Abstract
We assess how investors' willingness-to-pay (WTP) for sustainable investments responds to the impact of those investments, using a framed field experiment. Although investors have a substantial WTP for sustainable investments, they do not pay more for investments with more impact. This also holds for dedicated impact investors. When investors compare several sustainable investments, their WTP increases with impact, but depends strongly on the choice set. Investors experience positive emotions when choosing a sustainable investment, irrespective of the investment’s impact. These findings suggest that the WTP for sustainable investments is driven by warm glow and not by deliberate evaluations of impact.
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