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The Political Economy of Green Investing: Insights from the 2024 U.S. Election

Author

Listed:
  • Marco Ceccarelli

    (VU University Amsterdam)

  • Stefano Ramelli

    (University of St. Gallen - School of Finance; Swiss Finance Institute)

  • Anna Vasileva

    (University of Zurich - Department of Finance)

  • Alexander F. Wagner

    (University of Zurich - Department of Finance; Centre for Economic Policy Research (CEPR); European Corporate Governance Institute (ECGI); Swiss Finance Institute)

Abstract

Does the political context shape investors’ non-pecuniary demand for green assets? We provide evidence from incentivized surveys of U.S. investors before and after the 2024 U.S. presidential election. After Trump’s victory, investors reduced green investments on average. However, investors who strongly disapprove of his climate policy increased their green investment taste. These “contrarians” placed greater weight on non-pecuniary considerations and less on financial ones, suggesting they view green investing as a way to compensate for perceived climate inaction. Empirical analyses of real-world ETF flows align with this interpretation. The findings have implications for understanding and modeling green investment behavior.

Suggested Citation

  • Marco Ceccarelli & Stefano Ramelli & Anna Vasileva & Alexander F. Wagner, 2025. "The Political Economy of Green Investing: Insights from the 2024 U.S. Election," Swiss Finance Institute Research Paper Series 25-36, Swiss Finance Institute.
    • Handle: RePEc:chf:rpseri:rp2536
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    File URL: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=5198512
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    More about this item

    Keywords

    Beliefs; Climate change; Expected returns; Investments; Political economy; Surveys; Sustainable finance; Transition risk; Behavioral finance;
    All these keywords.

    JEL classification:

    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G41 - Financial Economics - - Behavioral Finance - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making in Financial Markets
    • G51 - Financial Economics - - Household Finance - - - Household Savings, Borrowing, Debt, and Wealth
    • P18 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Energy; Environment

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