The effects of changes in job insecurity on daily consumption and major life decisions

Abstract

Traditionally, research on job insecurity (JI) has focused on organizational consequences and employees’ psychophysical well-being. However, some recent studies explored potential extraorganizational outcomes of JI in relation to consumption and major life decisions. The present study, drawing on Conservation of Resource Theory, overcomes the limits of previous works by examining the effects of changes in JI through a simulation experiment design. Using a sequence of two different scenarios, 377 participants were asked to evaluate their JI and their inclination towards daily consumption and some major life decisions. Findings confirm that changes in JI affect such extraorganizational outcomes. It is also suggested that an improvement in job security leads to an increase in both consumption and major life decisions, which – in absolute values – is higher compared to the decrease that follows a reduction of job security.

Keywords

Conservation of Resource Theory consumer behaviour job insecurity major life decisions temporary employment

Introduction

Over the past few years, economic and political changes surrounding work have left many people insecure about the future of their jobs (Benach et al., 2014). Not surprisingly, job insecurity has become a topic of increasing scholarly and popular concern. Both the construct of job insecurity – in particular, the difference between ‘objective’ and ‘subjective’ job insecurity – and its effects have been studied widely in the last few decades (for reviews see De Witte, 2005; Greenhalgh and Rosenblatt, 2010; Kim and Von Dem Knesebeck, 2015; Sverke et al., 2002). Nonetheless, conceptual ambiguities and literature gaps still exist (for an integrative review, see Shoss, 2017). The present article aims to close an important research gap in the scholarly literature in this field, which is the study of the effects of subjective¹ job insecurity on extraorganizational outcomes.

When studying the effects of job insecurity, most researchers have focused on its ‘organizational’ outcomes, such as job satisfaction (e.g. De Cuyper and De Witte, 2006; Sora et al., 2009), organizational commitment (e.g. Chirumbolo and Hellgren, 2003; Sora et al., 2010), job performance (e.g. Staufenbiel and König, 2010), absenteeism (e.g. Chirumbolo and Areni, 2005), turnover (e.g. Berntson et al., 2010; Mauno et al., 2014) and organizational citizenship behaviours (e.g. Feather and Rauter, 2004; König et al., 2010; Lam et al., 2015). In contrast, social researchers (psychologists in particular) have paid scant attention to the ‘extraorganizational’ outcomes of job insecurity, with the notable exception of the effects on employees’ health and well-being (i.e. physical and psychological consequences such as strain, depression, cardiac pathologies, emotional exhaustion: Chirumbolo and Areni, 2010; De Cuyper et al., 2010; Hellgren et al., 1999; László et al., 2010; Mauno et al., 2005; Vander Elst et al., 2014). Some psychologists have started only recently to study other extraorganizational outcomes of job insecurity, such as its relation to work–family conflict (e.g. Richter et al., 2010) and its effect on economic behaviour (i.e. on spending and saving decisions: Lozza et al., 2009, 2013).

Although being a relatively unexplored area, Lozza et al. (2013) provided some insights about the effects of job insecurity on extraorganizational outcomes, such as daily consumption (e.g. ‘subjectively’ insecure workers report withholding purchases of consumption goods and services) and major life decisions (e.g. the interaction of both subjective and objective job insecurity seems to lead insecure workers to hold back on major life decisions such as getting married, having children, or buying a house). However, the above-mentioned study, although of high external validity as it is based on the secondary analysis of a panel dataset and a survey with a representative sample, has some limitations since it is exploratory and cross-sectional, and no conclusions about causality can be drawn. Moreover, it studies the effects of job insecurity in a static way (i.e. how insecure workers differ from secure ones in extraorganizational outcomes), and does not allow for inferences about what would happen if a switch from job insecurity to job security (and vice versa) occurred. In contrast, the present study aims to investigate the effects of changes (for the better/worse) of job insecurity, rather than states of job insecurity on extraorganizational outcomes.

Therefore, the present study aims to be novel in two ways: (1) it investigates from a psychological perspective the way job insecurity affects extraorganizational outcomes (beyond the traditional focus on organizational or health-related issues); and (2) it aims to overcome the limits of previous works by adopting an experimental research design, which will specifically allow studying changes in job insecurity and their effects on extraorganizational outcomes in a dynamic rather than static way (i.e. how a change – either an increase or a reduction – in job security can influence consumption and major life decisions).

