Child pages
  • Equity Theory Case Study Fall 2011 Team 4
Skip to end of metadata
Go to start of metadata


J. Stacey Adams developed equity theory in the early 1960s by building upon Festinger’s (1957) theory of cognitive dissonance to draw attention to the behaviors associated with and consequences of wage inequity (as cited in Adams, 1963; PSU WC, 2011).   Equity theory focuses on the ratio of an individual’s inputs and outcomes with that of another individual or standard.  The other individual or standard is referred to as the comparison other. The inputs are what the individual perceives to be the value he/she provides and the outcomes refer to benefits or rewards one receives  (PSU WC, 2011). 

Individuals will experience underpayment, or negative, inequity when they perceive themselves to be providing more inputs but receiving the same level of rewards as their comparison other.  Negative inequity may also be experienced when individuals perceive themselves providing equal inputs but receiving lesser rewards than the comparison other.   Overpayment, or positive, inequity will be experienced when individuals are providing equal inputs but receiving greater rewards than their comparison other or are providing fewer inputs while receiving equal rewards (PSU WC, 2011).

Keep these terms in mind as you consider the scenario below and try to determine the type of inequity experienced and identify the comparison other.  We will identify several behavioral and cognitive strategies that are commonly utilized to counteract feelings of inequity and define the concepts of procedural and distributive justice, both developed to describe the social justice related to equity theory.

Case Scenario

Mary has been working at ABC Co. for almost ten years, gaining knowledgeable experience. John is now hired to work for ABC Co., at the same position and job classification as Mary. Mary and John are teamed together to work on a research project, involving late nights, and very long hours. They spend much of their time in each other’s offices. Mary notices that John has gotten settled rather quickly, decorating with memorabilia from his college years and fraternity house. After quite some time, Mary learns that John earns more money than her. She learns that their educational backgrounds are quite similar, and both went to prestigious universities. She cannot think of why John would be earning more money than her.  

 Mary takes a logical step and goes straight to her supervisor, Mark. After much evasion of the question, Mark confirms that John does, in fact, earn more money; however, Mark did not offer any substantiating evidence to support the decision to pay John more. While in Mark’s office, Mary notices that Mark also has collegiate and fraternity décor; however, that is not what seemed odd, as many individuals decorated the offices with college memorabilia. What caught Mary's eye was that Mark’s office looked nearly identical to John’s office (similar school and fraternity items).  At this point, Mary concluded that John earns more money because he already knew the supervisor. In fact, the two had been in the same pledge class in college, and probably knew each other quite well. Mary feels as though this is unfair. She has an abundance job experience with the same educational background and feels as though John should not be earning more money than she, just because he attended the same university as Mark.

 Mary continues to work with John to complete the research project, and notices that John doesn’t seem to be putting as much effort as he could be into the project. Also, John has been spending much of his time at work goofing off and distracting other individuals from their own respective tasks. After several weeks, Mary and John are informed that they are up for a promotion, which will earn them more money. They will receive a larger office, more benefits, and a more prestigious title. Mary begins to notice that Mark often goes to lunch with John, which appear to not be working lunches.  Further, she hears Mark often offer additional suggestion and advice to John and others in the office, which is well beyond the scope of Mark’s job classification. It is apparent to Mary that Mark favors John over the other employees. As such, Mary feels as though there is little chance for her to receive the promotion, as it is Mark’s evaluation that will determine who is promoted, regardless of the level of experience and job performance.

 As Mary feels her chance of obtaining the promotion is dwindling, she stops going the extra mile to stand out when working on assignments. She begins to only follow instructions and complete the work accordingly, putting forth only minimal effort.  Whereas, before, she would add a personal cover page to her reports, or the extra binding to make it look more professional, and she might stay that little extra time at night to ensure that last little detail for a meeting the next morning is perfect. 

 John’s performance at work has also not improved since hearing about the promotion. In fact, it has only further declined. He often arrives to work later than expected, completes less work than required, and the work he does chose to complete is presented in a  sloppy manner, and typically not by the desired time and date. It becomes clear to Mary that John is not working towards the promotion. However, John is already discussing with other coworkers what changes he can and will make once he is promoted. She feels as though he will get the promotion without earning it. 

Applying Equity Theory

Let’s take a moment to identify how equity theory explains Mary’s reaction to the situation described above.   It’s important to remember that equity theory is based on social comparisons so the first question we need to address is with whom is Mary comparing herself (PSU WC, 2011)?   She is comparing her inputs and outcomes with her coworker John, which identifies him as the comparison other in this scenario.  Recall that a comparison other is the person or standard to which the ratio of inputs to outcomes is considered to define an inequity (PSU WC, 2011).  In the scenario described above the inputs that Mary is concerned with include experience, education, skills, work ethic and motivation.  More specifically we learn that Mary has ten years of experience with the company, a higher level of motivation to achieve the promotion, a stronger work ethic and an educational background and skill level comparable to John. The scenario explains that Mary perceives her work ethic to be stronger than John’s since he spends much of his time goofing off and distracting other employees when they should be working.  She perceives his lack of attention to his work and lateness to be indicative of a lesser level of motivation to achieve the announced promotion.   Mary is concerned with both her salary as well as her opportunity for advancement, both classified as outcomes in this particular scenario.  Recall that inputs are what one perceives to be of value to the company while outcomes refer to benefits  one receives from their place of employment(PSU WC, 2011). 

