Hostname: page-component-7b9c58cd5d-g9frx Total loading time: 0 Render date: 2025-03-17T05:31:24.575Z Has data issue: false hasContentIssue false
  • English
  • Français

Last word not yet spoken: a reinvestigation of last place aversion with aversion to rank reversals

Published online by Cambridge University Press:  14 March 2025

Andrea F. M. Martinangeli Open the ORCID record for Andrea F. M. Martinangeli [Opens in a new window]  and
Lisa Windsteiger
Andrea F. M. Martinangeli*
Affiliation:
Max Planck Institute for Tax Law and Public Finance, Marstallpl. 1, 80539 Munich, Germany
Lisa Windsteiger*
Affiliation:
Max Planck Institute for Tax Law and Public Finance, Marstallpl. 1, 80539 Munich, Germany
*
andrea.martinangeli@tax.mpg.de
lisa.windsteiger@tax.mpg.de
Get access Rights & Permissions [Opens in a new window]

Abstract

Preferences over social ranks have emerged as potential drivers of weaker than expected support for redistributive interventions among those closest to the bottom of the income distribution. We compare preferences for alterations of the income distribution affecting the decision maker’s social rank, but not their income, and compare them with similar alterations leaving both rank and income unchanged. Our study fails to find evidence of last-place aversion in a replication of Kuziemko et al. (Q J Econ 129(1):105–149, 2014). However, using a modified design that holds ranks fixed across rounds we find support for both a discontinuously greater disutility from occupying the last as opposed to higher ranks, thus affecting only those closest to the bottom of the distribution, and for a general dislike of rank reversals affecting most ranks. We discuss implications for policy design in both public finance and management science.

Keywords

Income distributionLast place aversionPositional concernsPreferences for redistributionRank reversal aversion

JEL classification

D31: Personal Income, Wealth, and Their Distributions H23: Externalities • Redistributive Effects • Environmental Taxes and Subsidies C91: Laboratory, Individual Behavior
Type
Original Paper
Information
Experimental Economics , Volume 24 , Issue 3 , September 2021 , pp. 800 - 820
Copyright
Copyright © 2020 Economic Science Association

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

Footnotes

Electronic supplementary material The online version of this article (https://doi.org/10.1007/s10683-020-09682-8) contains supplementary material, which is available to authorized users.

References

Alesina, A., Miano, A., & Stantcheva, S. (2018). Immigration and redistribution. Working paper 24733, National Bureau of Economic Research.CrossRefGoogle Scholar
Blanchflower, DG, & Oswald, AJ (2004). Well-being over time in Britain and the USA. Journal of Public Economics, 88(7), 1359–1386. 10.1016/S0047-2727(02)00168-8CrossRefGoogle Scholar
Bolton, GE, & Ockenfels, A (2000). ERC: A theory of equity, reciprocity, and competition. The American Economic Review, 90(1), 166–193. 10.1257/aer.90.1.166CrossRefGoogle Scholar
Camerer, CF, Dreber, A, Forsell, E, Ho, T-H, Huber, J, Johannesson, M, Kirchler, M, Almenberg, J, Altmejd, A, Chan, T, Heikensten, E, Holzmeister, F, Imai, T, Isaksson, S, Nave, G, Pfeiffer, T, Razen, M, & Wu, H (2016). Evaluating replicability of laboratory experiments in economics. Science, 351(6280), 1433–1436. 10.1126/science.aaf0918CrossRefGoogle ScholarPubMed
Card, D, Mas, A, Moretti, E, & Saez, E (2012). Inequality at work: The effect of peer salaries on job satisfaction. The American Economic Review, 102(6), 2981–3003. 10.1257/aer.102.6.2981CrossRefGoogle Scholar
Charness, G, & Rabin, M (2002). Understanding social preferences with simple tests. The Quarterly Journal of Economics, 117(3), 817–869. 10.1162/003355302760193904CrossRefGoogle Scholar
Duesenberry, JS (1949). Income, saving, and the theory of consumer behavior, Cambridge: Harvard University Press.Google Scholar
Falk, A, & Fischbacher, U (2006). A theory of reciprocity. Games and Economic Behavior, 54(2), 293–315. 10.1016/j.geb.2005.03.001CrossRefGoogle Scholar
Fehr, E, & Schmidt, KM (1999). A theory of fairness, competition, and cooperation. Quarterly Journal of Economics, 114(3), 817–868. 10.1162/003355399556151CrossRefGoogle Scholar
Ferrer-i Carbonell, A (2005). Income and well-being: An empirical analysis of the comparison income effect. Journal of Public Economics, 89(5), 997–1019. 10.1016/j.jpubeco.2004.06.003CrossRefGoogle Scholar
Fischbacher, U (2007). z-Tree: Zurich toolbox for ready-made economic experiments. Experimental Economics, 10(2), 171–178. 10.1007/s10683-006-9159-4CrossRefGoogle Scholar
Fong, C (2001). Social preferences, self-interest, and the demand for redistribution. Journal of Public Economics, 82(2), 225–246. 10.1016/S0047-2727(00)00141-9CrossRefGoogle Scholar
Gilens, M (2009). Why Americans hate welfare: Race, media, and the politics of antipoverty policy, Chicago: University of Chicago Press.Google Scholar
Gill, D, Kissová, Z, Lee, J, & Prowse, V (2018). First-place loving and last-place loathing: How rank in the distribution of performance affects effort provision. Management Science, 65(2), 459–954.Google Scholar
Greiner, B (2015). Subject pool recruitment procedures: Organizing experiments with ORSEE. Journal of the Economic Science Association, 1(1), 114–125. 10.1007/s40881-015-0004-4CrossRefGoogle Scholar
Konrad, K. A., & Morath, F. (2010). Social mobility and redistributive taxation. In WZB markets and politics working paper no. SP II (p. 15).CrossRefGoogle Scholar
Kuziemko, I, Buell, RW, Reich, T, & Norton, MI (2014). “Last-place aversion”: Evidence and redistributive implications. Quarterly Journal of Economics, 129(1), 105–149. 10.1093/qje/qjt035CrossRefGoogle Scholar
Luttmer, EFP (2005). Neighbours as negatives: Relative earnings and well-being. Quarterly Journal of Economics, 120(3), 963–1002.Google Scholar
Martinangeli, A., & Windsteiger, L. (2019). Immigration vs. poverty: Causal impact on demand for redistribution in a survey experiment. In Working paper of the Max Planck Institute for Tax Law and public finance no. 2019–13.Google Scholar
Murphy, R. O., Ackermann, K. A., & Handgraaf, M. (2011). Measuring social value orientation. SSRN scholarly paper ID 1804189, Social Science Research Network, Rochester, NY.Google Scholar
Rabin, M (1993). Incorporating fairness into game theory and economics. The American economic review, 83(5), 1281–1302.Google Scholar
Smith, JM (1982). Evolution now: A century after Darwin, New York: Freeman 10.1007/978-1-349-86046-3CrossRefGoogle Scholar
Xie, W, Ho, B, Meier, S, & Zhou, X (2017). Rank reversal aversion inhibits redistribution across societies. Nature Human Behaviour, 1(8), 0142 10.1038/s41562-017-0142CrossRefGoogle Scholar
Supplementary material: File

Martinangeli and Windsteiger supplementary material

Appendix
Download Martinangeli and Windsteiger supplementary material(File)
File 536.6 KB