Hinrichs Revisited: Individual Evaluations of Income Increments

ABSTRACT

Pay is used increasingly to recognize and reward performance; nevertheless, little research exists regarding the evaluation of pay increases. The data were collected, by applying the “method of limits” paradigm widely used in psychophysical measurement, from approximately 3,500 employees of a large industrial organization. Building on the seminal work of Hinrichs (1969), we posited and found that (a) Weber's Law is an inadequate explanation of pay evaluations; (b) individual difference variables moderate Weber fractions; (c) women did not expect less than men, they expected more; and (d) inflation increased evaluation thresholds. The potentially significant implications of these findings, for compensation administration and the paradigm in general, are discussed.