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

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...

Full description

Saved in:
Bibliographic Details
Published inJournal of economic behavior & organization Vol. 209; pp. 74 - 90
Main Authors Siemroth, Christoph, Hornuf, Lars
Format Journal Article
LanguageEnglish
Published Elsevier B.V 01.05.2023
Subjects
Crowdfunding
Environmental Impact
D9
Social Impact
D14
G32
Green Investments
Lab-in-the-field experiment
C93
Online AccessGet full text

Cover

More Information
Summary: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.
ISSN:0167-2681
1879-1751
DOI:10.1016/j.jebo.2023.02.023