"'Last-Place Aversion': Evidence and Redistributive Implications"
May
2012
Publication type: Working paper
Research Archive Topic: Business Economics and Public Policy, Corporate Finance
Abstract
We present evidence from laboratory experiments showing that individuals are "last-place averse." 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. 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 suggests that low-income individuals might oppose redistribution because it could diff erentially help the group just beneath them. Using survey data, we show that individuals making just above the minimum wage are the most likely to oppose its increase.
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