“Last-place Aversion”: Evidence and Redistributive Implications∗

We present evidence from laboratory experiments showing that individuals are “lastplace 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 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. ∗We thank Roland Bénabou, Doug Bernheim, Angus Deaton, Ray Fisman, Claudia Goldin, Caroline Hoxby, Seema Jayachandran, Larry Katz, Emir Kamenica, Judd Kessler, Sendhil Mullainathan, David Moss, Shanna Rose, Al Roth, Stefanie Stantcheva, Gui Woolston and participants at seminars at NBER, Brown, Columbia, Michigan, Ohio State, Princeton and Stanford for helpful comments. Elena Nikolova and Sam Tang provided excellent research assistance. Contact information: [email protected], [email protected], [email protected], [email protected]