Just Like My CEO: When Perceived Similarity Makes Pay Inequality Acceptable

Large CEO-employee pay gaps often elicit negative reactions, yet they have reached historic highs with limited resistance. How can this be explained? Developing a novel social comparison perspective, we propose that under specific circumstances pay inequality may yield positive reactions. We argue that perceived similarity with a CEO enhances acceptance of CEO pay, a process driven by elevated inspiration. We tested this prediction in four studies: a large international archival survey, a pre-registered survey of U.S. employees, and two pre-registered experiments. In the archival survey, we demonstrate that perceived similarity to CEOs, when measured indirectly, reduced support for income-inequality-reduction policies, and this effect appears-to-emerge across cultures. Converging experimental evidence reveals that employees who perceived greater similarity to their CEOs are more accepting of high CEO pay, due to feeling more inspired. These findings help elucidate why extreme pay disparities are often accepted, even though they may reinforce broader societal inequality.