Stress in performance-related pay: the effect of payment contracts and social-evaluative threat.

There is some evidence that performance-related pay (PRP) leads to higher levels of stress as it incentivizes employees to work harder for longer. However, PRP in the workplace also typically involves performance monitoring, which may introduce an additional source of stress via social-evaluative threat (SET). The current study examined the effect of PRP on stress while varying the level of performance monitoring/SET. Using an incentivized mixed design experiment, 206 participants completed a simulated work task after being randomly allocated to either a PRP contract (£0.20 per correct response, n = 110) or minimum-performance fixed payment contract (£5 for ≥10 correct responses; £0 for <10, n = 96) condition. All participants completed the task during a high SET (explicit performance monitoring) and low SET (no monitoring) condition. Subjective and objective stress were measured through self-report and salivary cortisol. High SET led to higher levels of self-reported stress but not cortisol, whereas there was no effect of the payment condition on either self-reported stress or cortisol. A statistically significant interaction revealed that high SET-fixed payment participants were significantly more stressed than those in the high SET-PRP group. Estimating the regressions separately for high- and low-performing individuals found that the effect was driven by low-performing individuals. These results suggest that fixed payment contracts that have a minimum performance threshold and which include performance monitoring and SET can be more stressful than traditional piece-rate PRP contracts. The current study suggests that incorporating performance monitoring and SET into payment contracts may affect the well-being of employees.

Salivary cortisol in university students after the COVID-19 pandemic.

The COVID-19 pandemic required people to navigate lockdowns and unfamiliar restrictions for the first time. It is known that situations characterised by uncontrollability and novelty heighten the physiological response to stress. The data presented here was collected as part of an experimental stress study and offered an opportunity to compare cortisol levels upon arrival to the lab before and after the first UK lockdown, when students had to navigate novel health and safety restrictions on campus. Participants (n = 152) were students who took part in an experiment designed to measure salivary cortisol levels as a response to a stress task. All provided a baseline cortisol sample after arriving to the lab but before the experimental task. Pre-lockdown participants (n = 72) were familiar with the campus rules whereas post-lockdown participants (n = 80) had to adhere to novel restrictions, including health questionnaires, PPE and social distancing. The post-lockdown sample had significantly higher levels of baseline cortisol, cortisol output (AUCg) and cortisol response (AUCi) than the pre-lockdown group. This effect remained significant even after controlling for sample characteristics. These findings suggest that navigating new restrictions may lead to heightened levels of anticipatory stress even if there is no difference in recent general mental health before and after the lockdown.

Performance pay and low-grade stress: An experimental study.

BACKGROUND: Although recent economics literature suggests a link between performance-related pay (PRP) and ill health, this finding is contested on the grounds that this link is plagued by endogeneity between the two variables of interest. OBJECTIVE: This study investigates the adverse effects of performance-related pay on stress which is an important determinant of physical health. METHODS: Forty subjects were randomly assigned to two equal groups: either being paid by performance or being paid a flat fee. Both objective (saliva samples to measure cortisol elevation) and subjective (self-reported stress level) measures of stress were obtained before and after participation in the experiment. This experimental methodology purges the effects of self-selection into performance pay and identifies the direction of causation from performance-related pay to stress which is measured by cortisol levels. RESULTS: Those who were paid for their performance experienced higher levels of stress, both in terms of perceived stress and in terms of objectively measured cortisol levels, compared to those who were paid a flat fee for minimum performance. CONCLUSIONS: Performance-related pay induces objectively measurable stress. Self-reported stress levels and the objective stress measure obtained by measuring cortisol move in a similar direction for the PRP and non-PRP groups, but only the cortisol group shows statistically significant differences between the PRP and non-PRP. This also suggests that individuals underestimate the stress caused by performance pay.

Economic insecurity: A socioeconomic determinant of mental health.

Economic insecurity is an emerging topic that is increasingly relevant to the labour markets of developed economies. This paper uses data from the British Household Panel Survey to assess the causal effect of various aspects of economic insecurity on mental health in the UK. The results support the idea that economic insecurity is an emerging socioeconomic determinant of mental health, although the size of the effect varies across measures of insecurity. In particular, perceived future risks are more damaging to mental health than realised volatility, insecurity is more damaging for men, and the negative effect of insecurity is constant throughout the income distribution. Importantly, these changes in mental health are experienced without future unemployment necessarily occurring.

A reappraisal of the unemployment-mortality relationship: transitory and permanent effects.

Using US state-level data for 1974 to 2003, this article estimates a relationship that describes both the transitory and permanent effects of unemployment rates on mortality. It shows that the transitory effect of increasing unemployment rates is to decrease mortality. The permanent effect of increasing unemployment rates is to increase mortality. The detrimental effects of higher unemployment rates on health take a long time to become visible. The permanent scars of unemployment on population health are detrimental and overwhelming. They dwarf any opposite and transitory effects.