late 14c., "action of compensating," from Latin compensationem (nominative compensatio) "a weighing one thing against another, a balancing," noun of action from past participle stem of compensare (see compensate). Meaning "what is given in recompense" is from c.1600; meaning "amends for loss or damages" is from 1804; meaning "salary, wages" is attested from 1787, American English. The psychological sense is from 1914.