonomy of pay referent categories (Bordia and Blau 1998), researchers define “other” as someone inside or outside the focal organization. People assess the adequacy of their rewards through a process of social comparison. The value of a given reward is not absolute, but is relative to other rewards with which it is compared (Greenberg 1993). A large discrepancy in equity comparison leads to a high level of pay dissatisfaction (Heneman and Judge 2000).
Income and Pay Equity Comparison Satisfaction
In the compensation literature, high-income individuals consistently have high pay satisfaction (Heneman 1992; Heneman and Schwab 1985). We use four “social referents” for the pay equity comparison satisfaction: colleagues in their own department, colleagues in the organization, others at comparable organizations, and others in the labor market. High-income individuals have positive evaluations when they compare their pay with their internal and external referents. We expect a positive relationship between Income and Pay Equity Comparison Satisfaction, in general (Path 1).
Culture: The US Versus Spain
Money attitude is related to individualism and masculinity which have been studied widely around the world (Hofstede and Bond 1988). The US ranked the highest (score = 91) on individualism and 15th (score = 62) on masculinity. Masculinity refers to materialism, money, possessions, and advancement. In America, income is used to judge success (Rubenstein 1981). Since experience with money is relative (Hsee et al. 2009), pay satisfaction depends on not only their income but also how people compare their pay. Those who compare their pay with the rich are dissatisfied. For most professors in a public institution, their pay is significantly below the market and is lower than that of elite private universities and large research institutions. Underpaid people are obsessed with money.
Spain ranked 15th (score = 62) on individualism and 37th–38th (score = 42) on masculinity. People in a collectivistic culture exercise modesty in describing achievements (Farh et al. 1991). Femininity emphasizes concerns for others, relationships, and quality of life. Professors have fair pay compared to the market, have less concern about the pay structures, and are less interested in comparing their pay with others. Americans have much higher interests in pay equity comparison than their Spanish counterparts. Due to differences in individualism and masculinity (materialism) between the US and Spain, we propose Hypothesis 1 below.
The relationship between income and pay equity comparison satisfaction is stronger for American professors than for Spanish professors.
Income and the Love of Money
We turn to the negative indirect path. The relationship between one’s objective money (income) and subjective money attitude (the love of money) reflects one’s psychological feeling about money in a given context (Fig. 1, Path 2). The income to the love of money relationship is negative among highly paid professionals in Hong Kong, (Tang and Chiu 2003), non-significant among adequately paid males and Caucasians, but positive among underpaid females and African-Americans (Tang et al. 2006b). When one’s income changes; one’s love of money attitude changes accordingly. With money, people have a sense of self-sufficiency (Vohs et al. 2006). Satisfied needs reduce their love of money motive (Tang and Chiu 2003) and marginal utility of money (Easterlin 2001). With unsatisfied needs, anticipation of pain heightens their desire for money (Zhou and Gao 2008). For underpaid Americans, the income to the love of money path is positive. Since Spanish professors have adequate pay and low levels of concern for materialism, income, and other’s pay, their path may be non-significant.
There is a positive relationship between income and the love of money for American professors, but not for Spanish professors.
The Love of Money and the Pay Equity Comparisons Standards
High love of money motives lead to low pay satisfaction (Tang and Chiu 2003). It is not “money” but “the love of money” that leads to unethical intentions (Tang and Chiu 2003). Money, a symbol of power, is metaphorically an addictive and insatiable drug (Lea and Webley 2006)—the more they have, the more they want. Organizations reward people with high pay based on their merit, reflecting internal equity, pay differential, and distributive justice. The Matthew Effect1 (Merton 1968; Tang 1996) creates rich-get-richer and poor-get-poorer patterns of achievement. Tournament theory of compensation suggests when the reward for winning the first place is significantly higher than that of the second place; the scores in the competition are much better (Eriksson 1999), reflecting a strong performance-reward linkage. Following the meritocracy ethos, a culturally accepted value in capitalist countries around the world, managers with talent, power, and money acquire new external wealth and power (Cohen and Levinthal 1990).
