N°25-36: The Political Economy of Green Investing: Insights from the 2024 U.S. Election

Does the political context shape investors’ non-pecuniary demand for green assets? We provide evidence from incentivized surveys of U.S. investors before and after the 2024 U.S. presidential election. After Trump’s victory, investors reduced green investments on average. However, investors who strongly disapprove of his climate policy increased their green investment taste. These “contrarians” placed greater weight on non-pecuniary considerations and less on financial ones, suggesting they view green investing as a way to compensate for perceived climate inaction. Empirical analyses of real-world ETF flows align with this interpretation. The findings have implications for understanding and modeling green investment behavior.