Climate Polarization and Green Investment
Working Paper 32131
DOI 10.3386/w32131
Issue Date
We build a nationally representative sample of retirement savers in Sweden to study how asymmetric updating of beliefs about climate change affects investment decisions. After the intense heat wave of 2018, respondents in regions dominated by a right-wing, anti-climate party grow less concerned about climate change, while respondents outside these regions grow more concerned. Those growing more concerned rebalance their retirement portfolios toward climate-friendly mutual funds; those growing less concerned rebalance out of these funds, but to a smaller degree. Financial sophistication and inertia interacts with political polarization in driving these effects.