A simulation experiment design was chosen over a longitudinal study for reasons of technical feasibility, as such changes are rare in one person’s life and difficult to foresee. Although examples of longitudinal studies can be found in the literature (Kinnunen et al., 2014; Mauno et al., 2011; Scott-Marshall and Tompa, 2011) and a strong preference for field research exists in the organizational sciences, the experimental approach should not be neglected and may be deserving of greater usage for several reasons: the strengths of effects found in the lab and field can be quite similar under certain conditions, and experimental research designs can be particularly effective to determine causality or uncover the conditions and processes by which variables influence one another (Vanhove and Harms, 2015).

To summarize, the main aim of this study is to investigate the effects of changes in job insecurity on two different extraorganizational outcomes (daily consumption and affordability of major life decisions). Studying such extraorganizational outcomes is theoretically and practically important because it might show that job insecurity is detrimental not only to organizational wellness and individual psychophysiological well-being, but also to the socio-economic development of a country. Understanding the theoretical underpinnings of the relation between job insecurity and extraorganizational outcomes may help develop employment policies aimed at reinvigorating the economy of a country and enhance citizens’ well-being. Italy might represent a good testing ground considering the prolonged slowdown experienced since the Global Financial Crisis and the high unemployment rate. According to Eurostat, the annual unemployment rate in Italy in 2016 was 11.7% (vs 8.5% in the EU-28) and the youth unemployment rate was 37.8% (vs 18.7% in the EU-28).²

In the following section, we present the rationale and hypotheses for our work, as well as the research design.

Rationale and hypotheses

Manipulation of job insecurity

A main challenge for a simulation experiment design aimed at studying the effect of changes in job insecurity is to manipulate effectively the change in perceived (subjective) job insecurity.

Previous works that have analysed the relation between contract of employment (objective job insecurity) and subjective job insecurity confirm that objective job insecurity does not necessarily result in subjective job insecurity (e.g. Dekker, 2010; De Witte and Näswall, 2003; Klandermans et al., 2010; Lozza et al., 2013). Hence, in order to manipulate perceived job insecurity, we cannot rely solely on a change of contract of employment (e.g. from temporary to permanent and vice versa).

Conceivably, the economic stability of a country (e.g. economic downturns and recoveries) also has an influence on job security. Such an idea is in line with other studies that showed that job insecurity increases in countries facing an economic crisis, but decreases in countries enjoying prosperity (Lübke and Erlinghagen, 2014). Moreover, it was found that perceived job insecurity is significantly correlated with the 2008 Global Financial Crisis (Voon and Ma, 2014). The internal stability of a workplace should be taken into account too. For example, job uncertainty can be the result of a downsizing process (Sutton, 1987), a lack of career opportunities (Greenhalgh and Rosenblatt, 1984; Sverke and Hellgren, 2002) and organizational change (Keim et al., 2014). If an organization undergoes a period of increased uncertainty, the workers display higher levels of job insecurity; and vice versa, when the objective circumstances of a company improve significantly, employees manifest reduced levels of perceived job insecurity (Klandermans and Van Vuuren, 1999). In order to effectively manipulate job insecurity, both contract of employment and the above-mentioned contextual elements will be considered as influencing factors.

Thus, the following hypotheses are given:

Hypothesis 1: A change for the worse (better) of contract of employment increases (reduces) job insecurity.

Hypothesis 2: A change for the worse (better) of context increases (reduces) job insecurity.

Testing the above hypotheses is a preliminary step in our study. In fact, a fundamental precondition to the main aim of this study, which is to investigate the effects of changes in job insecurity on extraorganizational outcomes, is to make sure that the simulation experiment design is effective in manipulating job insecurity.

