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Socially Responsible Investing in the Political Context

Author

Listed:
  • Ceccarelli, Marco
  • Ramelli, Stefano
  • Vasileva, Anna
  • Wagner, Alexander F.

Abstract

Can changes in political context shift the weight individuals place on non-pecuniary versus pecuniary motives in financial decision-making? We examine this question using pre-registered surveys and incentivized investment decisions surrounding the 2024 U.S. presidential election. Following Trump’s victory, investors reduced average green investments due to worse financial expectations. However, investors who strongly disapproved of his climate policies increased their green allocations, emphasizing climate considerations over financial ones. These "contrarian" investors appear motivated to offset perceived policy shortcomings. Real-world ETF flows corroborate this pattern. The findings have implications for understanding and modeling values-based investment behavior.

Suggested Citation

  • Ceccarelli, Marco & Ramelli, Stefano & Vasileva, Anna & Wagner, Alexander F., 2025. "Socially Responsible Investing in the Political Context," CEPR Discussion Papers 20123, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:20123
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    File URL: https://cepr.org/publications/DP20123
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    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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