12 Jul 2023

Research project on ESG investing wins Vernon L. Smith Young Talent Award

Young researchers from SAFE, Goethe University, and Deutsche Bundesbank are investigating the sustainability of socially and environmentally responsible investments

In a project at the Leibniz Institute SAFE, Jakob Famulok, Emily Kormanyos, and Daniel Worring are exploring the concept of “moral licensing” as a possible factor for environmental, social, and governance (ESG) investments. Jakob Famulok and Daniel Worring have now been awarded the prestigious Vernon L. Smith Young Talent Award of 4,000 US dollar for this research project.

By investigating whether individuals who invest in ESG products give themselves a moral license to engage in less sustainable consumption, the team aims to gain insights into potential net negative externalities (external costs) of sustainable investing. The award committee believes that the project has the potential to make an important contribution to the rapidly growing literature on ESG investing.

Making investment decisions with environmental impact in mind

To investigate this phenomenon, Famulok, Worring, and Kormanyos will study the preferences of approximately 3,000 to 4,000 individual investors in a large German retail bank. The goal is to understand how investors’ decisions are influenced by their awareness of their own carbon footprint relative to others and their ability to offset those emissions directly or indirectly through their investment decisions.

The Vernon L. Smith Young Talent Award is a prestigious research award in the field of experimental finance. Named after Vernon Lomax Smith, the 2002 Nobel Laureate in Economics, the award recognizes outstanding achievement in the field. It is awarded jointly by the Society for Experimental Finance (SEF) and Chapman University.

Jakob Famulok is pursuing his Ph.D. at the Graduate School of Economics, Finance and Management in Frankfurt. His research interests lie at the intersection of behavioral, and climate economics, and he is a Junior Researcher at SAFE. Emily Kormanyos received her Ph.D. from Goethe University Frankfurt, where she worked as a research assistant. She is currently conducting research on sustainable finance at the Deutsche Bundesbank. Daniel Worring is pursuing his Ph.D. at the Chair of Personal Finance of Andreas Hackethal at Goethe University Frankfurt with a focus on the sustainable behavior of private investors.