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Philanthropy & Sustainable Finance,
University of Amsterdam
Research
Disposed to be Overconfident
2024, with Katrin Gödker and Terrance Odean
Revise and Resubmit at The Journal of Finance
We hypothesize that individuals learn about their investment ability based on realized gains and losses rather than overall portfolio performance. Thus, how investors sell their stocks, or how they remember those sales, impacts their confidence. The disposition effect and self-serving memory leads to investor overconfidence. We provide empirical evidence for this in (i) survey data and transaction records of Dutch retail investors and (ii) an experiment for causality. In a final step, we outline a model that formalizes the learning mechanism and how it leads to overconfidence as well as lower trading profits and higher volume.
Impact or Responsibility? Giving Behavior in a Televised Natural Experiment
2024, with Inka Eberhardt, Martijn van den Assem and Dennie van Dolder
Revise and Resubmit at The Economic Journal
Imagine you have €100 to give to one of three people who are in need of money. Do you choose the person who you think can make the biggest impact with the money or the one who is struggling through no fault of their own? People have different views on how they should give. Utilitarianism suggests we should aim to maximize societal well-being, but previous research shows many people are less supportive of helping those they believe are responsible for their own bad situation. We analyze giving behavior using the Dutch TV show Geld Maakt Gelukkig ("Money Buys Happiness"). Our findings show that while responsibility matters, perceived impact is the strongest driver of donations.
Mental Models in Financial Markets: How Do Experts Reason About the Pricing of Climate Risk?
2024, with Rob Bauer, Katrin Gödker and Florian Zimmermann
Most finance experts believe climate risks are not sufficiently reflected in stock prices. We conducted a survey of 1,989 financial professionals through the CFA Institute. It shows that 68% think climate risks are underrepresented. Many expect it will take over ten years for markets to fully integrate these risks. Experts mental models reveal two main factors: poor quality of climate risk data and perceptions that others underestimate climate risks (second-order beliefs).
Gender-based Disparities in Subjective Versus Objective Glycemic Control in Individuals with Type 1
Diabetes
2024, with Coco Fuhri Snethlage, Pleun de Groen, Elena Rampanelli, Daniël van Raalte, Hans DeVries, Stijn Meijnikman, Sarah Siegelaar, Bastiaan de Galan, Bart Roep, Max Nieuwdorp & Nordin Hanssen
We explored how men and women with type 1 diabetes perceive and manage their condition differently. Over 14 days, we used continuous glucose monitoring (CGM) to compare their actual blood sugar control with their self-ratings. We found that men often think they're managing their diabetes better than they actually are, while women have a more accurate sense of their control. Men also had more unnoticed low blood sugar episodes. Our findings highlight the importance of using CGM to get a true picture of diabetes management and suggest that men and women might need different approaches for better care.
Geven en Nemen - Evaluatie Giftenaftrek 2016 - 2021
2024, with Nils Verheuvel, Derck Stabler, Michiel Bijlsma, William Luiten and Raymond Adema
We study the effects of tax deductible donations on the amounts given. We find that tax deductions are effective because they increase the donated amount. Yet, tax deductions are not efficient because the costs for the government are larger than the increase in donation amounts. We also explore matching as an alternative to tax deductions and find that matching is more efficient. Further research into matching vs. tax deductions is therefore needed.
Dirty Money. The Impact of Negative ESG News Sentiment on Dividend Consumption
2023, with Marten Laudi and Thomas Pauls
Using a large European bank dataset, we show that in response to negative ESG news exposing controversial business practices of dividend-paying firms, investors amplify their consumption from dividend income, compared to dividends from non-controversial firms. This increased consumption is immediate, occurring on the dividend payout day. We control for selection effects and rule out attention and adjustments to the dividend payout size as mechanisms. Instead, our results are consistent with laboratory evidence showing that people who earn money by violating social norms counter resulting negative emotions with mood-enhancing behavior, such as increased consumption. This aligns with the principles of emotion regulation theory. We demonstrate the applicability of emotion regulation theory outside of the laboratory in an important real-world context, financial markets.
Wealthy Americans and redistribution: The role of fairness preferences
2023, with Alain Cohn, Lasse Jessen and Marko Klasjna
The Journal of Public Economics
Wealthy individuals have a disproportionately large influence on the income distribution in society through politics and the corporate world. We show that even in the absence of self-interested motives to oppose redistribution, the wealthy may favor policies that further expand the gap between richer and poorer individuals because of their higher tolerance for inequality. Particularly individuals who experienced upward social mobility accept more inequality than those born into wealth.
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Social Status and Unethical Behavior: Two Replications of the Field Studies in Piff et al. (2012)
2023, with Minah Jung, Joachim Vosgerau and Jan Stoop
Journal of Experimental Psychology: General
Previous work suggested that wealthy individuals behave more unethically than less wealthy individuals. Specifically, drivers of expensive cars would be more likely to violate traffic laws than drivers of cheaper cars. We conducted several large-scale replications and find that drivers of expensive and cheap cars are equally likely to violate traffic laws.