Extraorganizational outcomes of changes in job insecurity

The following step (and the main aim of the present study) is to examine the impact of change in job insecurity on two extraorganizational outcomes: (1) daily consumption and (2) major life decisions. Exploring these two consequences is useful because they represent two different extraorganizational outcomes related to saving/spending decision-making with specific features. Daily consumption is short-term and repetitive, whereas major life decisions (i.e. decisions that represent discontinuity in an employee’s life cycle, such as buying a house, getting married, having children) are long-term and not recurrent (Lozza et al., 2013). Therefore, they require different strategies in terms of saving/spending. As Becker (1993) suggested, even when people decide to get married or have children, they attempt to raise their welfare by comparing benefits and costs. Hence, even major life decisions have an economic implication. Moreover, as suggested by Fryer (1986), income loss might reduce unemployed individuals’ sense of agency. Poverty disengages people from meaningful activities and restricts the possibilities of attaining life goals (in other words, making major life decisions).

There are both empirical and theoretical reasons to believe that job insecurity and these potential extraorganizational outcomes are related. From an empirical perspective, macro-economic research has pointed out that job insecurity can relate to both spending (Benito, 2006; De Lucia and Meacci, 2005; Stephens, 2004) and saving (job insecurity as a motivation to save monthly income: Bessho and Tobita, 2008; Klemm, 2010). From the theoretical perspective of the Conservation of Resource Theory (COR; Hobfoll, 1989), job security can be identified as a valuable resource (Selenko et al., 2013) and insecurity about continuity in a job situation threatens valued resources, such as salary or social status (Jahoda, 1982). COR theory can provide an excellent explanation as it argues that people ‘strive to retain, protect, and build resources and that what is threatening to them is the potential or actual loss of these valued resources’ (Hobfoll, 1989: 516). In COR theory, resources are categorized as objects, personal characteristics, conditions, or energies, which are valued in their own right or which serve as a means for attainment of other objects, personal characteristics, conditions, or energies. Based on COR theory, stable employment (e.g. permanent job contract, solid organization and secure context) can be considered as a condition resource, which is valued by employees not only in its own right (Jahoda, 1981; Warr, 1987) but also for its ability to facilitate the attainment of other valuable resources (e.g. housing, food, clothing, income). Therefore, job insecurity – the uncertainty about maintaining one’s job – implies a threat to a valuable resource (employment, mostly as a source of income; Hellgren et al., 1999). Both a perceived or actual loss of job security can motivate insecure employees to withdraw from other activities that demand their resources, reducing their consumption or withholding/postponing some major life decisions, in an effort to avoid further loss and minimize net loss of resources (Hobfoll, 2001).

In order to test whether a change in job insecurity (a threat to a valuable resource) affects extraorganizational decision-making (in order to keep a balance of other valued resources), the following hypotheses (summarized in Figure 1) are offered:

Hypothesis 3: A change that increases (diminishes) job insecurity directly predicts an increase (reduction) in withholding daily consumption.

Hypothesis 4: A change that increases (diminishes) job insecurity directly predicts increased (reduced) unaffordability of life projects.

Figure 1.

Expected relations between changes in job insecurity, withholding daily consumption and the unaffordability of major life decisions.

Finally, when studying the effects of changes (for the better/worse) in job insecurity on extraorganizational outcomes, one might also wonder whether there are differences between changes for the better and changes for the worse. Are they equivalent in terms of impact on extraorganizational outcomes? According to Prospect Theory (Kahneman and Tversky, 1979), losses loom larger than gains. Loss aversion is captured in Prospect Theory’s value function, which depicts a curvilinear relation between objective outcomes and subjective utility. The slope of this value function is steeper for losses than for gains, hence changes for the worse (given a reference point as status quo) should have a greater impact than changes for the better. In line with this, one of the main principles of COR theory, the primacy of resource loss, is the idea that it is psychologically more harmful for individuals to lose resources than it is helpful for them to regain the resources that they lost (Lee and Ashforth, 1996). Therefore, the following hypotheses are given:

Hypothesis 5: In absolute values, the impact of changes for the worse (better) in job insecurity on withholding daily consumption is greater (less) than the impact of changes for the better (worse).

Hypothesis 6: In absolute values, the impact of changes for the worse (better) in job insecurity on the unaffordability of major life decisions is greater (less) than the impact of changes for the better (worse).

