No, it isn't done to frighten the passengers, it's done for noise abatement reasons.
Taking a noise sensitive airport, such as Amsterdam Schiphol, the noise abatement procedure, which is typical of a lot of airports, is this:
Takeoff to 1500 ft above airfield: Takeoff power (which in most cases will not be full power).
1500 ft to 3000 ft above airfield: Climb power
At 3000 ft: Retract flaps and assume normal en-route climb.
The idea is to climb as steeply as possible close to the airport, commensurate with passenger comfort, and minimise disturbance to people on the ground.
There's a whole lot more to it than that, but does this sufficiently answer your question?