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Why Do Investors Pay Higher Fees for Sustainable Investments? An Experiment in Five European Countries
2023, with Daniel Engler and Gunnar Gutsche
Our research indicates that higher fees for sustainable investments are not due to investors’ social preferences, but rather to their low financial literacy. This finding suggests that investors may not fully understand the impact of these fees on their overall returns, and may benefit from greater education and transparency in the investment industry. Differences in financial literacy across countries explain why investors in Germany and the Netherlands tend to be more fee-sensitive than those in France, Poland, and Spain.
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Do Financial Advisors Charge Sustainable Investors a Premium?
2023, with Marten Laudi and Utz Weitzel
Reject and Resubmit at Management Science
In both the United States and Europe, we find that financial advisors charge sustainable investors higher fees than conventional investors. Our experiments with 415 financial advisors suggest that this is not due to any additional effort or costs associated with sustainable investing. Instead, we found evidence of price discrimination, with sustainable investors – especially those with lower financial literacy – being charged the highest fees. These findings have important implications for investors and regulators.
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A Fistful of Dollars: Financial Incentives, Peer Information, and Retirment Savings
2022, with Rob Bauer and Inka Eberhardt
The Review of Financial Studies
Financial incentives in the form of a lottery increase retirement information search, whereby raffling a few large prizes are more effective than raffling the same amount in the form of many small prizes. However, financial incentives do not improve pension knowledge or savings behavior three weeks after our intervention. Peer information has no effect altogether.
Meet the Parents: Impact of a Menstrual Health Intervention on Parental Implicit and Explicit Attitudes Towards Menstrual Taboos in Rural Bangladesh
2021, with Eleonora Nilessen and Lidwien Sol
Adolescent girls in Bangladesh and many other places in the world are subject to social and cultural norms regarding menstruation that prohibit partaking in every-day activities. We find the Ritu program has a strong effect on changing self-reported explicit attitudes among parents: parents in the treatment group are more likely to agree that menstruating girls should be able to cook, play with friends, eat white foods and wash clothes. We also find they are more likely to report their own daughter(s) are allowed to undertake these activities during their period. Even while implicit attitudes stay unchanged, ,conscious (explicit) beliefs about the ability and effectiveness of supporting girls during their menstruation and sending girls to school (among other things) clearly adapt in response to the Ritu intervention.
Get real! Individuals Prefer More Sustainable Investments
2021, with Rob Bauer and Tobias Ruof
The Review of Financial Studies
The United Nations Sustainable Development Goals (SDGs) have created societal and political pressure for pension funds to address sustainable investing. We run two field surveys (n=1,669 and n=3,186) with a pension fund that grants its members a real vote on its sustainable-investment policy. Two thirds of participants are willing to expand the fund’s engagement with companies based on selected SDGs, even when they expect engagement to hurt the financial performance. The support remains strong after the fund implemented the choice. A key reason is participants’ strong social preferences.
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Breaking Down Menstrual Barriers in Bangladesh; Cluster RCT Evidence on School Attendance and Psychosocial Outcomes of Adolescent Girls
2021, with Eleonora Nilessen and Lidwien Sol
Girls’ poor ability to manage menstrual health (MH) imposes barriers to education and general wellbeing, especially in low- and middle-income countries. This paper presents the results of the Ritu trial, a 2-year clustered randomized controlled trial, examining the effect of a multi-faceted menstrual health intervention in Bangladesh. We randomized 148 schools from one rural district, into one of the three groups; i) receiving a school program (sanitation facilities, MH education and support); ii) a school program and a targeted household program (parental MH education); iii) or the control group. The primary beneficiaries are schoolgirls in grades 6 until 8, age 11-15. We measure short- to medium-term impacts on school attendance, a set of psychosocial outcomes, and menstrual health outcomes.
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Beter Geven - Dertien verbetervoorstellen voor vereenvoudiging en versterking van de giftenaftrek en de ANBI regels
2020, in collaboration with Samenwerkende Brancheorganisaties Filantropie (SBF)
SBF (‘Samenwerkende Brancheorganisaties Filantropie’) intends to make proposals to the government and politics to strengthen the fiscal system relevant to philanthropy. To achieve this, it has established a Committee of experts and asked them to provide advice to SBF on this matter. SBF believes that the system can be simplified, expanded, and strengthened by: i) Simpler application of deduction possibilities: fewer conditions for donations and gifts and fewer types of receiving ANBIs and SBBIs (recognized charitable and social-benefit organizations); ii) Broadening the potential use by citizens and businesses.; iii) Improved availability of information for a reliable tax return and for effective control.
Do Sex Hormones at Birth Predict Later-life Economic Preferences? Evidence from a Pregnancy Birth Cohort Study
2020, with Boris van Leeuwen, Jeanne Bovet, Gideon Nave, Jonathan Stieglitz and Andrew Whitehouse
The Proceedings of the Royal Society B
More than 1400 papers suggest that sex hormones around birth affect later-life decisions, relying on 2D-4D digit ratios as proxy. We are the first to use neo-natal sex hormones from umbilical cord blood and 2D-4D ratios and find no relation with economic preferences like risk preferences, competitiveness and social preferences. We use a large sample from the Raine study, a well-studied cohort in Western Australia.