Method

Participants

The population of this study were Italian people aged between 19 and 39 years old. The choice of this population was based on the idea that perceived job insecurity affects daily consumption and major life decisions among this age cohort to a greater extent, since people are more likely to move out from their family home and start a family of their own. A sample of 377 Italian participants took part in the study (46.2% males; mean age = 25.5, SD = 3.5) through social media and web-based recruitment (Bull et al., 2013; Rife et al., 2016). A sequence of two different scenarios (out of four available scenarios) was presented to each participant, for a total of 12 different sequences. The sample size allowed us to have approximately 30 respondents for each sequence, and the 12 different groups were comparable for sex, age and education.³ The different sequences enabled us to examine how perceived job insecurity is affected by (1) a change of employment condition (from permanent to temporary and vice versa) in a stable context (either secure or insecure); (2) a change of context (from secure to insecure and vice versa) maintaining the same employment condition (either permanent or temporary); (3) a change of both employment condition and context.

Procedure and instrument

We presented scenarios in an online questionnaire in which we manipulated two antecedents of job insecurity: (1) contract of employment (temporary vs permanent) and (2) context (secure vs insecure). The temporary (permanent) employment condition corresponds to a fixed-term (ongoing) job contract, while the insecure (secure) context corresponds to a period of economic crisis (out of crisis), working in an unstable (solid) company with scarce (good) opportunities for career advancement. The use of fictitious scenarios in the experimental questionnaire was necessary in order to manipulate the perceived job security/insecurity (see Rationale and Hypotheses). Although such experimental design is of lower external validity than if real working conditions of participants were used, it allows testing the impact of changes in job insecurity on extraorganizational outcomes in both directions – that is, moving from a condition of perceived job insecurity to a condition of perceived job security, and vice versa.

The simulation experiment is a 2 (temporary employment vs permanent employment) × 2 (secure context vs insecure context) factorial design, which resulted in four different scenarios: (1) secure – temporary; (2) insecure – temporary; (3) insecure – permanent; (4) secure – permanent (see Table 1). Such variables and levels were chosen to manipulate effectively the subjective job insecurity. Each respondent was exposed to a sequence of two scenarios, for a total of 12 potential different sequences (see Table 2).

Table 1.

Scenarios.

		Context
		Secure	Insecure
Employment	Temporary	• Fixed-term contract • Out of the crisis, solid company with good opportunities for career advancement	• Fixed-term contract • Economic crisis, unstable company with scarce opportunities for career advancement
Employment	Permanent	• Ongoing contract • Out of the crisis, solid company with good opportunities for career advancement	• Ongoing contract • Economic crisis, unstable company with scarce opportunities for career advancement

Table 2.

Potential different sequences.

	First scenario	Second scenario
	(Context – Employment)	(Context – Employment)
1	SECURE – TEMPORARY	INSECURE – TEMPORARY
2	SECURE – TEMPORARY	INSECURE – PERMANENT
3	SECURE – TEMPORARY	SECURE – PERMANENT
4	INSECURE – TEMPORARY	SECURE – TEMPORARY
5	INSECURE – TEMPORARY	SECURE – PERMANENT
6	INSECURE – TEMPORARY	INSECURE – PERMANENT
7	SECURE – PERMANENT	SECURE – TEMPORARY
8	SECURE – PERMANENT	INSECURE – TEMPORARY
9	SECURE – PERMANENT	INSECURE – PERMANENT
10	INSECURE – PERMANENT	INSECURE – TEMPORARY
11	INSECURE – PERMANENT	SECURE – TEMPORARY
12	INSECURE – PERMANENT	SECURE – PERMANENT

Note: Words set in bold show what condition/s changed from first scenario to second scenario (either context, or employment, or both).

Participants were first asked to imagine being in a condition of temporary/permanent employment and in a secure/insecure context. Then, they were asked to imagine that three months have passed and either their employment condition, or the context, or both have changed (for the better or for the worse). In each scenario, regardless of the conditions, they were told to imagine being paid a net monthly salary of €1300,⁴ which was kept fixed in order not to influence the perceived job insecurity.

