Beyond the Basket: Are Sustainable Investing and Sustainable Consumption Substitutes?

Working Paper

We examine whether socially responsible investment (SRI) and socially responsible consumption (SRC) crowd out each other, complementing an online survey of more than 1,000 retail banking clients with three years (March 2022-February 2025) of administrative records on portfolio holdings and transaction-level consumption for more than 15,000 clients. In the administrative data, we identify sustainable investment and consumption from fund names and merchant labels through a transparent keyword-matching procedure. Across a wide range of specifications-survey and revealed behavior, alternative sustainability measures, the extensive and intensive margins, within-individual dynamics over time, and disaggregated consumption categories-we find no evidence that sustainable consumption and sustainable investment crowd out each other, and statistical equivalence tests allow us to reject an economically meaningful substitution relationship. In the survey, stated SRI and SRC preferences are positively aligned, and this alignment persists after controlling for a broad set of SRI beliefs, expectations, literacy, and individual characteristics. Taken together, the consistent absence of substitution suggests that policies strengthening sustainability in one domain are unlikely to be offset by reduced engagement in the other.