Nobody Wants To Be In Last Place

It’s little surprise that nobody wants to be on the bottom rung of the economic ladder.

But what I do find surprising about the study below is the lengths the people on the second rung will go to in order to keep those on the bottom rung in place. Why? They fear being left on the bottom rung themselves.

The study be Ilyana Kuziemko, Ryan W. Buell, Taly Reich, Michael I. Norton explains a lot of strange political phenomenon where people appear to work against their own economic interests.

Here is the synopsis from the National Bureau of Economic Research:

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.

I also managed to locate the paper in its entirety. Find it here. I’ve included part of the introduction below. Fascinating work.


Page 2
1 Introduction
Individuals in low-income groups often seem to vote against their economic interests, even as their
shared circumstances would suggest that they would unite to demand greater redistribution. Ameri-
cans have expressed widespread support for repealing the estate tax and for tax reforms that largely
benefit those in the highest brackets (Bartels, 2008). Whereas the median-voter theorem (Meltzer
and Richard, 1981) predicts that the demand for redistribution grows with income inequality, the
large increases in inequality over the past thirty years have not led to greater support for redistri-
bution in the US (Kelly and Enns, 2010), the UK (Georgiadis and Manning, 2011), or other OECD
countries that have experienced rising inequality (Kenworthy and McCall, 2008).1
Scholars have offered many explanations for the seeming inability of lower-income groups to
unite in support of redistributive policies.2 The Marxist notion of “false consciousness” holds that
the capitalist class promotes ideological concepts that blind the proletariat to their common inter-
ests (Engels, 1893). Similarly, Therston Veblen argued that members of the working class tend to
admire the “leisure class” and even mimic its habits—such as conspicuous consumption—instead
of identifying with members of their own class (Veblen, 1899). Especially in the American con-
text, scholars often argue that racial, ethnic or cultural divisions (Woodward 1955; Alesina et al.
2001; Frank 2004) as well as a belief in income mobility (Bénabou and Ok, 2001) limit support for
redistribution.
This paper offers another explanation, which to our knowledge has not been formally explored
in past research. We hypothesize that there is a basic aversion to feeling that one is in “last place,”
which increases competition and inhibits political unity among members of lower-income groups.
Instead of uniting in pursuit of general redistribution, working-class groups may wish to punish
those who are slightly below or above themselves, with the hope of having at least one group to
“look down on.” As the probability of falling to the bottom of the income distribution decreases
with income, anxiety about relative position would be less of a concern for middle- and upper-class
individuals.

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