Social Preferences and Portfolio Choice

73 Pages Posted: 2 Oct 2013 Last revised: 18 Nov 2021

See all articles by Arno Riedl

Arno Riedl

Maastricht University; IZA Institute of Labor Economics; CESifo (Center for Economic Studies and Ifo Institute); Netspar

Paul Smeets

Maastricht University

Multiple version iconThere are 3 versions of this paper

Date Written: July 1, 2017


To understand why investors hold socially responsible mutual funds, we link administrative data to survey responses and behavior in incentivized experiments. We find that both social preferences and social signaling explain socially responsible investment (SRI) decisions. Financial motives play less of a role. Socially responsible investors in our sample expect to earn lower returns on SRI funds than on conventional funds and pay higher management fees. This suggests that investors are willing to forgo financial performance in order to invest in accordance with their social preferences.

Keywords: portfolio choice, social preferences, socially responsible investments, mutual funds, administrative investor data, experiment, survey

JEL Classification: G110, D640, C900

Suggested Citation

Riedl, Arno M. and Smeets, Paul, Social Preferences and Portfolio Choice (July 1, 2017). CESifo Working Paper Series No. 4403, Available at SSRN: or

Arno M. Riedl

Maastricht University ( email )

Department of Microeconomics & Public Economics
P.O. Box 616
Maastricht, 6200 MD


IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679

Netspar ( email )

P.O. Box 90153
Tilburg, 5000 LE

Paul Smeets (Contact Author)

Maastricht University ( email )

P.O. Box 616
Maastricht, Limburg 6200MD
+31433883643 (Phone)

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