[lbo-talk] "Last-place Aversion": Evidence and Redistributive Implications

[SA]

On 8/17/2011 4:35 PM, Bryan Atinsky wrote:
> http://www.nber.org/papers/w17234
>
> 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.


> The French want no-one to be their superior. The English want 
> inferiors. The Frenchman constantly raises his eyes above him with 
> anxiety. The Englishman lowers his beneath him with satisfaction. 

-- Tocqueville