"Last-place Aversion": Evidence and Redistributive Implications
Ilyana Kuziemko,
Ryan W. Buell,
Taly Reich and
Michael I. Norton
No 17234, NBER Working Papers from National Bureau of Economic Research, Inc
Abstract:
Why do low-income individuals often oppose redistribution? We hypothesize that an aversion to being in "last place" undercuts support for redistribution, with low-income individuals punishing those slightly below themselves to keep someone "beneath" them. In laboratory experiments, we find support for "last-place aversion" in the contexts of risk aversion and redistributive preferences. 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. Similarly, in money- transfer games, those randomly placed in second-to-last place are the least likely to costlessly give money to the player one rank below. Last-place aversion predicts that those earning just above the minimum wage will be most likely to oppose minimum-wage increases as they would no longer have a lower-wage group beneath them, a prediction we confirm using survey data.
JEL-codes: C91 D31 D72 H23 I3 J38 (search for similar items in EconPapers)
Date: 2011-07
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Published as “Last-Place Aversion”: Evidence and Redistributive Implications* Ilyana Kuziemko, Ryan W. Buell, Taly Reich and Michael I. Norton The Quarterly Journal of Economics (2014) 129 (1): 105-149. doi: 10.1093/qje/qjt035
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