Educate or automate? The role of sustainable finance literacy interventions versus default nudges in sustainable investing

Seifert, M. | Palan, S. | Spitzer, F. | Kirchler, E. | Gangl, K.

Status: Writing

Sustainable investing requires financial knowledge many retail investors lack. Should policy teach investors, or automate their choices? We compare sustainable finance literacy (SFL) trainings with an automated green default in an incentivized framed field experiment (N = 1,790). Education increases literacy by 11 to 15 percentage points and shifts sustainable investments by amounts statistically indistinguishable from the effect of the default. Unlike the default, education improves understanding and sometimes self-efficacy. Post-treatment literacy predicts lower investments into a fund facing greenwashing allegations. Education and automation move choices similarly, but in contrast do automation, education increases investors’ competence for the next decision.