The “Last Place Aversion” Paradox

Occupy-wall-street-psychology_1Ilyana Kuziemko and Michael I. Norton offer a psychological explanation of the Occupy Wall Street protest in Scientific American:

If ever Americans were up for a bit of class warfare, now would seem to be the time. The current financial downturn has led to a $700 billion tax-payer-financed bank bailout and an unemployment rate stuck stubbornly above nine percent. Onto this scene has stepped the Occupy Wall Street (OWS) movement, which seeks to bring together a disparate group of protesters united in their belief that the current income distribution is unfair. “The one thing we all have in common is that We are the 99% that will no longer tolerate the greed and corruption of the 1%,” says their website. In an era of bank bailouts and rising poverty – and where recent data show that the top 1 percent control as much as 35 percent of the total wealth in America – it would appear that the timing of this movement to reconsider the allocation of wealth could not be more perfect.

Or, maybe not.

Support for redistribution, surprisingly enough, has plummeted during the recession. For years, the General Social Survey has asked individuals whether “government should reduce income differences between the rich and the poor.” Agreement with this statement dropped dramatically between 2008 and 2010, the two most recent years of data available. Other surveys have shown similar results.

What might explain this trend?