Last Word Not Yet Spoken: Last Place and Rank Reversal Aversion
42 Pages Posted: 31 Jan 2019
Date Written: January 30, 2019
Preferences over social ranks have emerged as potential drivers of weaker than expected support for redistributive interventions among those closest to the bottom of the income distribution. We compare preferences for alterations of the income distribution affecting the decision maker's social rank, but not their income, and compare them with similar alterations leaving both rank and income unchanged. We find support for both a discontinuously greater disutility from occupying the last as opposed to higher ranks, thus affecting only those closest to the bottom of the distribution, and for a general dislike of rank reversals affecting most ranks. We moreover contribute to the replication literature by uncovering and correcting a potential reason for the failed replication of previous results. We discuss implications for policy design in both public finance and management science.
Keywords: income distribution, last place aversion, positional concerns, rank reversal aversion
JEL Classification: C91, D31, H23
Suggested Citation: Suggested Citation