Working Paper: NBER ID: w31813
Authors: Raymond Fisman; Pulak Ghosh; Arkodipta Sarkar; Jian Zhang
Abstract: We study exposure to pollution information and investment portfolio allocations, exploiting the rollout of air quality monitoring stations in India. Using a triple-differences framework, we show that retail investors' investments in "brown" stocks are negatively related to local air pollution after a monitoring station appears nearby, with particularly pronounced effects on ``alert'' dates when air quality is listed as harmful to the general population. The effect of pollution information on investment choices is most prominent amongst tech-savvy investors who are most plausibly "treated" by real-time pollution data, and by younger investors who tend to be more sensitive to environmental concerns. Overall, our results provide micro-level support for the view that salience of environmental conditions affect investors' tastes for green investments, and preferences for environmental amenities more generally.
Keywords: Pollution; Investment; Air Quality; ESG; Investor Behavior
JEL Codes: D91; G11; G41; Q51
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Caaqms rollout (C32) | salience of pollution information (Q53) |
| salience of pollution information (Q53) | retail investors' investments in brown stocks (G24) |
| Caaqms rollout (C32) | retail investors' investments in brown stocks (G24) |
| air quality monitoring stations (Q53) | share of brown stocks in affected investors' portfolios (G11) |
| pollution information (Q53) | investment choices (G11) |
| young and tech-savvy investors (G24) | sensitivity to air quality data (Q53) |