Gregers Nytoft Rasmussen

Ph.d.-forsvar: Gregers Nytoft Rasmussen: "Patience, Risk Aversion, and Economic Behavior: Combining Experimental Data with Administrative Register Data"

In models of economic behavior, assumptions about preferences are essential. Empirical knowledge about preferences is therefore important in explaining the behavior of individuals. This PhD thesis studies relationships between preferences and economic decision-making at the individual level. The work presented here is based on large-scale Internet experiments with more than 5,000 Danish respondents. The experiments involved incentivized intertemporal choices and investment choices designed to elicit measures of individual-level patience and risk aversion. The experimental preference measures are linked at the individual level to Danish third-party reported administrative register data. The work in this thesis distinguishes itself by facilitating a comparison between experimentally elicited preferences and long-term real-life economic behavior observed in the registers, while earlier studies have primarily evaluated the relationships between preferences and economic decision-making in short-term laboratory settings.

The thesis consists of three self-contained chapters, which all contribute to the understanding of how heterogeneity in preferences relates to actual economic decision-making at the individual level. In chapter 1, I document that time and risk preferences are important for behavior on the loan market in terms of several outcomes: loan to income ratios, the timing of first debt incurrence, interest rates paid on debt, the choice of mortgage loan, and delinquencies on loans. Chapter 2 investigates the relationship between time discounting and wealth inequality. We find a strong positive correlation between measured patience levels and the respondents’ positions in the wealth distribution. In chapter 3, I study the association between preference heterogeneity and insurance demand and find positive relationships between insurance purchases and levels of risk aversion as well as patience.