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Sustainable Financial Literacy and Preferences for Sustainable Investments among Young Adults

Author

Listed:
  • Armin Varmaz
  • Katharina Riebe
  • Sabrina Hegner

Abstract

We use a choice experiment on equity fund investments to estimate the preferences of young adults for sustainable investments relative to conventional investment funds. Our results suggest that the traditional trade-off between investment fund risk and return is still valid in the selection of sustainable investment funds. The environment focus is more important for the choice of sustainable investment then social or governance aspects. Latent behavioural characteristics (conscientiousness, importance of the impact of direct investments on sustainability, risk aversion, financial literacy) are also important to explain the choice for sustainable funds. In diesem Beitrag verwenden wir ein Auswahlexperiment bzgl. der Auswahl von Aktienfonds, um die Präferenzen junger Erwachsener für nachhaltige Anlagen im Vergleich zu konventionellen Investmentfonds zu schätzen. Unsere Ergebnisse deuten darauf hin, dass der traditionelle Trade-Off zwischen dem Risiko und der Rendite von Aktienfonds auch bei der Auswahl nachhaltiger Investmentfonds Bestand hat. Der Fokus auf die Umwelt ist bei der Wahl nachhaltiger Anlagen wichtiger als soziale oder Governance-Aspekte. Latente Verhaltensmerkmale (Gewissenhaftigkeit, Bedeutung der Auswirkungen von Direktinvestitionen auf die Nachhaltigkeit, Risikoaversion, Finanzwissen) sind ebenfalls wichtig, um die Entscheidung für nachhaltige Fonds zu erklären.

Suggested Citation

  • Armin Varmaz & Katharina Riebe & Sabrina Hegner, 2021. "Sustainable Financial Literacy and Preferences for Sustainable Investments among Young Adults," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 90(4), pages 43-69.
    • Handle: RePEc:diw:diwvjh:90-4-4
    DOI: 10.3790/vjh.90.4.43
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    More about this item

    Keywords

    portfolio choice; sustainable investments; Socially responsible investments; Ethical investing; Corporate social responsibility; equity funds; financial literacy;
    All these keywords.

    JEL classification:

    • G53 - Financial Economics - - Household Finance - - - Financial Literacy
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G41 - Financial Economics - - Behavioral Finance - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making in Financial Markets
    • C52 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Evaluation, Validation, and Selection
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • A13 - General Economics and Teaching - - General Economics - - - Relation of Economics to Social Values

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