After reading each scenario, participants responded to a list of items from three different scales:

Job insecurity (Sverke et al., 2004), Cronbach’s α = .81. This was composed of five items and respondents were asked to express their agreement/disagreement on a five-point Likert-type scale (1 = strongly disagree to 5 = strongly agree);

Withholding daily consumption, Cronbach’s α = .79 (ad hoc scale, 10 items, see Appendix). Respondents answered the question ‘Imagine that you find yourself in the situation described above. How likely it is that you decide to reduce/withhold your daily consumption in the following categories?’ in relation to 10 different market sectors, on a five-point Likert-type scale (1 = very unlikely to 5 = very likely);

Affordability of major life decisions, Cronbach’s α = .90 (ad hoc scale, eight items, see Appendix). Respondents answered the question ‘Imagine that you find yourself in the situation described above. How likely it is that you could afford to … ?’ in relation to eight different long-term life projects (1 = very unlikely to 5 = very likely). Reversed scores were used during analyses.

Italian validation of the original Job Insecurity Scale was adopted (Chirumbolo et al., 2015).

Statistical analysis

Two-way independent ANOVAs were conducted to test Hypotheses 1 and 2, structural equation modelling (SEM) was used to test Hypotheses 3 and 4 and independent-samples t-tests were used to test Hypotheses 5 and 6. For each analysis, difference scores (or change scores) were estimated, by subtracting measures at Time 1 from measures at Time 2. The use of difference scores has many advantages. Not only are they easy to interpret, but they also help remove unexplained variance (Thomas and Zumbo, 2012). They offer reliable estimates of true change, and they are useful whenever it is reasonable to assume that intra-individual differences vary between persons (Gollwitzer et al., 2014). Although some scholars (Cronbach and Furby, 1970; Linn and Slinde, 1977; Lord, 1956) have warned against using difference scores because they think they are inherently unreliable, difference scores are considered to be sufficiently reliable when standard deviations differ between measurement occasions, and standard deviations are likely to differ between measurement occasions due to differential treatment effects (Gollwitzer et al., 2014). Similarly, the basic idea of the difference-in-differences regression models is to estimate the true effect of the treatment (i.e. an exogenous variable). Differences between groups prior to the intervention are captured by the fixed effect of group membership, so that the difference between the groups is stable over time and only the effect of the exogenous variable is measured (see also Antonakis et al., 2010).

Results

The key results are presented in three sub-sections. First, we test the effects of changes of contract of employment and context on job insecurity (Hypotheses 1 and 2), as they are a preliminary requirement to assess the effectiveness of our research design in manipulating job insecurity. Following this, we test whether changes in job insecurity affect sacrifices in daily consumption and the unaffordability of major life decisions (Hypotheses 3 and 4). Finally, we test the hypotheses that changes for the worse have a greater impact than changes for the better on extraorganizational outcomes (Hypotheses 5 and 6).

Effects of contract of employment and context on job insecurity

In order to verify if the simulation experiment design is effective in manipulating job insecurity, we tested if a change of contract of employment and/or context led to lower/higher levels of job insecurity.

To quantify the difference between scores in job insecurity observed at two occasions of measurement, we subtract job insecurity at Time 1 from job insecurity at Time 2, and we obtain a difference score (from now on, ΔJI). By using delta values we are able to study dynamic effects of changes in job insecurity (Hypothesis 1, Hypothesis 2), and evaluate the impact of the independent variables net of static effects.

A two-way independent ANOVA was conducted on the influence of two independent variables (change of contract and change of context) on the change of job insecurity (ΔJI). Both change of contract and change of context included three levels (worsened, stable, improved). Sex, age and education were included as covariates (and resulted non-significant).

Results (Figure 2) indicated a significant main effect for changes in contract of employment, F(2,366) = 30.84, p < .001, η² = .14. As predicted by Hypothesis 1, changes for the worse (M = .5, SD = 1.2) significantly increase ΔJI when compared to changes for the better (M = –.5, SD = 1.1). Post hoc tests also showed significant differences between stable condition (M = .0, SD = 1.2) and both changes for the worse/better. Similarly, the main effect for context yielded an F ratio of F(2,366) = 130.32, p < .001, η² = .42. This means that a change for the worse from a secure to an insecure context (M = .9, SD = .9) increases ΔJI when compared to a change for the better (M = −1.0, SD = 1.0), as suggested by Hypothesis 2. Significant differences between stable condition (M = .0, SD = 1.1) and changes for both the worse and the better were also revealed by post hoc tests. No interaction effect was found.

