Moral Sentiments and Investor Behavior: Evidence from the Chernobyl Disaster
Abstract
We exploit meteorological conditions prevailing in Sweden at the time of the Chernobyl accident, which created stark regional differences in exposure to a large-scale environmental shock within the same population. Using comprehensive register-based data, we test whether this quasi-random variation in "Chernobyl experiences" predicts subsequent values-based investment behavior. Investors in the most affected regions are about 20% more likely to allocate to socially responsible assets compared to otherwise similar investors in the least affected regions. The effect is robust to extensive individual-level controls, including health status, and to alternative specifications addressing regional sorting. Our findings provide novel evidence that lived experiences of salient societal shocks can durably shift portfolio preferences, highlighting a moral-sentiment channel in household finance that persists well beyond standard risk-return considerations.