Last Word Not Yet Spoken: Last Place and Rank Reversal Aversion

42 Pages Posted: 31 Jan 2019

See all articles by Andrea Martinangeli

Andrea Martinangeli

Max Planck Institute for Tax Law and Public Finance

Lisa Windsteiger

Max Planck Institute for Tax Law and Public Finance

Date Written: January 30, 2019

Abstract

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

Martinangeli, Andrea and Windsteiger, Lisa, Last Word Not Yet Spoken: Last Place and Rank Reversal Aversion (January 30, 2019). Working Paper of the Max Planck Institute for Tax Law and Public Finance No. 2019-02. Available at SSRN: https://ssrn.com/abstract=3325784 or http://dx.doi.org/10.2139/ssrn.3325784

Andrea Martinangeli (Contact Author)

Max Planck Institute for Tax Law and Public Finance ( email )

Marstallplatz 1
Munich, 80539
Germany

Lisa Windsteiger

Max Planck Institute for Tax Law and Public Finance ( email )

Marstallplatz 1
Munich, 80539
Germany

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