DOI: 10.5255/ukda-sn-856873
title: Experiments on Performance-related Pay and Stress: Sample Selection, 2022

description: As described in the overarching funded project description, the focus of the research is to examine the relationship between performance-related pay and stress using experimental methods. Importantly, stress is measured here both subjectively (i.e. asking the stress level of participants) and objectively (i.e. collection of salivary cortisol). 

The basic experiment is generally the same across all of the experiments in the project. Subjects are recruited by using a database at the university where the experiments took place. All experimental sessions happened at 1400 to control for the diurnal patterns of cortisol. Participants were also told to avoid exercising, smoking, drinking caffeine and eating two hours before the experiment since these also affect cortisol. During the experiment, participants are told generally about the experiment and enter a 10-minute relaxation period where they can colour in a mindfulness colouring page if they wish. Then they are asked questions about their subjective stress and a baseline cortisol measurement. Next, participants are given three example maths questions to complete in their own time and then allocated their employment contract. The performance-related pay (PRP) contract is piece rate based on the number of correct answers while the minimum performance contract (nonPRP) is a flat rate once ten questions are answered correctly. Then, participants are given 10 minutes to complete as many questions of maths problems (up to 50) without the use of a calculator. The computer screen gives the number of correct answers and for the nonPRP group, a banner is shown when they answer 10 questions correctly. After the task, a screen shows how much they earned from their performance, including the show up fee. Another measure of cortisol is taken and a survey administered to collect information on subjective stress and to collect demographic information. Participants had a 10-minute rest period of colouring after which a third cortisol sample was taken. Then participants had one final 10-minute rest period after which a fourth and final cortisol sample was taken. Finally, participants were called into the control room and given their payment. Cortisol samples were frozen and after all were collected were sent to a laboratory for analysis.

In the second experiment, we want to allow for a more ‘real life’ example from the labour market – namely that workers generally select into PRP jobs. It might be that this selection stems from an ability to handle stress better and so this experiment tests whether selection negates the effects of PRP on stress as found in the first experiment when the contract was randomised. Thus there are a couple additional changes in this experiment compared to the general description above. 

1) Pre-testing of the experiment showed that participants overestimated their performance. Thus, for this experiment, participants were invited to a morning session where they completed two 10-minute tasks, where they were told in one how much they would have been paid if in the PRP contract and the other they were told how much they would have earned in the nonPRP contract. 
2) As in the previous experiment, participants were paid £5 if they choose and met the minimum performance contract and were paid £0.20 for each correct answer when they chose the PRP contract. However, the show-up fee was increased to £7.50 to increase the sample pool of participants.

The data suggest that PRP is significantly associated with higher subjective stress, but the effect on cortisol is less robust with only weakly significant effects found.