In this study, we select Factors Equity and Success as individuals’ cognitive love of money (attitudinal standards) which match deserved salary and other’s salary (pay equity standards). People with high love of money orientation compare their pay with the rich—selecting high pay comparison standards (Path 3). Path 3 is stronger for Americans than for their Spanish counterparts, due to cultural differences related to materialism, individualism, and masculinity.
There is a positive relationship between love of money and the pay equity comparison standards for American professors, but not for Spanish professors.
The Pay Equity Comparisons Standards and the Pay Equity Comparison Satisfaction
The pay equity comparison standards serve as a “frame of reference” to judge their pay equity comparison satisfaction (Path 4). When one compares oneself with the rich, one experiences a sense of relative deprivation and low pay comparison satisfaction. We expect to see a strong path for American professors. However, due to Spanish professors’ lower levels of individualism and masculinity (materialism), this path is less obvious.
The negative relationship between pay equity comparison standards and the pay equity comparison satisfaction is stronger for Americans than for Spanish professors.
A questionnaire was mailed to “all full-time faculty” of a state university in the US with 18,500 students and 719 professors. It was translated into Spanish using a multi-stage translation-back-translation procedure (Brislin 1980) and distributed to “a random sample” of full-time professors of a Spanish public university with 20,000 students and 1,000 professors. The two public universities are similar in size. We collected data from 207 American professors and 104 Spanish professors.
Means, standard deviations, and correlations of major variables
1. Sex (% male)
4. Current (year)
5. Total (year)
We used two items to measure the pay equity comparison standards: (1) The annual salary of people holding jobs comparable to my own should be paid $____/year (deserved salary) and (2) One person with whom I compare myself is making $____/year (other’s salary) (Rice et al. 1990). Spanish income and pay equity comparison standards were converted to US dollars in subsequent analyses. The Cronbach’s alpha for deserved salary and other’s salary was .94. For pay equity comparison satisfaction, participants compared their pay with (1) colleagues in their own department, (2) colleagues in the organization, (3) others at comparable organizations, and (4) others in the labor market, using very dissatisfied (1), neutral (3), and very satisfied (5) as anchors (α = .89).
We used the average of items for each sub-construct (parcel) of Love of Money. The path from the overall construct (Love of Money) to its measured variable (Factor Good) equals the square root of the reliability (Cronbach’s alpha) of the measured variable (Factor Good), while the amount of random error to the measured variable (Factor Good) is the quantity one minus the reliability. We did this for both the US and Spanish models in our multi-group analysis. We used the following criteria for evaluating configural invariance: (1) χ2, df, and p value (2) Tucker-Lewis Index, TLI > .90 (3) comparative fit index, CFI > .90, and (4) root mean square error of approximation, RMSEA < .10 (Vandenberg and Lance 2000). For metric invariance, we adopted changes in CFI and RMSEA (if ΔCFI/ΔRMSEA ≤ .01: differences do not exist) as the criteria (Cheung and Rensvold 2002).
The Pay Equity Comparison Standards
For American professors, their “deserved salary” ($56,022.94) and “other’s salary” ($55,279.35) were significantly higher than their self-reported income ($48,457.41) (t = 5.87, p < .001; t = 4.45, p < .001, respectively). For Spanish professors, their “deserved salary” ($25,529.76) and “other’s salary” ($23,019.55) were slightly higher than their self-reported income ($22,533.92). The differences were non-significant (t = 1.76, p = .084; t = .26, p = .795, respectively). Professors in the US and Spain set different standards.
Step One: Multi-Group Confirmatory Factor Analysis (MGCFA)
For the Love of Money Scale, we achieved configural invariance (factor structures) for the sample in the US (χ2 = 47.48, df = 41, p = .23, TLI = 1.00, CFI = 1.00, RMSEA = .03) and in Spain (χ2 = 73.49, df = 41, p = .00, TLI = .98, CFI = .99, RMSEA = .09). We achieved metric invariance (factor loadings) by comparing (1) the unconstrained model (χ2 = 121.14, df = 82, p = .00, TLI = .99, CFI = 1.00, RMSEA = .04) with (2) the constrained model using multi-group confirmatory factor analysis, MGCFA (χ2 = 135.63, df = 89, p = .00, TLI = .99, CFI = .99, RMSEA = .04) due to non-significant differences between the two (ΔCFI = .01, ΔRMSEA = .00, Cheung and Rensvold 2002). The factor structures and factor loadings of the Love of Money Scale were invariant across these two samples. We have confidence to examine the relationships among variables using our theoretical model.