Figure 2.

Influence of changes in contract of employment and context on job insecurity.

An additional result given by the different effect size is that the change of context (η² = .42) has a greater impact on perceived job insecurity than a change of contract of employment (η² = .14).

These results not only confirm previous findings in job insecurity literature, but also overcome the limits of cross-sectional studies and show that changes of both contract of employment and context do modify levels of perceived job insecurity.

To summarize, we can assume that the simulation experiment successfully managed to manipulate job insecurity levels. These preliminary results lay the basis to test the other hypotheses about the effects of changes in job insecurity on extraorganizational outcomes.

Impact of changes in job insecurity on extraorganizational outcomes

In the preceding paragraphs, we demonstrated that the simulation experiment successfully managed to manipulate job insecurity. The aim of this section is to assess the impact of changes in job insecurity on sacrifices in daily consumption and the unaffordability of major life decisions (Hypothesis 3 and Hypothesis 4).

Change scores (measurement at Time 1 subtracted from Time 2) were calculated for all items of withholding daily consumption (from now on, Δconsumption) and unaffordability of major life decisions (from now on, ΔMLD). In order to assess the impact of changes in job insecurity on withholding daily consumption and the unaffordability of major life decisions we considered ΔJI as the independent variable and Δconsumption and ΔMLD as dependent variables. To test the hypotheses, difference-in-differences regression equations were used, as they account for the unobserved idiosyncratic individual characteristics of participants by determining the net effect of perceived job insecurity on extraorganizational outcomes (for other difference-in-differences examples see Angrist and Krueger, 1999; Card and Krueger, 1994; Meyer, 1995; Nyman et al., 2010; Wooldridge, 2003). Structural equation modelling (SEM) in AMOS (Arbuckle, 1997) was used to conduct the analyses. Measurement model properties were examined first, using confirmatory factor analysis (CFA). Individual items were used as the indicator of latent variables reflecting ΔJI, Δconsumption and ΔMLD. The model was estimated using maximum likelihood with robust standard errors and evaluated using the chi-square and approximate fit statistics, based on Hu and Bentler (1999). These included: Root Mean Square Error of Approximation (RMSEA) < .08; Confirmatory Fit Index (CFI) ≥ .95; and Tucker–Lewis Index (TLI) ≥ .95. Results showed that the proposed model (Figure 3) provided adequate fit to the data, χ²(223) = 522.35, p < .001, CFI = .95, TLI = .95, RMSEA = .06 (LO90 = .053, HI90 = .066) with standardized factor loadings ranging from .12 to .92 (median standardized loading = .74). Correlated measurement errors were incorporated in the model when justifiable from a theoretical point of view. They include the correlation between Δconsumption and ΔMLD errors, as both these variables involve saving/spending decision-making which can be affected by a loss of resources (as suggested by COR theory).

Figure 3.

The effect of changes in job insecurity on withholding daily consumption and the unaffordability of major life decisions.

Therefore, consistent with Hypothesis 3 and Hypothesis 4, changes that increase (diminish) job insecurity directly predict an increase (reduction) in withholding both daily consumption and major life decisions. Interestingly, as standardized factor loadings in Figure 3 show, job insecurity seems to have a greater influence on major life decisions than daily consumption.

Different impact of changes for the worse/better on extraorganizational outcomes

Lastly, we want to test the hypothesis that changes for the worse (potential loss of expected resources due to increased job insecurity) have a greater impact on extraorganizational outcomes compared to changes for the better (potential gain of expected resources due to reduced job insecurity). This is in line with Prospect Theory, which states that losses loom larger than gains.

