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Specifically, we compare our inputs and outputs with someone else’s inputs and
outputs. We perceive fairness if we believe that the input-to-output ratio we are
bringing into the situation is similar to the input/output ratio of a comparison person,
or a referent. Perceptions of inequity create tension within us and drive us to action

that will reduce perceived inequity. This process is illustrated in the Equity Formula.
Figure 14.9 The Equity Formula

Source: Based on Adams, J. S. (1965). Inequity in social exchange. In L.
Berkowitz (Ed.), Advances in Experimental Social Psychology(Vol. 2, pp. 267–299).
New York: Academic Press.
What Are Inputs and Outputs?
Inputs are the contributions the person feels he or she is making to the
environment. In the previous example, the hard work Marie was providing, loyalty to
the organization, the number of months she has worked there, level of education,
training, and her skills may have been relevant inputs. Outputs are the rewards the
person feels he or she is receiving from the situation. The $10 an hour Marie is
receiving was a salient output. There may be other outputs, such as the benefits
received or the treatment one gets from the boss. In the prior example, Marie may
reason as follows: “I have been working here for six months. I am loyal and I perform
well (inputs). I am paid $10 an hour for this (outputs). The new guy, Spencer, does
not have any experience here (referent’s inputs) but will be paid $14 (referent’s
outcomes). This situation is unfair.”
We should emphasize that equity perceptions develop as a result of a subjective
process. Different people may look at exactly the same situation and perceive
different levels of equity. For example, another person may look at the same scenario
and decide that the situation is fair because Spencer has computer skills and the
company is paying extra for these skills.
Who Is the Referent?
The referent other may be a specific person or an entire category of people. For
example, Marie might look at want ads for entry-level clerical workers and see
whether the pay offered is in the $10 per hour range; in this case, the referent other is
the category of entry-level clerical workers, including office assistants, in Marie’s
local area. Referents should be comparable to us—otherwise the comparison is not
meaningful. It would be illogical for Marie to compare herself to the CEO of the
company, given the differences in the nature of inputs and outcomes. Instead, she
would logically compare herself to those performing similar tasks within the same
organization or a different organization.

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