Model for Workload Salary

+Model

SOCECO-679;

No. of Pages 26

ARTICLE IN PRESS

The Journal of Socio-Economics xxx (2007) xxx–xxx

A decision-making model for workload/salary choices and their effect on well-being

Eugenio L. Facci ∗ , Genie Chartier

Kenan Institute, CB 3440, Kenan Center, Chapel Hill, NC 27599-3440, United States Received 21 July 2006; received in revised form 20 April 2007; accepted 20 June 2007

Abstract We propose a career decision-making model to examine employees’ well-being and understand why in developed countries rising incomes are accompanied by increasing workloads, rising social problems and stagnant satisfaction. The model applies prospect theory to people’s career choices under uncertainty, and specifically to scenarios where workload is expressed through qualitative expressions. We argue that uncertainty leads to systematic over-evaluation of some well-being predictors (salary) over others (friends and family). A research agenda and some potential solutions are also discussed. © 2007 Published by Elsevier Inc.

JEL classification: A13; A14; D70; D81; J22 Keywords: Decision-making; Utility indifference curves; Well-being; Labor economics; Prospect theory

When choosing a career or evaluating a job offer people have to examine several issues which are all important – salary, position, prospective lifestyle and so forth – but that are often expressed in different manners. For instance, consider an employed individual who receives an offer to take on a new job. The new position would pay 20% more, yet it would entail relocation to a new city and a workload described by prospective colleagues as “sometimes significant”. In this case one has to ponder the advantages of a sure salary gain against the potential disadvantage of a possible setback in terms of lifestyle. The questions that this paper discusses relate to these types of career decisions and are essentially three. Are these decisions generally made in a proper way, in that they usually lead...