Household preferences for socially responsible investments

Mariacristina Rossi, Dario Sansone, Arthur van Soest, Costanza Torricelli*

*Corresponding author for this work

Research output: Contribution to journalArticleScientificpeer-review

Abstract

We analyze revealed and stated household preferences for socially responsible investments (SRI). Using a questionnaire specifically designed for this purpose and administered to a Dutch representative household panel, we investigate the actual and latent demand for SRI products. Respondents reported whether they owned SRI products, the reason behind this decision, but also answered stated choice questions on traditional investments and hypothetical SR products with an explicit return penalty and/or an in-kind compensation. Our results show that social investors are willing to pay a price to be socially responsible rather than needing a little nudge, such as a gift (a book or a voucher). Highly educated individuals have a substantial latent demand that is currently unexploited. Keeping education constant, individuals who consider themselves financially literate are less interested in SR products than others. Particularly at the intensive margin, the stated demand for SRI funds is sensitive to the return penalty.
Original languageEnglish
Pages (from-to)107-120
JournalJournal of Banking & Finance
Volume105
DOIs
Publication statusPublished - Aug 2019

Keywords

  • Ethical mutual funds
  • Personal finance
  • Investor behavior
  • performance
  • savings

Cite this

Rossi, Mariacristina ; Sansone, Dario ; van Soest, Arthur ; Torricelli, Costanza. / Household preferences for socially responsible investments. In: Journal of Banking & Finance. 2019 ; Vol. 105. pp. 107-120.
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Household preferences for socially responsible investments. / Rossi, Mariacristina; Sansone, Dario; van Soest, Arthur; Torricelli, Costanza.

In: Journal of Banking & Finance, Vol. 105, 08.2019, p. 107-120.

Research output: Contribution to journalArticleScientificpeer-review

TY - JOUR

T1 - Household preferences for socially responsible investments

AU - Rossi, Mariacristina

AU - Sansone, Dario

AU - van Soest, Arthur

AU - Torricelli, Costanza

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AB - We analyze revealed and stated household preferences for socially responsible investments (SRI). Using a questionnaire specifically designed for this purpose and administered to a Dutch representative household panel, we investigate the actual and latent demand for SRI products. Respondents reported whether they owned SRI products, the reason behind this decision, but also answered stated choice questions on traditional investments and hypothetical SR products with an explicit return penalty and/or an in-kind compensation. Our results show that social investors are willing to pay a price to be socially responsible rather than needing a little nudge, such as a gift (a book or a voucher). Highly educated individuals have a substantial latent demand that is currently unexploited. Keeping education constant, individuals who consider themselves financially literate are less interested in SR products than others. Particularly at the intensive margin, the stated demand for SRI funds is sensitive to the return penalty.

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