"Last-Place Aversion": Evidence and Redistributive Implications

55 Pages Posted: 24 Jul 2011 Last revised: 11 Aug 2011

See all articles by Ilyana Kuziemko

Ilyana Kuziemko

National Bureau of Economic Research (NBER)

Ryan W. Buell

Harvard Business School

Taly Reich

Stanford University

Michael I. Norton

Harvard Business School - Marketing Unit

Date Written: July 2011

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.

Suggested Citation

Kuziemko, Ilyana and Buell, Ryan W. and Reich, Taly and Norton, Michael I., "Last-Place Aversion": Evidence and Redistributive Implications (July 2011). NBER Working Paper No. w17234. Available at SSRN: https://ssrn.com/abstract=1892658

Ilyana Kuziemko (Contact Author)

National Bureau of Economic Research (NBER) ( email )

Ryan W. Buell

Harvard Business School ( email )

Soldiers Field Road
Morgan Hall 429
Boston, MA 02163
United States
617-496-6918 (Phone)

HOME PAGE: http://www.hbs.edu/rbuell

Taly Reich

Stanford University ( email )

Stanford, CA 94305
United States

Michael I. Norton

Harvard Business School - Marketing Unit ( email )

Soldiers Field
Boston, MA 02163
United States

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