Portfolio Choice And Investments In Renewable Energy: Evidence From U.S. Household Surveys

Abstract

Economic theory predicts that investing in renewable energy should generally have a negative effect on risk-taking in financial portfolios, which can affect the optimal design of a wide variety of financial and insurance policies. However, there is no empirical work to confirm a relationship between renewable energy investments and portfolios. Using data for 15,600 U.S. households spanning the period 2001-2012, we find that increases in renewable energy investments also increase investments in risky assets. Therefore, investing in renewable energy has a substantial impact on portfolio choice decisions.