Doing Good in Good Times Only? Uncertainty as Contingency Factor of Warm-Glow Investment

31 Pages Posted: 31 Aug 2023


Recent studies in investor behavior have put forth a so-called “warm-glow” theory, suggesting that investors appear to have developed a preference for responsible investments. The theory explains why investors empirically appear to pay a premium for responsible assets. According to recent reports, however, Covid-19, supply chain uncertainties, and the recent surge in inflation, have led to a resurgence of investment in what could be considered non-responsible assets. Investor sentiment has changed. In this paper we put forth the hypothesis that market uncertainty acts as a contingency variable on warm-glow preferences, such that in times of crisis, the investor loses the taste for responsible assets, in favor of the preservation of consumption and wealth. Focusing on the global banking sector, we show that this helps explain what was observed during the financial crisis. Our study adds uncertainty as an important contextual contingency to discussions in the nascent warm-glow theory.

Keywords: Uncertainty, investor altruism, warm-glow preference, Green investment, banking and ESG, Sustainability

Suggested Citation

Kabderian Dreyer, Johannes and Sund, Kristian and Tatomir, Mirel, Doing Good in Good Times Only? Uncertainty as Contingency Factor of Warm-Glow Investment. Available at SSRN: or

Kristian Sund

Roskilde University ( email )

Universitetsvej 1
Roskilde DK-4000, 4000


Mirel Tatomir

Roskilde University ( email )

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