Awarding Merit or Rewarding Inequalities? The Effect of Merit-based Reward Systems on Performance

Why do socioeconomic status inequalities persist in meritocratic systems, where merit and performance should be the sole criterion of evaluation? Recent studies show that merit-based practices can have a stratifying effect on attitudes, behaviours, and performance based on social position. I further explore whether these effects occur only in the presence of a social environment, arguing that merit-based reward systems integrate a competitive structure responsible for the observed stratifying dynamics. In a survey experiment conducted in the United Kingdom (N=495), participants completed a real-effort task under different reward structures: a control condition that rewarded participation and a merit-based condition that rewarded performance. Within the merit-based conditions, participants were randomly assigned to either a solitary environment, where performance was rewarded independently of others, or a social one, where their performance was evaluated against that of other participants. The results confirm that merit-based reward systems create a contrasting opportunity-threat dynamic: participants from low-socioeconomic positions underperform under meritocratic conditions, while participants from high-socioeconomic positions perform better. However, this pattern is evident only when the meritocratic condition is paired with a social component, suggesting that the meritocratic emphasis on performance alone is insufficient to produce an effect. Rather, its effect is activated in combination with social dynamics of competition and comparison. This study offers an innovative perspective on the reproduction of socioeconomic status inequalities even when merit and performance are objectively rewarded. These findings hold important implications for social stratification in educational settings and workplaces that widely implement meritocratic reward systems.