Working Paper: CEPR ID: DP18285
Authors: Hans Degryse; Alberta Di Giuli; Naciye Sekerci; Francesco Stradi
Abstract: This paper examines the drivers of households’ sustainable investments. Analyzing a representative sample of Dutch households, we document the existence of two types of households: those that invest in sustainable financial products for social reasons (social sustainable investors) and those that do it for financial reasons (financial sustainable investors). The two groups are of equal importance but are characterized by different features. The social sustainable investors have higher social preferences, level of education and trust, and are more likely left-wing and less risk-loving. Reliable labelling, reducing greenwashing concerns, and emphasizing the low risk and the typical left-wing thematic linked to sustainable investments is positively related to sustainable investments by social sustainable investors, whereas hyping the benefit in terms of returns of sustainable investments through social media and word of mouth is positively associated with the investment decisions of financial sustainable investors. Lack of information is the most important barrier for not holding sustainable investments and thus not participating in the stock market.
Keywords: sustainable investments; household finance; decision making; financial literacy
JEL Codes: D14; G11; G41
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Higher social preferences (D71) | Sustainable investments (social investors) (O35) |
| Higher trust (Z13) | Sustainable investments (social investors) (O35) |
| Left-wing political views (P26) | Sustainable investments (social investors) (O35) |
| Higher sustainable finance literacy (G53) | Sustainable investments (social investors) (O35) |
| Financial hype (G19) | Sustainable investments (financial investors) (G23) |
| Lack of information (D89) | Sustainable investments (both groups) (Q01) |