Time Use and Happiness of Millionaires: Evidence from the Netherlands
2020, with Ashley Whillans, Rene Bekkers and Michael Norton
Social Psychological and Personality Science
How do the very wealthy spend their time, and how does time use relate to well-being? In two studies in the Netherlands, the affluent and the general population spent time in surprisingly similar ways such as by spending the same amount of time working. Yet the nature of their time use differed in critical ways that are related to life satisfaction. In Study 1, millionaires spent more time engaged in active leisure (e.g., exercising and volunteering) (e.g., watching television and relaxing). In Study 2, millionaires spent more time engaged in tasks at work over which they had more control. The affluent sample belongs to the top of the income and wealth distribution, representing a significantly wealthier sample than in previous studies. These results further our understanding of when and how wealth may translate into greater well-being.
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High Net Worth Individuals Philanthropy Trends: A Comparative Study of France and the Netherlands
2017, in collaboration with ABN AMRO MeesPierson
Charitable giving is of great value to society. In particular, wealthy individuals and their families have the ability to make a significant impact on society. Many research papers and wealth briefings try to understand the multi-billion dollar global charitable giving market. These studies have provided valuable insights, but often miss the viewpoint of High Net Worth Individuals (HNWIs). Our comparative research provides a unique perspective on wealthy individuals in France and in the Netherlands. It is the first research to use the same methods in two different countries, which allows us to make solid comparisons.
Buying Time Promotes Happiness
2017, with Ashley Whillans, Elizabeth Dunn, Rene Bekkers and Michael Norton
Proceedings of the National Academy of Sciences
How should individuals spend their money to maximize their life satisfaction? Across the United States, Canada, Denmark and the Netherlands, we find that spending money to buy time increases life satisfaction. Outsourcing tasks such as house cleaning, cooking and doing groceries reduce feelings of stress. Yet, surprisingly, almost half of the Dutch millionaires do not buy time. What can you learn from the happiness of millionaires? Millionaires rate their life satisfaction with an 8.1 compared to 7.5 for the general population. Yet, it is not the money itself that makes them happy, but the way they spend their time. Thirty minutes per day makes the difference. If you spend half an hour more on active leisure (exercising, volunteering, socializing) instead of passive leisure (watching TV), you can be almost as happy as the wealthy.
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Why Do Investors Hold Socially Responsible Mutual Funds?
2017, with Arno Riedl
The Journal of Finance
Social preferences are the most important driver for investors to hold socially responsible mutual funds. Many investors accept lower expected returns on socially responsible investments and are willing to pay higher management fees. Providers of socially responsible investments benefit from a focus on the societal impact of responsible investments rather than focusing too much on financial performance.
De Geefondernemer
2016, in collaboration with ABN AMRO MeesPierson
This report contains the results of a study on the giving behavior and giving motivations of affluent relationships of ABN AMRO MeesPierson. The study is structured into a quantitative part and a qualitative part. The quantitative part consists of a survey among a random sample from the bank's client base and an experiment conducted with a portion of the surveyed group. The qualitative part involved conversations with relationships to gain insight into their motives and the ways in which they are philanthropically active. In the following, we present the key findings of the study.
Towards a Practical and Scientifically Sound Tool for Measuring Time and Risk Preferences in Pension Savings Decisions
2016, with Jan Potters and Arno Riedl
We develop an experimental method to estimate individuals’ time and risk preferences tailored to long-term decision making, like pension savings decisions. We directly compare our approach to low stakes incentivized experiments with short horizons, typically used in the literature.
Giving Behavior of Millionaires
2015, with Rob Bauer and Uri Gneezy
Proceedings of the National Academy of Sciences
Millionaires are more generous in dictator games than any other group studied in the literature. Yet, millionaires reduce their generosity in a bargaining context (ultimatum game). For fund raisers, it is therefore important to tap into the giving mindset of the wealthy and prevent an exchange focus like: “You give, you get”.
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Social Identification and Investment Decisions
2015, with Rob Bauer
Journal of Economic Behavior and Organization
The extent to which investors at socially responsible banks can identify with their socially responsible investments is an important driver for allocations to socially responsible banks. Return expectations and risk preferences also play a role, but are less important. Providers of socially responsible investments can benefit from creating strong social connections with their clients.
Van Vermogen Naar Verandering
2014, in collaboration with ABN AMRO MeesPierson
This report contains the results of a study on the giving behavior and giving motivations of affluent relationships of ABN AMRO MeesPierson. The study is structured into a quantitative part and a qualitative part. The quantitative part consists of a survey among a random sample from the bank's client base and an experiment conducted with a portion of the surveyed group. The qualitative part involved conversations with relationships to gain insight into their motives and the ways in which they are philanthropically active. In the following, we present the key findings of the study.
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