Step Two: Structural Equation Modeling (SEM) Results
Standardized total effect, direct effect, and indirect effect for the whole sample and the two subsamples: The US and Spain
Step 1: standardized direct effect
1. Income → satisfaction (Path 1)
2. Income → LOM (Path 2)
3. LOM → standards (Path 3)
4. Standards → satisfaction (Path 4)
Step 2: standardized indirect effect
1. Income → standards
2. Income → satisfaction
3. LOM → satisfaction
Step 3: standardized total effect
1. Income → satisfaction
2. Income → LOM
3. Income → standards
4. LOM → standards
5. LOM → satisfaction
6. Standards → satisfaction
The Whole Sample
All paths were significant for the whole sample (Table 2). The direct path (Path 1) was positive (.52) and the indirect path (Paths 2, 3, and 4 combined) was negative (−.341). High income was related to high love of money that was related to high pay equity comparison standards that, in turn, was related to low pay equity comparison satisfaction. The overall total effect from income to satisfaction was positive but small (.180 = .52 + (−.341)). Therefore, high income leads to high pay equity comparison satisfaction. We turn to the main focus of this study below.
The US Sample
The direct path was significant (Path 1 = .49, C.R. = 4.163, p < .001) (Table 2, Step 1). The indirect path showed the following results: Income to the Love of Money (Path 2 = .79, C.R. = 3.065, p = .002), the Love of Money to the Pay Equity Comparison Standards (Path 3 = .93, C.R. = 3.075, p = .002), and the Pay Equity Comparison Standards to the Pay Equity Comparison Satisfaction (Path 4 = −.25, C.R. = −2.072, p = .038). Income explained 62 % of the variance for the Love of Money. The Love of Money explained 87 % of the variance for the Pay Equity Comparison Standards. The Pay Equity Comparison Standards and Income explained 12 % of the Pay Equity Comparison Satisfaction.
Table 2 (Step 2) shows that the standardized indirect effect. There were three indirect effects: (1) .73 (Income → the Love of Money → Pay Equity Comparison Standards) (2) −.18 (Income → the Love of Money → Pay Equity Comparison Standards → Pay Equity Comparison Satisfaction), and (3) −.23 (the Love of Money → Pay Equity Comparison Standards → Pay Equity Comparison Satisfaction). The standardized total effect (Table 2 Step 3) from income to pay comparison satisfaction (.31) was the combination of the direct effect (.49, Path 1) and indirect effect (−.18, Paths 2, 3, and 4). The total effect of income to pay comparison satisfaction is positive (.31 = .49 − .18). American professors emphasized the deserved salary (.94) more than the other’s salary (.64). External referents—colleagues in other universities (.94) and people in the labor market (.93) carried heavier weight than internal referents—within the university (.71) and in the department (.64).
The Spanish Sample
The direct and indirect paths were all non-significant: (Path 1 = .11, C.R. = .719, p > .05), Path 2 (.89, C.R. = 1.902, p = .057), the Path 3 (.72, C.R. = 1.861, p = .063), and Path 4 (−.125, C.R. = −.799, p > .05). Results were all in the predicted direction. Income explained 79 % of the variance for the Love of Money. The Love of Money explained 52 % of the variance for the Pay Equity Comparison Standards. The Pay Equity Comparison Standards and Income explained 1 % of the Pay Equity Comparison Satisfaction.
The standardized indirect effect (Table 2 Step 2) from the income to the pay equity comparison standards was .64 and to the pay equity comparison satisfaction was −.08. The effect from the love of money to the pay equity comparison satisfaction was −.09. The standardized total effect (Table 2 Step 3) from income to satisfaction was quite small but positive (.03)—the combination of the direct effect (.11, Table 2 Step 1) and the indirect effect (−.09, Table 2 Step 2). Income has little or no effect on pay comparison satisfaction. Spanish professors valued the deserved salary (.94) higher than the other’s salary (.80). Internal referents (in the department (.87), in the organization (.79)) were more important than external referents (in the labor market (.59) and in other organizations (.35)). Taken together, results of this study support our Hypotheses.
