Understanding the Impacts of Climate Anxiety on Financial Decision Making

Previous studies have identified harmful social, physical and mental impacts due to climate change. Anxiety due to climate change or “climate anxiety” may be an adaptive reasonable response to a real threat; however, it may also be associated with considerable functional impairment of associated behaviours. In this study, we examined the relationship between climate anxiety and pro-environment financial decisions. Discrete choice experiments are required to make various choices with different attributes and levels, allowing us to understand the importance of different factors within these choices. We found that a moderate level of climate anxiety may be optimal for making pro-environmental choices, with this group having significantly higher consideration of sustainable investment options than participants in the low or high climate anxiety groups. We also found that, for participants with moderate levels of climate anxiety, there was no significant difference in the importance of financially focused attributes (risk, return on investment or length of investment) and sustainability, indicating it as a primary consideration in these decisions. Using a novel experimental approach to this problem, these findings are significant as they allow us to further examine choices to understand not only frequency of pro-environmental behaviours, but trade-offs participants made. This study provides evidence for the use of DCE when examining pro-environment behaviours, as they may be more robust to socially desirable response bias, compared to self-report survey measures.