Doing Well While Feeling Good

Abstract

Sustainable finance promotes the doing well while doing good paradigm, that is the idea of simultaneously achieving positive social impact and financial return. This paper posits that the decision to invest sustainably is, in part, driven by impurely altruistic motivations. A series of artefactual field experiments provides evidence that: (i) altruism is contextual and does not necessarily imply sustainable investing; (ii) the warm glow of giving is a primary driver for sustainable investing; (iii) doing well while doing good leads to greater happiness (the investor’s high); and (iv) these effects are largely intrinsic rather than extrinsic phenomena. Implications for market participants and policy makers are discussed.

Keywords: sustainable investing, social preferences, impure altruism, warm glow, investor’s high

JEL Classification: G11, G41, D01, D91, Q50