Altruism and egoism in investment decisions

Abstract

We provide survey evidence that personal values have an impact on individual investment decisions, in particular preferences for socially responsible investing. Our findings show that there is a positive link between altruistic values and the relative importance of social responsibility. This effect is stronger when individuals believe that they can make a positive social or environmental impact with their investments, or when they feel morally obliged to invest responsibly. If altruistic individuals associate responsible investments with higher returns, it decreases their motivation to invest responsibly. Egoistic values are negatively associated with the decision to invest responsibly, unless individuals associate responsible investing with higher returns.

The changing landscape of behavioral finance

“…Consistent with this conjecture, using survey data from Germany, Brodback, Guenster, and Mezger () show that altruistic individuals exhibit a strong preference for social responsibility. These individuals are aware that socially responsible investments earn lower returns and they are willing to accept lower returns for social impact.…”

Drivers of Investor Motivations for Impact Investments: The Case of Microfinance

“…They find that both social preferences and signaling explain socially responsible investment decisions, while investors are willing to sacrifice financial performance. Moreover, in a survey of a population of citizens in a German town, (Brodback, Guenster, and Mezger (2019) find a positive association of altruistic attitudes and willingness to invest in SI. In an early a survey among Swedish retail investors, Nilsson (2008) identifies that a pro-social attitude and financial perceptions are connected.…”

“…A more granular examination of individual investor decisions requires investigation at the micro level. The rapidly growing body of empirical literature on the motivations of SI investors typically focuses on distinct sub-samples of the population, using either experimental settings (Gutsche and Ziegler 2016;Barreda-Tarrazona, Matallín-Sáez, and Balaguer-Franch 2011;Glac 2009;Webley, Lewis, and Mackenzie 2001), survey-based data (Brodback, Guenster, and Mezger 2019;Dor-fleitner and Utz 2014; Berry and Junkus 2013), administrative investor portfolio data, or a combination thereof (Bauer, Ruof, and Smeets 2019;Riedl and Smeets 2017;Borgers and Pownall 2014). Experimental research designs testing investment decisions in a laboratory setting aim to eliminate social desirability biases of survey-based research, while they may also encounter limitations in terms of generalizability, framing biases and social desirability bias caused by the experimental setting itself (Levitt and List 2007).…”

Impact of Environmental Investments and Air Protection Costs on the Sustainable Development of Coal Mining Regions

“…The work of D. Brodback et al shows that "green" investing is influenced by altruistic motives. Therefore, the amount of environmental investments is determined by the degree of corporate social responsibility of managers and owners [4]. Wang et al note the potential of China's state environmental policy in managing environmental damage.…”