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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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    Cited by:

    1. Herbst, Luisa & Konrad, Kai A. & Morath, Florian, 2017. "Balance of power and the propensity of conflict," Games and Economic Behavior, Elsevier, vol. 103(C), pages 168-184.
    2. Clark, Andrew E. & D'Ambrosio, Conchita, 2014. "Attitudes to Income Inequality: Experimental and Survey Evidence," IZA Discussion Papers 8136, Institute for the Study of Labor (IZA).
    3. Fischer, Stefanie, 2017. "The downside of good peers: How classroom composition differentially affects men's and women's STEM persistence," Labour Economics, Elsevier, vol. 46(C), pages 211-226.
    4. Gill, David & Kissová, Zdenka & Lee, Jaesun & Prowse, Victoria L., 2015. "First-Place Loving and Last-Place Loathing: How Rank in the Distribution of Performance Affects Effort Provision," IZA Discussion Papers 9286, Institute for the Study of Labor (IZA).
    5. Marianne Bertrand & Adair Morse, 2016. "Trickle-Down Consumption," The Review of Economics and Statistics, MIT Press, vol. 98(5), pages 863-879, December.
    6. Fehr, Dietmar, 2015. "Is increasing inequality harmful? Experimental evidence," Discussion Papers, Research Unit: Market Behavior SP II 2015-209, WZB Berlin Social Science Center.
    7. Ryan W. Buell, 2017. "Last Place Aversion in Queues," Harvard Business School Working Papers 18-053, Harvard Business School.
    8. Stephen Morris & Hyun Song Shin, 2016. "Risk Premium Shifts and Monetary Policy: A Coordination Approach," Central Banking, Analysis, and Economic Policies Book Series,in: Elías Albagli & Diego Saravia & Michael Woodford (ed.), Monetary Policy through Asset Markets: Lessons from Unconventional Measures and Implications for an Integrated World, edition 1, volume 24, chapter 5, pages 131-150 Central Bank of Chile.
    9. Emily Breza & Supreet Kaur & Yogita Shamdasani, 2016. "The Morale Effects of Pay Inequality," NBER Working Papers 22491, National Bureau of Economic Research, Inc.
    10. Pettit, Nathan C. & Doyle, Sarah P. & Lount, Robert B. & To, Christopher, 2016. "Cheating to get ahead or to avoid falling behind? The effect of potential negative versus positive status change on unethical behavior," Organizational Behavior and Human Decision Processes, Elsevier, vol. 137(C), pages 172-183.
    11. Baghestanian, Sascha & Gortner, Paul J. & van der Weele, Joël J., 2014. "Peer effects and risk sharing in experimental asset markets," SAFE Working Paper Series 67, Research Center SAFE - Sustainable Architecture for Finance in Europe, Goethe University Frankfurt.
    12. Camerer, Colin & Dreber, Anna & Forsell, Eskil & Ho, Teck-Hua & Huber, Jurgen & Johannesson, Magnus & Kirchler, Michael & Almenberg, Johan & Altmejd, Adam & Chan, Taizan & Heikensten, Emma & Holzmeist, 2016. "Evaluating replicability of laboratory experiments in Economics," MPRA Paper 75461, University Library of Munich, Germany.
    13. Michael Kirchler & Florian Lindner & Utz Weitzel, 2018. "Delegated decision making and social competition in the finance industry," Working Papers 2018-07, Faculty of Economics and Statistics, University of Innsbruck, revised Sep 2018.
    14. Clark, Andrew E. & D'Ambrosio, Conchita, 2014. "Attitudes to Income Inequality: Experimental and Survey Evidence," IZA Discussion Papers 8136, Institute for the Study of Labor (IZA).
    15. Nasri, Khaled & Belhadj, Besma, 2017. "Multidimensional Poverty Measurement in Tunisia: Distribution of Deprivations across Regions," MPRA Paper 83318, University Library of Munich, Germany.
    16. Benjamin Elsner & Ingo E. Isphording & Ulf Zölitz, 2018. "Achievement rank affects performance and major choices in college," ECON - Working Papers 300, Department of Economics - University of Zurich.
    17. Thomas Fujiwara & Carlos Sanz, 2017. "Norms in Bargaining: Evidence from Government Formation in Spain," NBER Working Papers 24137, National Bureau of Economic Research, Inc.
    18. Thomas Fujiwara & Carlos Sanz, 2017. "Norms in bargaining: evidence from government formation in Spain," Working Papers 1741, Banco de España;Working Papers Homepage.
    19. Liam J. A. Lenten, 2016. "Mitigation of Perverse Incentives in Professional Sports Leagues with Reverse-Order Drafts," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 49(1), pages 25-41, August.
    20. Steven R. Beckman & Gregory DeAngelo & W. James Smith & Ning Wang, 2016. "Is social choice gender-neutral? Reference dependence and sexual selection in decisions toward risk and inequality," Journal of Risk and Uncertainty, Springer, vol. 52(3), pages 191-211, June.

    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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