Comparing Four Approaches to Understanding the Proximal Determinants of Pay Level Satisfaction

Different perspectives regarding the relationship between reported pay, a comparison standard, their discrepancy and pay level satisfaction have been advanced in the literature. Among those are the direct link theory (Schaffer, 1953), the discrepancy theory (Lawler, 1971), the combined theory (Wall & Payne, 1973) and the polynomial approach (Edwards, 1994). The present study (N = 272) empirically tested these perspectives and found all to make significant predictions; but, the combined theory explains more variance than either the direct link theory or the discrepancy theory alone, and explains a similar amount of variance as the polynomial approach. Based on the combined theory, we found a downward curvilinear effect of reported pay and a linear effect of the discrepancy. Money does buy pay level satisfaction, but there is no further increase beyond a pay level of $125k. We also found that overpayment (reported pay above a comparison standard) does not lead to pay level dissatisfaction. Colleague’s pay s...