An independent-samples t-test was conducted to compare absolute values of Δconsumption (dependent variable) in increased job insecurity and decreased job insecurity conditions. The independent variable was obtained by dividing participants into two groups. One condition included those whose job insecurity had increased from Time 1 to Time 2 (positive values of ΔJI), the other condition included those whose job insecurity had decreased (negative values of ΔJI).⁵ Those who did not change their job insecurity level (values of ΔJI around zero) were excluded. There was a significant difference in the absolute change score for increased (M = 3.4, SD = 8.1) and reduced job insecurity condition (M = 5.8, SD = 8.4); t(342) = 2.69, p < .001. Similarly, an independent-samples t-test was conducted to compare absolute values of ΔMLD in increased job insecurity and decreased job insecurity conditions. Again, there was a significant difference in the score for increased (M = 5.4, SD = 9.1) and reduced job insecurity condition (M = 7.9, SD = 7.4); t(341) = 2.77, p < .001. These results show that the impact of increased/reduced job insecurity on extraorganizational outcomes is not symmetrical, thus meaning that a perceived loss of resources has a smaller impact on saving/spending decision-making compared to a perceived gain. This is not coherent with our hypotheses (Hypothesis 5 and Hypothesis 6), as the direction of such impact is not in the expected direction suggested by Prospect Theory. A perceived gain of resources (reduced job insecurity) seems to affect to a greater extent both everyday consumption and major life decisions. Some possible explanations for this unexpected result will be provided in the Discussion section.

Discussion

The present study addresses an important research gap in the job insecurity literature by looking into some potential consequences of job insecurity for life outside work. It provides a contribution to the understanding of two under-researched consequences of job insecurity: the sacrifices in daily consumption and affordability of major life decisions. By confirming the direct effect of job insecurity on extraorganizational outcomes, the study supports the findings and overcomes the limitations of previous field research (Lozza et al., 2009, 2013).

First, it expands previous literature findings (Lozza et al., 2013) suggesting that changes of both contract of employment and context can affect perceived job insecurity (Hypothesis 1 and Hypothesis 2). Moreover, context appears to have a greater influence than contract of employment, thus suggesting that security derived from the context (i.e. working in an unstable company during an economic downturn vs working in a solid company in a benign economic environment) is a primary condition of job security, while the contract of employment is secondary. Overall, it is shown that our simulation experiment design allowed a good manipulation of perceived job insecurity.

Second, it is proved that changes in job insecurity significantly affect holding back on daily consumption and the affordability of major life decisions in the hypothesized direction (Hypothesis 3 and Hypothesis 4). In addition, changes in job insecurity seem to have a greater influence on major life decisions than on daily consumption. This result might be related to a ceiling effect in daily consumption, since consumption cannot always be reduced (e.g. consumption of food can be reduced only to a certain extent). In times of uncertainty, people might choose to adopt a ‘value for money’ consumption strategy for certain goods and services (e.g. looking for promotions and discounts) rather than withholding purchases (Lozza et al., 2016).

Third, it is showed that – in absolute values – a change for the better in job security affects extraorganizational outcomes to a greater extent than a change for the worse. This finding is in the opposite direction of our hypotheses (Hypothesis 5 and Hypothesis 6). In other words, our results do not entirely follow one of the main principles of COR and Prospect Theory. In fact, our findings show that gaining resources (i.e. increasing job security through a transition from an insecure to a secure condition) has a bigger impact on extraorganizational outcomes compared to losing resources (i.e. decreasing job security through a transition from a secure to an insecure condition). We can only speculate about this apparent incongruence. Few studies have deviated from the general pattern of ‘bad’ being stronger than ‘good’ (for a review see Baumeister et al., 2001). The closest to a general reversal was in anticipation of future events, insofar as prevailing optimism about the future reflects a greater power of good future events (e.g. Weinstein, 1980). A further possible explanation can be found in the specificity of the Italian context where the study took place. Italy is currently experiencing an economic downturn and it is plausible to believe that many respondents actually went through a loss of job security during the last few years (or witnessed someone else’s). In such context, they might have realized that – despite the austerity and sacrifices – they were adopting new purchase strategies to afford daily consumption (Lozza et al., 2016) and did not entirely give up some major life decisions (such as buying a house or having kids). Therefore, imagining being out of the crisis could act as a strong incentive to finalize and give a boost to those projects they had already planned but were postponing. In other words, we might assume that if people are used to gloom the consequences of gains are bigger. Further exploration in countries with a different economic environment could help gain a better understanding.

