Impact investing

Demography

Traditional investments

Microeconomics

Economics

Business

Willingness to pay

Emerging markets

Political science

Valuation (finance)

Population

Sustainable development

Sociology

Finance

Natural resource economics

Production (economics)

Social impact

Review of Financial Studies

We assess how investors’ willingness-to-pay (WTP) for sustainable investments responds to the social impact of those investments, using a framed field experiment. While investors have a substantial WTP for sustainable investments, they do not pay significantly more for more impact. This also holds for dedicated impact investors. When investors compare several sustainable investments, their WTP responds to relative, but not to absolute, levels of impact. Regardless of investments’ impact, investors experience positive emotions when choosing sustainable investments. Our findings suggest that the WTP for sustainable investments is primarily driven by an emotional, rather than a calculative, valuation of impact.

Do Investors Care about Impact?