Household Climate Finance: Theory and Survey Data on Safe and Risky Green Assets

Shifrah Aron-Dine, Johannes Beutel, Monika Piazzesi and Martin Schneider

No 32615, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper studies green investing using data from a representative survey of German households that inform a quantitative asset pricing model. We document substantial heterogeneity in nonpecuniary benefits and hedging across the wealth distribution, as well as sizeable unmet demand for green deposit accounts. Model counterfactuals show that optimism about green equity returns, rather than tastes, is currently responsible for the greenium. Introducing green deposits at a spread would not crowd out green equity but increase overall green investment. Feeding results from an RCT into the model, we show green equity could increase with better information about green finance.

JEL-codes: E0 F0 (search for similar items in EconPapers)
Date: 2024-06
New Economics Papers: this item is included in nep-ene, nep-env, nep-fdg and nep-mac
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