Financial inadequacy and the disadvantageous changes in time perspective and goal‐striving strategies throughout life

• Author: Yi‐Ren Wang,Michael T. Ford
• Published date: 01 November 2020
• Date: 01 November 2020
• DOI: http://doi.org/10.1002/job.2475

RESEARCH ARTICLE

Financial inadequacy and the disadvantageous changes in time

perspective and goal-striving strategies throughout life

Yi-Ren Wang | Michael T. Ford

Department of Management, The University

of Alabama, Tuscaloosa, Alabama, U.S.A.

Correspondence

Yi-Ren Wang, Department of Management,

The University of Alabama, Tuscaloosa,

Alabama, U.S.A.

Email: ywang314@crimson.ua.edu

Summary

As inequality in wealth and income continues to grow, it is important to consider the

implications of financial disparities for worker motivation and behavior. While

workers with socioeconomic disadvantages have a decreased chance of career

success and upward social mobility, the potential mechanisms linking financial status

to work motivation outcomes are not fully known. Drawing on theory on resource

scarcity, we address this issue and propose that financial inadequacy shapes the

extent to which workers consider and plan for the future, with consequences for

goal-striving strategies throughout adulthood. Latent change analyses of data from a

heterogeneous sample of 4,446 working adults largely supported the hypotheses.

Results showed that a high level of financial inadequacy predicted increases in

short-term time horizon and decreases in future-oriented planning, which then

predicted disadvantageous changes in goal-striving strategies over an 18-year

period. Short-term time horizon also predicted subsequent increases in financial

inadequacy. By highlighting the motivational challenges associated with inadequate

finances that accompany low-wage employment, our study offers evidence for the

motivational mechanisms that may reinforce economic inequality and social mobility

in the workforce.

KEYWORDS

financial inadequacy, future-oriented planning, goal-striving strategies, inequality, mobility,

resource scarcity, short-term time horizon, time perspective

1|INTRODUCTION

According to the US Bureau of Labor Statistics (https://www.bls.gov/

home.htm), approximately 7.6 million workers in the United States live

below the poverty line, while many others live paycheck to paycheck

and have trouble meeting their financial obligations (Leana &

Meuris, 2015). Meanwhile, there is evidence that income and wealth

disparities are growing (Economic Policy Institute, 2019). Workers

with inadequate income levels are more likely to suffer from a

number of detrimental outcomes, including lower life satisfaction

(Howell & Howell, 2008) and higher risk of mental disorders (Link,

Lennon, & Dohrenwend, 1993) and mortality (Adler et al., 1994). Low-

income workers are also much less likely to escape from undesirable

circumstances and improve their socioeconomic status (Pitesa &

Pillutla, 2019).

Organizational behavior researchers delving into this issue have

found that individuals with socioeconomic disadvantages have a lower

likelihood of career success (Ng, Eby, Sorensen, & Feldman, 2005;

Pitesa & Pillutla, 2019). Research also found low-income individuals

tend to have lower self-efficacy and to believe that there are

uncontrollable obstacles interfering with their goals (Lachman &

Weaver, 1998). Workers can improve their life situation by striving

toward higher levels of job performance and career advancement, and

yet low-income workers seem to engage less in proactive learning and

developmental behavior at work (Pitesa & Pillutla, 2019) although the

mechanisms are not fully known. In order to tackle the causes of

Received: 5 March 2019 Revised: 17 July 2020 Accepted: 20 July 2020

DOI: 10.1002/job.2475

J Organ Behav. 2020;41:895–914. wileyonlinelibrary.com/journal/job © 2020 John Wiley & Sons, Ltd. 895

social immobility, it is critical to consider and identify potential expla-

nations for this pattern of behavior as a result of one's financial

status.

