Dirty Air and Green Investments: The Impact of Pollution Information on Portfolio Allocations

Raymond Fisman, Pulak Ghosh, Arkodipta Sarkar and Jian Zhang

No 31813, NBER Working Papers from National Bureau of Economic Research, Inc

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.

JEL-codes: D91 G11 G41 Q51 (search for similar items in EconPapers)
Date: 2023-10
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