Why Do Retail Investors Pick Green Investments? A Lab-in-the-Field Experiment with Crowdfunders

57 Pages Posted: 26 Jul 2021

See all articles by Christoph Siemroth

Christoph Siemroth

University of Essex - Department of Economics

Lars Hornuf

Dresden University of Technology

Date Written: 2021

Abstract

Do investors invest in green projects because they expect higher returns, to help the environment, or to help other people? To separate these motivations, we run a decision experiment in which crowdfunders choose between a higher return or a positive environmental impact, and between a higher return or a positive social impact. A majority of investors choose environmental and social impact over higher returns, conditional on large enough impact. Combining the experimental data with historical investments, we find that investors allocate a larger share of funds to green projects if they value environmental impact more and if they expect a higher return, but not if they value social impact more, all else equal. These findings suggest that investors have a preference for positive environmental impact, and satisfy it by investing in green projects. Finally, we introduce new survey measures of impact for future use, which are experimentally validated and predict field behavior.

JEL Classification: C930, D140, D900, G320

Suggested Citation

Siemroth, Christoph and Hornuf, Lars, Why Do Retail Investors Pick Green Investments? A Lab-in-the-Field Experiment with Crowdfunders (2021). CESifo Working Paper No. 9197, Available at SSRN: https://ssrn.com/abstract=3892621 or http://dx.doi.org/10.2139/ssrn.3892621

Christoph Siemroth (Contact Author)

University of Essex - Department of Economics ( email )

Wivenhoe Park
Colchester CO4 3SQ
United Kingdom

HOME PAGE: http://sites.google.com/site/csiemroth/

Lars Hornuf

Dresden University of Technology ( email )

Dresden, 01307
Germany

HOME PAGE: http://www.hornuf.com

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