Are People Altruistic When Making Socially Responsible Investments? Evidence From a tDCS Study.

Xiaolan Yang,Shu Chen,Wenting Meng,Jian Zhang,Mei Gao

doi:10.3389/fnins.2021.704537

Abstract

Socially responsible investment (SRI) is an emerging philosophy that integrates social and environmental impacts into investment considerations, and it has gradually developed into an important form of investment. Previous studies have shown that both financial and non-financial motivations account for SRI behaviors, but it is unclear whether the non-financial motive to adopt SRI derives from investors’ altruism. This study uses neuroscientific techniques to explore the role of altruism in SRI decision-making. Given that existing evidence has supported the involvement of the right temporoparietal junction (rTPJ) in altruism and altruistic behaviors, we used transcranial direct current stimulation (tDCS) to temporarily modulate activity in the rTPJ and tested its effect on charitable donations and SRI behaviors. We found that anodal stimulation increased the subjects’ donations, while cathodal stimulation decreased them, suggesting that tDCS changed the subjects’ levels of altruism. More importantly, anodal stimulation enhanced the subjects’ willingness to make SRIs, while cathodal stimulation did not have a significant impact. These findings indicate that altruism plays an important role in SRI decision-making. Furthermore, cathodal stimulation changed the subjects’ perceived effectiveness of charitable donation but not that of socially responsible fund. This result may help explain the inconsistent effects of cathodal stimulation on charitable donations and SRI behaviors. The main contribution of our study lies in its pioneering application of tDCS to conduct research on SRI behaviors and provision of neuroscientific evidence regarding the role of altruism in SRI decision-making.

Highlights

Responsible investment (SRI) is an investment discipline that adds concerns about social or environmental issues as a determinant of investment portfolio construction or investment activities in the consideration of investment risks and returns (Sparkes and Cowton, 2004; Sparkes, 2008)
If altruism does play an important role in Socially responsible investment (SRI) decision-making, changes in subjects’ processing of moralmaterial conflicts will lead to changes in their SRI behaviors
The results are consistent with the conclusions of previous studies showing that activity in the right temporoparietal junction (rTPJ) is positively correlated with the level of altruism (Morishima et al, 2012; Hutcherson et al, 2015; Strombach et al, 2015)

Summary

Introduction

Responsible investment (SRI) is an investment discipline that adds concerns about social or environmental issues as a determinant of investment portfolio construction or investment activities in the consideration of investment risks and returns (Sparkes and Cowton, 2004; Sparkes, 2008). Some studies show that SRI is driven by financial motives for higher returns or lower risks. Jansson and Biel (2011) found that the main motivation for investors to engage in SRI lies in a belief that socially responsible assets can bring higher investment returns. Døskeland and Pedersen (2016) and Riedl and Smeets (2017) noted that once investors perceive the expected returns from socially responsible assets to be poor or lower than those from traditional assets, their willingness to make SRIs will decrease. Empirical studies have found that the financial performance of portfolios with high levels of social responsibility is generally better with regard to returns and risks (Orlitzky and Benjamin, 2001; Derwall et al, 2004)

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