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Dirty Air and Green Investments: The Impact of Pollution Information on Portfolio Allocations
By Raymond Fisman, Pulak Ghosh, Arkodipta Sarkar & Jian Zhang
We study exposure to pollution information and investment portfolio allocations, exploiting the rollout of air quality monitoring stations in India. Using a triple-differences framework, we show that retail investors’ investments in “brown” stocks are negatively related to local air pollution after a monitoring station appears nearby, with particularly pronounced effects on “alert” dates when air quality is listed as harmful to the general population. The effect of pollution information on investment choices is most prominent amongst tech-savvy investors who are most plausibly “treated” by real-time pollution data, and by younger investors who tend to be more sensitive to environmental concerns. Overall, our results provide micro-level support for the view that salience of environmental conditions affect investors’ tastes for green investments, and preferences for environmental amenities more generally.
Source NBER
