People don’t like to be last. But the depths of this aversion are now coming to light—with surprising implications for inequality and redistribution.
The schoolyard drama plays out in every gym class, at every recess: students line up and the captains take their places and the selection begins. Athletes are chosen first. The ranks slowly thin. A ripple of concern passes through the last few students who glance one way and the other to consider the competition, quietly, fearfully wondering who will be chosen last.
We associate this anxiety with the self-conscious years of adolescence. But recent research from Taly Reich at Yale SOM, with colleagues from Columbia and Harvard, suggests this aversion to last place might continue to affect behavior throughout our lives. And the implications extend well beyond playground embarrassment.
It is well documented that, when faced with the option to give money to those who have more or those who have less, people tend to give to those with less. It seems that people are somehow wired for charity. Given this, scholars have long puzzled over the fact that low-income individuals frequently oppose redistributive policies that would be in their economic interest—raising the income tax in higher brackets, for instance. Why wouldn’t they want to take from those with more and give to those with less, if indirectly?
By drawing on common playground wisdom, Reich and her colleagues provide an interesting theoretical bridge—supported by experimentation—between these seemingly contrary points. Their theory, published in an article entitled “Last-Place Aversion”: Evidence and Redistributive Implications, posits that, under certain circumstances, our innate desire to avoid last place countervails our charitable instinct.
“We hypothesize that individuals exhibit a particular aversion to being in last place,” write Reich and her coauthors. Last-place aversion, as they call it, “suggests that low-income individuals might oppose redistribution because they fear it might differentially help a ‘last-place’ group to whom they can currently feel superior.”
The paper tests this insight first with a series of lab experiments. Participants are randomly assigned a dollar amount, with each player separated by a single dollar. (So a round with six players has the distribution: $1, $2, $3, $4, $5, and $6.) Participants are then shown the distribution and asked whether they would like to give $2 to the player in the position above or below. The outcome is predictable—people give to those with less—except that “the subject in second-to-last-place gives the money to the person above her between one-half and one-fourth of the time.” As their theory would suggest, the penultimate group wants to avoid slipping into last.
With these results on-hand, Reich and her colleagues move beyond the lab, using a survey of low-wage workers. Starting at the federal minimum, or “last-place,” wage ($7.25/hour), the survey divides participants into $1 incremental segments. Participants are then asked if they favor an increase in the minimum wage. In agreement with the results of past surveys, which have demonstrated majority support, roughly 80 percent of the survey participants advocate a higher wage. “The striking exception,” explain the authors, “is the relative lack of support among those making just above the current minimum (between $7.26 and $8.25).” Consistent with the lab results and last-place aversion, those nearest the bottom are least inclined to give to those at the bottom.
Beyond the exploration of redistributive preferences, last-place aversion opens an interesting window on consumer behavior. For instance, studies have demonstrated the tendency of diners to purchase the second cheapest wine on a menu, rather than the cheapest. Among other reasons for this could be an expansion of last-place aversion that includes not only a personal desire to avoid last place, but a similar impulse to steer clear of last-place products. Last-place aversion could also reframe operational interventions for “last place” clients. In short, those sixth-grade anxieties may hold useful and unexpected lessons on the competitive field of business.