Despite how highly these employees valued this information, they hadn’t, by the time the researchers came calling, seemed to have done much work to track it down themselves. When asked to estimate the average of five of their peers’ salaries, they were off by an average of 16 percent, which was about as accurate as they would have been if they had just submitted their own salaries as their guess.
Read: When the boss says, “Don’t tell your co-workers how much you get paid”
“Some of these misperceptions,” Cullen and Perez-Truglia write, “are due in part to high search costs.” And those “search costs”—essentially, the obstacles that come with gathering information—are a matter not just of the legwork involved in asking around but also of the discomfort of doing so. The value of avoiding the discomfort of asking might, for some, be in the neighborhood of $1,000. Another thing the employees might have been interested in paying for was the opportunity to avoid being asked about their own salary by a co-worker, something that 89 percent of the research subjects said they’d expect to happen if they inquired about someone else’s salary.
In reviewing the accuracy of the employees’ estimates, Cullen and Perez-Truglia noted that male and female employees were off by a similar margin. That is, men didn’t seem to have better information than women, even though such a discrepancy has been thought to be one possible contributor to gender-pay gaps. (However, women on average were less confident than men that their guesses were correct.)
In addition to asking their subjects how much they’d pay to gain information about their peers, the researchers asked how much they would pay to prevent others from knowing how much they themselves earned. And a pattern emerged: The higher someone thought his or her salary was relative to others’, the more money that person was willing to pay to prevent the salary from being shared.
Cullen explained to me why this might be the case: “It’s likely that this information would have a detrimental effect … in the sense that others could maybe use the information to negotiate and maybe it would slow the rate of promotion for the high [earners].” Also, being secretive might be advantageous if one had a hunch that one’s team members would be resentful after learning how high the number was. “It’s possibly a very wise … move for the high-income people to be not forthcoming,” Cullen said.
While this study was conducted in Asia, Cullen told me that the phenomena she and Perez-Truglia examined probably aren’t Asia-specific. She says this because the bank employees she studied hailed from regions with a variety of cultural backgrounds, yet those potential cultural differences didn’t appear to correlate with any differences in the data.
I asked Rachel Sherman, a sociologist at the New School and the author of Uneasy Street: The Anxiety of Affluence, what she made of these findings. Not commenting on Cullen and Perez-Truglia’s paper specifically, Sherman told me that when she interviewed wealthy New Yorkers for her book, she found them to be guarded about their finances. “It goes against social conventions to talk about how much money you have or how much money you make,” she told me. “I think there’s also reluctance, among the people I interviewed for my book, to recognize how much money they have, partly because they’re worried they have more.”
