Household Preferences for Investing in Crowdfunding

Abstract

Using representative survey data on the Dutch population, we analyze households’ actual participation and stated preferences for crowdfunding involvement at the extensive and intensive margin, with emphasis on the relation with investing in socially responsible assets. We find that crowdfunding investors are higher educated and more future oriented than others, whereas risk aversion plays a negative but insignificant role. Financial literacy is positively associated with knowing about crowdfunding, but not with actual participation. A stated choice preference experiment largely confirms these relations. At the intensive margin, however, results are rather different: Women have a stronger preference for crowdfunding than men do. Financial literacy reduces the preferred share invested in crowdfunding. We find a strong positive relation between crowdfunding and socially responsible investing. We identify several common factors: a desire to contribute to improving society and a lack of confidence in traditional financial institutions. Comparing stated and revealed preferences, we find that the potential for attracting more crowdfunding funders is much smaller than for attracting socially responsible investors.