This study offers the following theoretical, empirical, and practical contributions to the literature regarding professors’ pay comparison satisfaction. Pay comparison satisfaction depends on the combination of income, the love of money, pay equity comparison standards, and the culture (the US vs. Spain). Our two mediators (love of money and pay equity comparison standards) explain how and why income is related to pay dissatisfaction. Our moderator (culture) shows “when” and “for whom” or “where” the indirect relationship of our theoretical model is amplified (for our American sample) or attenuated (for our Spanish sample). We reveal why professors experience low pay comparison satisfaction in this American sample, but not in this Spanish sample. Pay comparison satisfaction may have less to do with people’s income (absolute amount), but more to do with their love of money, pay comparison standards, and culture. Overall, individuals with high income have high pay comparison satisfaction. This relationship is stronger for American professors than for thier Spanish counterparts.
Income is positively related to pay comparison satisfaction, supporting the literature (Heneman and Judge 2000). The indirect path, however, shows that income is negatively related to pay comparison satisfaction. Underpaid American professors with high income have a strong love of money orientation. They do use the love of money attitude as a “frame of reference” when they establish their standards (deserved salary and other’s salary) which are significantly higher than their own self-reported income. American professors compare their own pay with the rich. Due to their higher standards, their comparison leads to low pay equity comparison satisfaction. Results support a partially mediated model because both direct and indirect paths are significant.
The total effects from the love of money to pay equity comparison standards (.93) and to pay equity comparison satisfaction (−.23) contribute to our new understanding of the causes of low pay comparison satisfaction. We illustrate the importance of incorporating the love of money and the pay equity comparison standards in our theoretical model. Our pay equity comparison satisfaction reflects professors’ satisfaction when they compared their pay with that of internal and external referents. They do pay more attention to “external” referents than to internal referents (the issue of whom also) for two reasons: First, most professors, those in the college of business in particular, could make more money (double their money) in business and industry than in academia. Second, they are paid fairly within the department and within the university based on equality and academic tenure rather than equity. There is very little or no reward for research publications (except for tenure and promotion). There is very little they can do to change their pay and benefits because there is no merit pay program. Professors have received the across-the-broad pay increases (0–2 %) that does not match the market. The modest goal of the equity adjustment plan has been to increase faculty pay to 50th percentile of the peer (AACSB-International) institutions with similar size and mission. Their pay compression and low pay lead to a high level of love of money (Tang and Chiu 2003).
These professors have 21.32 years of professional experience (11.62 years at the current university) and have changed job 1.19 times in their careers. Inequity existed, compared to the external referents in the labor market. These equity studies may have highlighted professors’ concerns regarding external equity (Gino and Pierce 2009; Kouchaki et al. 2013). We reveal the importance of external referents in the pay comparison process. Professors in state/public universities tend to have much lower pay than elite private universities or large research institutions of higher education. The average Americans change jobs every 3.6 years. People, professors included, do change jobs to increase their pay (Gomez-Mejia and Balkin 1992; Tang et al. 2000). American professors in this sample, however, have long career tenure, long job tenure at the current institution, also low income, relatively speaking, and low pay comparison satisfaction, as a result. These American professors have developed connections to the university and local social community and are likely to remain with the university (Mitchell et al. 2001) and hence have low turnover rate. In order to attract, retain, and motivate university faculty and use pay strategy as a source of sustained competitive advantage, administrators and state legislators need to pay attention to external pay equity and set university faculty’s pay above the average pay of peer institutions, or, at a high percentile to enhance external competitiveness and reputation (Milkovich et al. 2014; McGrath 2013).
We find non-significant direct and indirect paths for the Spanish sample due to their low importance they place on money. Spanish professors are paid well, have a sense of self-sufficiency, and are able to take their minds off money. Income has no significant impact on love of money. Contrary to American professors, their pay equity comparison standards are slightly higher than their self-reported pay, but the differences are not significant. Spanish professors are relatively content with their income, do not have very high pay equity comparison standards, do not compare their pay with the rich, and income is not related to pay dissatisfaction. Results partially reflect differences in the work environment (institutions) and national culture.
