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Last-Place Aversion: Evidence and Redistributive Implications

Last-Place Aversion: Evidence and Redistributive Implications 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 modified dictator games, participants randomly placed in second-to-last place are the most likely to give money to the person one rank above them instead of the person one rank below. Last-place aversion suggests that low-income individuals might oppose redistribution because it could differentially 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. Similarly, in the General Social Survey, those above poverty but below median income support redistribution significantly less than their background characteristics would predict. JEL Codes: H23, D31, C91. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png The Quarterly Journal of Economics Oxford University Press

Last-Place Aversion: Evidence and Redistributive Implications

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References (105)

Publisher
Oxford University Press
Copyright
The Author(s) 2013. Published by Oxford University Press, on behalf of President and Fellows of Harvard College. All rights reserved. For Permissions, please email: journals.permissions@oup.com
ISSN
0033-5533
eISSN
1531-4650
DOI
10.1093/qje/qjt035
Publisher site
See Article on Publisher Site

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 modified dictator games, participants randomly placed in second-to-last place are the most likely to give money to the person one rank above them instead of the person one rank below. Last-place aversion suggests that low-income individuals might oppose redistribution because it could differentially 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. Similarly, in the General Social Survey, those above poverty but below median income support redistribution significantly less than their background characteristics would predict. JEL Codes: H23, D31, C91.

Journal

The Quarterly Journal of EconomicsOxford University Press

Published: Feb 10, 2014

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