Date:
Location:
Michael I. Norton, Harold M. Brierley Professor of Business Administration, Harvard Business School.
Do people from different countries and different backgrounds have similar preferences for how much more the rich should earn than the poor?
Using survey data from 40 countries (N = 55,238), we compare respondents’ estimates of the wages of people in different occupations—chief executive officers, cabinet ministers, and unskilled workers—to their ideals for what those wages should be.
We show that ideal pay gaps between skilled and unskilled workers are significantly smaller than estimated pay gaps and that there is consensus across countries, socioeconomic status, and political beliefs.
Moreover, data from 16 countries reveals that people dramatically underestimate actual pay inequality. In the United States—where underestimation was particularly pronounced—the actual pay ratio of CEOs to unskilled workers (354:1) far exceeded the estimated ratio (30:1), which in turn far exceeded the ideal ratio (7:1).
In sum, respondents underestimate actual pay gaps, and their ideal pay gaps are even further from reality than those underestimates.
About the speaker
Michael I. Norton is the Harold M. Brierley Professor of Business Administration at the Harvard Business School and a member of Harvard’s Behavioral Insights Group.
Norton's research can be grouped into two broad areas. First, he explores the effects of social norms on people’s attitudes and behavior, addressing the key role that social factors play in shaping the preferences of individuals. In the domain of behavioral economics, Norton's research investigates the psychology of investment: How investing time, labor, and money impacts how people come to value things, from products to people.
Norton is the co-author, with Elizabeth Dunn, of the 2013 book, Happy Money: The Science of Smarter Spending.
His work has been published in a number of leading academic journals, including Science, the Journal of Personality and Social Psychology,Psychological Science, and the Journal of Consumer Research, and has been covered in media outlets such as the Economist, the Financial Times, the Wall Street Journal, and the Washington Post.
His research has twice been featured in the New York Times Magazine Year in Ideas issue, in 2007 (Ambiguity Promotes Liking) and 2009 (The Counterfeit Self). His "The IKEA Effect: When Labor Leads to Love" was featured in Harvard Business Review's Breakthrough Ideas for 2009. In 2010, he won the Theoretical Innovation Prize from the Society of Personality and Social Psychology; in 2011, he won the SAGE Young Scholars Award from the Foundation for Social and Personality Psychology.
In 2012, he was selected for Wired Magazine’s Smart List as one of “50 People Who Will Change the World.” His TEDx talk, How to Buy Happiness, has been viewed more than 3 million times.
Norton holds a B.A. in Psychology and English from Williams College and a Ph.D. in Psychology from Princeton University.
