Patience, Risk Aversion, and Economic Behavior: Combining Experimental Data with Administrative Register Data

This paper tests whether time and risk preferences are related to behavior on the loan market. Measures of patience and risk aversion are elicited for about 5,000 Danish participants in an incentivized online experiment. The experimental preference measures are matched to individual-level debt behavior in the field as observed in detailed administrative register data. I find that patient individuals have lower ratios of nonmortgage loan to income, postpone the incurrence of their first non-mortgage debt further, pay lower average interest rates on their non-mortgage debt, are less likely to choose mortgages with deferred amortization (interest-only mortgages), and are less likely to be delinquent on loans. Furthermore, the results indicate that risk averse mortgage holders are less likely to choose adjustable-rate mortgages.