One factor that may help explain the effect of financial status on

goal-striving patterns is the worker's time perspective. Research on

time perspective (Kooij, Kanfer, Betts, & Rudolph, 2018; Rudolph,

Kooij, Rauvola, & Zacher, 2018) has highlighted the benefits of

focusing on the future. However, behavioral perspectives on resource

scarcity suggest that low-income individuals may suffer from barriers

that make them less able to shape their own future (Kraus, Piff, &

Keltner, 2009; Mullainathan & Shafir, 2013; Shah, Shafir, &

Mullainathan, 2015). We therefore develop and test the hypothesis

that financial resource scarcity inspires motivational states that may

be maladaptive to long-term success.

We focus specifically on the role of financial inadequacy as a

threat to a workers' goal-striving patterns and define it as the per-

ceived inadequacy or insufficiency of a worker's income and wealth to

meet his/her household's needs. We chose to focus on perceived

financial inadequacy because it captures a worker's subjective evalua-

tion of his/her financial condition, which explains greater variance in

life quality outcomes than objective income or wealth does

(Ackerman & Paolucci, 1983; Leana & Meuris, 2015).

In this study, we investigate how financial inadequacy predicts

changes in time perspective and goal striving over an 18-year period,

and in doing so, we make three contributions to the literature. First,

our findings provide insight into the motivation of workers from dif-

ferent financial backgrounds to pursue activities that have long-term

benefits and may have implications for their career achievement and

social mobility. There has been considerable recent interest in time

perspective in the organizational behavior literature (e.g., Kooij

et al., 2018; Shipp, Edwards, & Lambert, 2009), but most of this work

has focused on its trait antecedents and its consequences. There has

been less work examining how situational factors can shorten one's

time perspective and reduces one's planning tendency. Here, we inte-

grate theory on resource scarcity to identify financial inadequacy as a

potentially important situational antecedent of time perspective. Sec-

ond, we consider the downstream effects of financial inadequacy and

time perspective for the development of goal-striving strategies. Thus,

our findings may help explain how financial inadequacy predicts the

development of disadvantageous goal-striving strategies through

changes in time perspective, with potential implications for social

mobility. Third, we develop and test the effects of goal-striving strate-

gies on subsequent levels of financial inadequacy. Existing research

on financial inadequacy in organizational behavior has generally

focused on concurrent or more immediate consequences of financial

distress. In this study, we test these relationships over a longer period,

extending theory on resource scarcity and motivation to a broader

time span. In doing so, our findings will offer insight into the worker

poverty trap and economic inequality (Amis, Mair, & Munir, 2020;

Laajaj, 2017). Figure 1 illustrates the conceptual model among our

core constructs.

2|THEORY ON RESOURCE SCARCITY

Theory on resource scarcity has argued that the feeling of scarcity

influences motivation and behavioral choices (e.g., Mullainathan &

Shafir, 2013). In their work on this topic, Mullainathan and

Shafir (2013) argued that perceived scarcity in resources can promote

a scarcity mindset that encourages individuals to allocate most of their

attention and effort toward immediate demands, especially those rele-

vant to the resources that are scarce. For example, research has

shown that being hungry or thirsty makes people respond more

quickly to food- or drink-related cues than to other needs or desires

(Aarts, Dijksterhuis, & De Vries, 2001; Radel & Clément-Guillotin,-

2012). Research also shows that individuals facing time scarcity

accomplish immediate tasks with a greater efficiency than those with-

out deadline pressure (Karau & Kelly, 1992). Experimental research

has found that individuals with fewer material resources tend to

report a higher level of fatigue when performing a task than individ-

uals assigned more plentiful resources, suggesting that resource scar-

city promotes increased effort expenditure toward immediate tasks

(Mullainathan & Shafir, 2013; Shah et al., 2015; Shah, Mullainathan, &

Shafir, 2012). A recent attempt to replicate classic research on self-

FIGURE 1 The proposed conceptual

model. Note. This figure only illustrates

the conceptual model. This is not the

analysis model, and the figure does not

present all estimated paths in the

analysis. The full serial mediation from

initial financial inadequacy to increase in

subsequent financial inadequacy was not

hypothesized or tested

896 WANG AND FORD