I have heard it also puts you in a better position when an airline is bumping passengers or carry-on luggage, though the soft rules are always changing, so I don't know if this is still the case (or ever was.)

Depending on the region, you can get a pretty hefty payout for getting bumped, if you know what paperwork to file (even if they get you a hotel and later flight). Terrible if you have plans, not bad if you're backpacking like in my case.

This is also true of hotels. If the hotel is overbooked they will “walk” the third party booked people first and keep their reward members / first party booked people happy

If I were operating an airline, I would have a list of the passengers sorted by revenue or profit and use that to figure out who to bump first.

I imagine the “basic economy” tickets are basically first in line for being bumped.