Rank reversal aversion inhibits redistribution across societies

Abstract

Income inequality is pervasive despite evidence of inequality-Averse social preferences. We show that people will sometimes support inequality to avoid reversing the rank of others in society. Using a third-party dictator game that we call the redistribution game, we found that people sometimes choose more unequal outcomes to preserve existing hierarchies. When a proposed transfer reversed pre-existing income rankings, adults across cultures were twice as likely to reject the transfer. Running the same experimental game in a society of nomadic Tibetan herders with a low level of market integration 1, we observed an exceptionally high aversion to rank reversals. In children, we found that inequality aversion develops between the ages of four and five, as shown in previous studies 2,3, whereas rank reversal aversion develops between the ages of six and seven. Just as some animal species develop stable pecking orders to reduce in-group violence, human aversion to reversing rank is observed at an early age and across cultures.