There are some limitations to be taken into account. A simulation experiment design is – by definition – artificial and may lack external validity. Moreover, this study relied on self-reported data in all variables studied, which means – especially for daily consumption and major life decisions – that people believed they would make these sacrifices, which did not represent actual behaviour. A further limitation is the single source bias (SSB), which arises when overlapping variability is due to data collected from a single source (Campbell and Fiske, 1959).

Despite such limitations, the study still presents several points of interest and relevance. Implications from a theoretical, methodological and pragmatic aspect will be discussed.

From a theoretical perspective, it shows how research on job insecurity should not focus merely on ‘organizational’ outcomes, but ‘extraorganizational’ outcomes also should be taken into account. Moreover, findings are coherent with the Conservation of Resource Theory (Hobfoll, 1989), as job insecurity may be described as a threat to a highly-valued resource (employment), and people who feel threatened tend to withdraw from activities – such as consumption and major life decisions – that make further demands on their resources. Therefore, the study also highlights the relevance of Hobfoll’s theory in this field.

From a methodological aspect, the manipulation of job insecurity that we adopted proved to be effective and could therefore be used in other experimental studies. A subtler definition of the hypotheses and variables studied could also lead to a better understanding of job insecurity antecedents and consequents (i.e. testing the effect of working in a solid/unstable company separately from the economic situation of a country).

Finally, taking a pragmatic perspective, these findings suggest that policy-makers should promote social policies aimed at the reduction of job insecurity, especially – but not only – for temporary workers. Since an improvement in job security might lead to an increase in both consumption and major life decisions, work protection that increases as the length of time worked increases might lead to significantly more favourable extraorganizational outcomes.

Conclusions

To summarize, our research provides multiple unique contributions to the extant literature. It shows that an improvement in job security increases the willingness to engage in both daily consumption and major life decisions. These results might be of interest for policy-makers, especially in the wake of the Global Financial Crisis, as many countries still need to find a trigger to reinvigorate social and economic development.

Moreover, considering two different extraorganizational outcomes – daily consumption and major life decisions – job insecurity seems to have a bigger influence on long-term planning, as though job insecurity obscures people’s vision of their own future and paralyses their long-term life projects to a greater extent than their daily consumption.

Finally, in absolute values, an improvement in job security affects decisions (in both everyday consumption and major life decisions) to a greater extent compared to the opposite and equivalent effect that a worsening in job security would have on holding back on them. Hence the importance of promoting work policies aimed at guaranteeing a progressive improvement of work conditions, such as progressive-entitlement employment contracts.

In conclusion, as shown by the present study, a lack of job security could be detrimental not only to workers’ health and organizational well-being, but also to extraorganizational outcomes related to spending and saving, and – therefore – to both workers’ life satisfaction and the socio-economic health of an entire country.

Footnotes

Appendix

Declaration of Conflicting Interests

The authors declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.

Funding

The authors received no financial support for the research, authorship, and/or publication of this article.

Notes

Author biographies

Edoardo Lozza is Associate Professor at the Faculty of Psychology at the Catholic University of Milan. He is also Director of the Master’s degree in ‘Psychology for Organizations: Human Resources, Marketing and Communication’, where he teaches ‘Marketing Psychology’ and ‘Economic Psychology’. Currently, he is mainly interested in exploring new patterns in consumer behaviour and in applying a psychological perspective to economic behaviours.

Cinzia Castiglioni achieved a Master’s degree in Psychology for Marketing and Organizations in 2011 and an Executive Master’s degree in Qualitative Research for Marketing and Society in 2014. She is currently a PhD candidate at the Faculty of Psychology at the Catholic University in Milan. Her research interests range from the fields of economic psychology and consumer behaviour to mixed-methods research.

Andrea Bonanomi is Assistant Professor in Statistics at the Faculty of Psychology at the Catholic University of Milan, where he teaches ‘Psychometrics’ and ‘Methods and Techniques of Applied Quantitative Psycho-Social Research’. His main research areas are multivariate statistics, treatment of ordinal data, big data and psychometrics.

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