Bringing out the Binoculars: How Future Orientation Makes Investors More Receptive to the Positive Environmental Impacts of Green Bonds

"Many studies have demonstrated that behavioral interventions can influence pro-environmental consumer behavior. However, little work has been done to investigate whether such interventions can impact pro-environmental investment behavior (specifically, the willingness to forgo pecuniary returns for environmental quality). In this paper, I test whether future orientation (induced through priming) and the provision of information can influence the demand for green bonds through a 3x2 experiment with two subject pools (a student pool and a Mechanical Turk worker pool). In my experiment, participants make a series of decisions to invest in either green or traditional bonds, with the return differential between green and traditional bonds increasing with every decision. Decisions have real consequences — they determine participants’ payouts as well as the actual investments I make in public markets. My results indicate that while Future Orientation and Positive Information provision have a limited impact on green bond investment propensity by themselves, a combination of the two treatments leads to significantly more individuals choosing to invest in green bonds. This finding holds even as the return differential between green and traditional investments widens significantly. Other key variables that influence demand for green bonds include prior investment experience, race, gender, and intended college major. "

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