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Willingness to Pay for Sustainable Funds: Does Reverse Labelling and Moral Appeals Increase Demand for Sustainable Investments?

Ingebrigtsen, Linn; Bognøy, Stian
Master thesis
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URI
https://hdl.handle.net/11250/3015931
Date
2022
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  • Master Thesis [4657]
Abstract
This thesis seeks to determine if there is a willingness to pay for sustainable funds and if it is

possible to influence the willingness to pay through a reverse label- and a moral treatment.

The study also investigates the impact of the demographic factors age, gender, income,

education, and knowledge.

We study this topic by gathering data from an experimental survey sent to customers of

Storebrand in Norway. The sample of 400 respondents is exposed to the treatments in a 2x2

between subject design. The willingness to pay is determined through a hypothetical question

where the respondents are asked what they are willing to pay in management fee for a

sustainable fund, and still prefer this over an otherwise comparable non-sustainable fund with

a management fee of 1%. With standard labelling they are reporting their willingness to pay

for “Global sustainable” compared to “Global”. With reverse labelling they are reporting their

willingness to pay for “Global” compared to “Global non-sustainable”. The moral treatment

consists of a moral text before the question of willingness to pay.

The results suggest that there is a willingness to pay for sustainable funds, and that this

willingness can be increased by exposing respondents to a combination of both treatments.

Furthermore, the moral treatment is effective in increasing the probability of the respondents

being willing to pay. In total, the number of respondents who had a willingness to pay for

sustainable funds was 34% in the control group. This number increased to 49% for the groups

who were exposed to a treatment. Receiving the combination of both treatments almost tripled

the willingness to pay for sustainable funds as the average management fee people accepted

went from 1.25% to 1.69%, an increase of 0.44 percentage points. The demographic factor of

having a gross annual salary of more than 700,000 NOK is showed to have a negative

correlation with willingness to pay for sustainable funds. However, gender, education, and

knowledge were not significant, and neither was age when removing outliers.

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