Risk Preferences Across Public and Private Sector Employees: Evidence From Mortgage Choices
27 Pages Posted: 19 Jul 2018
Date Written: June 27, 2018
Public sector employees have long been considered to be more risk-averse when compared with their private sector counterparts. Using data from mortgage applications, we offer novel evidence that casts doubt on this conventional view. After accounting for differences in applicants' demographic and creditworthiness characteristics, we find little, to no, differences between public and private sector employees in terms of their risky mortgage choices. The findings are robust to accounting for potential bias from unobservables and testing alternative measures of mortgage riskiness.
Keywords: Risk Preferences, Public Sector
JEL Classification: H83, J45, M59
Suggested Citation: Suggested Citation