"Knowledge may be power," says Ray Fisman at Slate, "but it can also be a blow to the ego." That is certainly the case when it comes to knowing the salaries of your colleagues. In my first job out of graduate school, I made $45,000 as a World Bank consultant — "more than I'd earned in my entire life" and "more than I knew what to do with." I was thrilled, until "I discovered via water-cooler chatter how much more other Ph.D.-educated employees" like me earned. Then "my monthly paychecks began eating away at my soul." And according to a study by researchers at Berkeley and Princeton, says Fisman, he is not alone. Here, an excerpt:
The anxiety and discontent caused by previously private salaries being revealed is an office story line common enough that it's been dramatized in episodes of "The Office" and "Mad Men." It's now also been carefully analyzed in a newly released study in which a group of Berkeley and Princeton researchers notified University of California employees of a Sacramento Bee Web site where they could compare their earnings to those of their peers. Their subjects' reactions will hardly surprise anyone who has found himself in a similar position. In a follow-up survey run by the researchers, below-median earners exposed to the salary Web site reported significantly lower job satisfaction and were more likely to be hunting for a new job than low earners who weren't exposed to salary info. For relatively high earners, information about others' salaries didn't seem to make any difference in their happiness or the likelihood they were searching for a different job.