Socially Responsible Investing in the Political Context

Marco Ceccarelli, Stefano Ramelli, Anna Vasileva and Alexander F. Wagner

No 20123, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: Can changes in political context shift the weight individuals place on non-pecuniary versus pecuniary motives in financial decision-making? We examine this question using pre-registered surveys and incentivized investment decisions surrounding the 2024 U.S. presidential election. Following Trump’s victory, investors reduced average green investments due to worse financial expectations. However, investors who strongly disapproved of his climate policies increased their green allocations, emphasizing climate considerations over financial ones. These "contrarian" investors appear motivated to offset perceived policy shortcomings. Real-world ETF flows corroborate this pattern. The findings have implications for understanding and modeling values-based investment behavior.

Keywords: Behavioral finance; Climate change; Expected returns; Investments; Political economy; Surveys; Sustainable finance (search for similar items in EconPapers)
JEL-codes: D83 G11 G12 G41 G51 P18 (search for similar items in EconPapers)
Date: 2025-04
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