American professors do value money and experience pay satisfaction/dissatisfaction differently compared to their Spanish counterparts. This may be caused by their different pay in the state university systems. Among university employees, 84 % feel they are underpaid, by an average of 19 % (Heneman and Judge 2000). People do change their attitude depending on their employment status and the amount of money they have (Tang and Chiu 2003). Some Americans may think about their own pay and incorporate other’s high pay in setting their pay equity comparison standards. People in Spain consider the salary information in the US “irrelevant” and may ignore it. If people value money to show off, get power, compare oneself to others or overcome self-doubts (negative money motives), then it leads to the importance of money and to low subjective well-being (Srivastava et al. 2001). National culture plays an important role in our understanding of the income to the pay comparison satisfaction relationship.
To some, money is a motivator. It may prompt individuals to take action, achieve their goals and increase pay (Locke et al. 1980; Tang et al. 2000), or engage in unethical behavior (Chen et al. 2013; Tang et al. 2011). Money leads to movement because whatever gets measured and paid gets done. On the other hand, others (Herzberg 1968) argue that money is a hygiene factor. People do work for money—but they work even more for meaning in their lives (Pfeffer 1998). University administrators need to pay stakeholders fairly and well to enhance justice perceptions and increase satisfaction. For universities interested in enhancing their academic reputation, administrators need to establish internal equity, external equity, individual equity, and a strong pay administration and policy, offer faculty fair pay and favorable benefits, entice the most qualified professors, increase the visibility of their institutions, attract highly qualified students, and promote higher university ranking in the academic market. When employees are paid well, they will be able to take their minds off money and focus on the tasks on hand. If one is “not” paid adequately, then, one may have a strong sense of injustice and may steal in the name of justice (Greenberg 1993) and engage in unethical behaviors. This negative impact may be much stronger for managers in business organizations than for professors in universities.
Our cross-sectional data collected at one time and from one source do not provide strong cause-and-effect relationship. We selected one public university in each country. Our samples are relatively small and may not represent the populations of professors in these two cultures. The smaller sample size for the Spanish data may contribute to the non-significant findings reported here. It may also reflect the differences in cultures. Future researchers may want to expand the love of money construct (e.g., Monetary Intelligence, or money smart, Chen et al. 2013; Lemrová et al. 2013; Tang and Sutarso 2013), use longitudinal, objective and subjective/qualitative data from different sources, and replicate these findings in different occupations, cultures, and countries to enhance our understanding of the psychology of money.
We develop a mediated mediation theoretical model, examine the relationship between income and pay comparison satisfaction, treat love of money and pay comparison standards as two mediators, investigate the direct and the indirect paths of our model simultaneously, and treat culture as a moderator based on a sample of professors in the US and Spain. For the whole sample, both the positive direct path and the negative indirect path are significant. Subsequent analyses reveal that American professors set their pay equity comparison standards (deserved and other’s salary) significantly higher than their own salary, whereas Spanish professors do not. Regarding pay comparison satisfaction, American professors focus on external referents in the market, whereas Spanish professors select internal referents within organizations. For American professors, the indirect path shows that high income was related to high love of money, high equity comparison standards, and low pay equity comparison satisfaction. For Spanish professors, both paths are non-significant. When we combine both the direct and indirect paths, the standardized total effect of income to pay comparison satisfaction is positive for American professors, but negligible for Spanish professors. Income was related to pay equity comparison satisfaction for Americans, but not for Spanish professors. It is concluded that pay comparison satisfaction depends on not only one’s income but also one’s love of money, pay equity comparison standards, and culture. Our research reveals a significant and “robust” phenomenon in understanding the relationships among income, the love of money, the pay equity comparison standards, and the pay equity comparison satisfaction across cultures, novel and original theoretical, empirical, and practical contributions to the literature, and may spark curiosity and add new vocabulary to the conversation regarding income, psychology of money, compensation, and employee pay satisfaction.
To anyone who has, more will be given and he will grow rich; from anyone who has not, even what he has will be taken away. (Matthew 13: 12).