Sustainability Preferences: The Role of Beliefs

To formally evaluate how investors trade off financial returns with non-pecuniary motives in socially responsible investments (SRIs), we need reliable measures of return expectations. This study elicits beliefs about sustainable asset performance in a field survey experiment. We show that unincentivized Likert-scale belief measures fail to predict allocation decisions, while return expectations based on two incentivized methods are positively influenced by sustainability labels and meaningfully correlate with investment choices. Our findings highlight the importance of proper belief elicitation in understanding SRI motives, and caution institutions against relying solely on survey responses to infer investor preferences in contexts involving non-pecuniary considerations.