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For some, salary boost feels like failure

U. WARWICK (UK) — People with neurotic tendencies may actually perceive a pay increase as a sign of failure, according to a new study.

In a working paper, economist Eugenio Proto from the Centre for Competitive Advantage in the Global Economy (CAGE) at the University of Warwick looked at how personality traits can affect the way we feel about our income in terms of levels of life satisfaction.

He found evidence suggesting that neurotic people can view a pay raise or an increase in income as a failure—if it is not as much as they expected.

Neuroticism is a fundamental personality trait in psychology and refers to a tendency to experience negative emotional states. People with high levels of neuroticism have higher sensitivity to anger, hostility, or depression.

Proto, who co-authored the paper with Aldo Rustichini from the University of Minnesota, says people who receive a high salary and have high levels of neuroticism are more likely to see a pay rise as a failure.

He says: “Someone who has high levels of neuroticism will see an income increase as a measure of success. When they are on a lower income, a pay increase does satisfy them because they see that as an achievement.

“However, if they are already on a higher income they may not think the pay increase is as much as they were expecting. So they see this as a partial failure and it lowers their life satisfaction.”

Proto, who will be presenting the research at next month’s ESRC Research Methods Festival, used data from the British Household Panel Survey and the German Socioeconomic Panel.

He adds: “These results suggest that we see money more as a device to measure our successes or failures rather than as a means to achieve more comfort.”

More news from University of Warwick: http://www2.warwick.ac.uk/newsandevents/

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