Public sector employees: Risk averse and (diminishingly) altruistic . . .

Another one of those articles I’d like to read.  I will in this case, but would be interested in others’ thoughts on the contents either when I’ve read it or before.  Looks interesting.

Date: 2009-09
By: Buurman, Margaretha (Erasmus University Rotterdam)
Dur, Robert (Erasmus University Rotterdam)
van den Bossche, Seth (TNO Work and Employment)
URL: http://d.repec.org/n?u=RePEc:iza:izadps:dp4401&r=upt
We assess whether public sector employees have a stronger inclination to serve others and are more risk averse than employees in the private sector. A unique feature of our study is that we use revealed rather than stated preferences data. Respondents of a large-scale survey were offered a substantial reward and could choose between a widely redeemable gift certificate, a lottery ticket, or making a donation to a charity. Our analysis shows that public sector employees are significantly less likely to choose the risky option (lottery) and, at the start of their career, significantly more likely to choose the pro-social option (charity). However, when tenure increases, this difference in pro-social inclinations disappears and, later on, even reverses. Our results further suggest that quite a few public sector employees do not contribute to charity because they feel that they already contribute enough to society at work for too little pay.

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Legal Eagle
12 years ago

Fascinating! I wonder what the stats are with private sector employees?

Paul Frijters
Paul Frijters(@paul-frijters)
12 years ago

Interesting. I am trying to remember whether civil service employee tenure profiles are steep or flat. I seem to recall they are quite flat (relatively good entry pay but little progression), which would perfectly fit the notion that over time, individuals move from being overpaid to underpaid and thus indeed to becoming altruistic via their acceptance of low wages. It would constitute a very high degree of rationality though for this to be true, i.e. it requires self-awareness of the utility function, and awareness of dynamic relative pay measures.