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Is Sustainable Finance a Dangerous Placebo?

Author

Listed:
  • Florian Heeb

    (MIT Sloan)

  • Julian F Kölbel

    (University of St. Gallen; MIT Sloan; and Swiss Finance Institute)

  • Stefano Ramelli

    (University of St. Gallen; and Swiss Finance Institute)

  • Anna Vasileva

    (University of Zurich)

Abstract

A first-order concern regarding sustainable finance is that it may crowd out individual support for more effective, policy-driven approaches to address societal challenges. We test the validity of this concern in a pre-registered experiment in the context of a real referendum on a climate law with a representative sample of the Swiss population (N=2,051). We find that the opportunity to invest in a climate-conscious fund does not erode individuals’ support for climate regulation. While sustainable finance resembles a placebo in the sense that participants seem to overestimate its impact, it is not a dangerous placebo that crowds out political engagement.

Suggested Citation

  • Florian Heeb & Julian F Kölbel & Stefano Ramelli & Anna Vasileva, 2023. "Is Sustainable Finance a Dangerous Placebo?," Swiss Finance Institute Research Paper Series 23-46, Swiss Finance Institute.
    • Handle: RePEc:chf:rpseri:rp2346
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    File URL: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4484166
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    More about this item

    Keywords

    Behavioral Finance; Climate Change; ESG; Externalities; Sustainable Finance; Political Economy; Voting Behavior;
    All these keywords.

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • H42 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Private Goods
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • P16 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Capitalist Institutions; Welfare State

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