According to equity theory Mary is experiencing a sense of underpayment inequity, or negative inequity.  Recall that negative inequity describes a situation where an individual perceives his or her own inputs and outcomes to be less favorable when compared with the comparison other (PSU WC, 2011).  In this case Mary sees herself as contributing a higher level of inputs than John but receiving less favorable outcomes.  Adams (1965) states that people are motivated to correct a perceived inequity through behavioral or cognitive corrections to maintain a sense of psychological balance.  So how did Mary choose to deal with the inequity she experienced and what other options did she have?

Behavioral Strategies for Addressing Inequity

There are four behavioral strategies an individual may adopt to cope with inequity.  The first strategy is to adjust inputs to a level that is more fitting of the outcomes (PSU WC, 2011).   This is the first strategy that Mary chose to adopt.  She has chosen to put less effort into her work resulting in a lower quality product.  For example, she used to add a personal touch to her reports with a custom cover and stay late to prepare for an early-morning presentation. The second behavioral strategy Mary chose to adopt Adams (1965) called “leaving the field”.  This behavioral strategy is also known as withdrawal and may be permanent or temporary in nature (PSU WC, 2011).  In Mary’s case she now only performs the minimum amount of work required of her position and does only exactly as she is instructed.  This behavior, as well as increased absenteeism and longer breaks, are temporary instances of withdrawal (PSU WC, 2011).  Mary choosing to find other employment and quit her job is an example of permanent withdrawal (PSU WC, 2011).  There are two other behavioral strategies that Mary could have chosen to utilize to correct the inequity.

The first of these strategies is to attempt to change the outcome to more closely match the inputs (PSU WC, 2011).  Mary could have achieved this by asking her supervisor for a raise in light of her continued commitment to the company and high quality work product.  It’s important for her to highlight all of the value (or inputs) that she brings to the company to justify the increase in salary (the outcome).   Another strategy is to persuade the comparison other to change his/her inputs (PSU WC, 2011).  For example, Mary may have spoken to John about his work ethic and suggested that he converse with coworkers during his lunch hour or breaks so as not to distract them from their own work.  Beyond these four behavioral strategies there are three cognitive strategies for addressing inequity. 

Cognitive Strategies for Addressing Inequity

Cognitive strategies are more short-term and often considered the less risky option for relieving inequity (PSU WC, 2011).  These options are also considered to require less effort.  The first strategy involves distorting the view of either the inputs or outcomes (PSU WC, 2011).  For example, Mary may acknowledge that John is paid more than her, but realize that she is the more respected individual and is considered more valuable by her coworkers.  A second strategy is to distort the comparison others' inputs or outcomes to even the ratios and restore equity (PSU WC, 2011).  For example, although Mary feels that her inputs are greater than John’s, she does admit that being part of a fraternity does give him quite the edge in networking.  Also, she noticed how during their presentation, John could just flip a switch, and seem to know everything about the project, even after really not paying attention or participating much during the preparation phase.

The final cognitive strategy suggests changing the comparison other (PSU WC, 2011).  Mary may consider herself in comparison to another coworker for the promotion who is considerably less qualified and less likely to be offered the position.  The ease with which one is willing to change their comparison other is dependent upon the length of time the individual has been comparing him/herself.  The longer one has maintained the same comparison other the more difficult it is to adopt another (PSU WC, 2011).

Building on Equity Theory

As equity theory falls out of favor in current research, distributive and procedural justice have emerged as an added way to evaluate fairness in the workplace (PSU WC, 2011).  Distributive justice is similar to equity theory in that it relates to equitable distribution of rewards to maintain fairness (PSU WC, 2011).  Procedural justice relates more to the process that an organization employs when deciding how to distribute those rewards (PSU WC, 2011).  Recall that Mary took a step to determine how the organization came to the decision to pay John a higher salary by approaching her supervisor, Mark.  Mark did not disclose to her the reasons for John’s higher salary and Mary suspected the decision was biased when she observed John and Mark attended school together and participated in the same fraternity.  Mark’s refusal to address the difference in salary and Mary’s dissatisfaction with the organizational system points to a failing of procedural justice.  Mary’s dissatisfaction with the difference in salary (the outcome) points to a failing of distributive justice.  


We’ve taken a lot of time to discuss Mary’s behavior in the scenario previously described but can we apply equity theory to learn more about John’s behavior? It would be difficult to assess the motivations for John’s behavior because we are unsure of who or what his comparison other is.  Recall that equity theory is based on social comparisons as well as perceptions so it is possible that John’s comparison other is someone in a higher position and that he also is experiencing negative inequity (PSU WC, 2011).  

It is important for organizations to fully understand the importance of disturbing rewards fairly and equitably amongst employees and to be aware of the consequences of not doing so.  Adams’ development of equity theory in the early sixties was the first step to increase awareness of the reality that compensating employees fairly is important to the growth and continued success of an organization (PSU WC, 2011).  An organization that experiences the negative effects described above would be best advised to evaluate their own rewards policies to determine if they are in fact both fair and equitable and be prepared to make adjustments accordingly. 


Adams, J.S. (1963). Toward and understanding of inequity. Journal of abnormal and social psychology. 67(5). 422- 436.

Adams, J. S. (1965). Inequity in social exchange. In L. Berkowitz (Ed.), Advances in experimental and social psychology (pp. 276-299). New York: Academic Press.

Pennsylvania State University World Campus. (2011). Lesson 5: Equity Theory: Is what I get for my work fair compared to others?. Retrieved from

  • No labels