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"Last-Place Aversion": Evidence and Redistributive Implications

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  • Ryan W. Buell
  • Taly Reich
  • Michael I. Norton

Abstract

We present evidence from laboratory experiments showing that individuals are "last-place averse." Participants choose gambles with the potential to move them out of last place that they reject when randomly placed in other parts of the distribution. In modified dictator games, participants randomly placed in second-to-last place are the most likely to give money to the person one rank above them instead of the person one rank below. Last-place aversion suggests that low-income individuals might oppose redistribution because it could differentially help the group just beneath them. Using survey data, we show that individuals making just above the minimum wage are the most likely to oppose its increase. Similarly, in the General Social Survey, those above poverty but below median income support redistribution significantly less than their background characteristics would predict. JEL Codes: H23, D31, C91. Copyright 2014, Oxford University Press.

Suggested Citation

  • Ryan W. Buell & Taly Reich & Michael I. Norton, 2014. ""Last-Place Aversion": Evidence and Redistributive Implications," The Quarterly Journal of Economics, Oxford University Press, vol. 129(1), pages 105-149.
  • Handle: RePEc:oup:qjecon:v:129:y:2014:i:1:p:105-149
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    File URL: http://hdl.handle.net/10.1093/qje/qjt035
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    More about this item

    JEL classification:

    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior

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