I downvoted because the arguments that impact investing funds would outperform funds purely optimized for profit seemed quite naive, and indicated a lack of some basic microeconomic intuitions that made me strongly distrust the rest of the post.
The study linked helped a bit, though I easily found meta analyses with the opposite conclusion, and also it’s a kind of domain where I would expect empirical studies to be pretty easily fudged to give the socially approved conclusion.
Also some general feeling of distrust of someone advocating for an intervention that they are financially benefited by, though that was much weaker evidence and I recognize that people who work in this space are probably also the ones who think most about it.
That feels overly harsh given that many economists apparently accept that SRI doesn’t undermine the bottom line. Its weird to downvote something held by a significant chunk of economists for being naive.
I’d like to highlight the distinction between ‘impact investing funds would outperform funds purely optimized for profit’ and ‘SRI doesn’t undermine the bottom line’. In markets as efficient as I think publicly traded stocks are, the former is highly improbable and the latter is highly probable.
The blog post appears to make both claims. Habryka’s complaint may seem more defensible to you if it is entirely about the former claim.
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Two technical notes on this distinction:
Given the existence of some low-quality evidence for the strong (outperformance) claim, you might argue that that too is not so naive.
Of course, SRI typically reduces diversification, with an effect somewhere between negligible and substantial depending on the strategy, making the weak (doesn’t undermine) claim misleading in some situations, even with efficient markets.
All I (personally, can’t speak for Max) tried to convey was that there is substantial evidence that impact investing has not led to underperformance (can’t say anything about the future because as every financial disclaimer says: past performance is not indicative of future results).
Of course, studies showing historical outperformance from ESG are useful to make Kit’s latter point that SRI has not undermined the bottom line
I downvoted because the arguments that impact investing funds would outperform funds purely optimized for profit seemed quite naive, and indicated a lack of some basic microeconomic intuitions that made me strongly distrust the rest of the post.
The study linked helped a bit, though I easily found meta analyses with the opposite conclusion, and also it’s a kind of domain where I would expect empirical studies to be pretty easily fudged to give the socially approved conclusion.
Also some general feeling of distrust of someone advocating for an intervention that they are financially benefited by, though that was much weaker evidence and I recognize that people who work in this space are probably also the ones who think most about it.
That feels overly harsh given that many economists apparently accept that SRI doesn’t undermine the bottom line. Its weird to downvote something held by a significant chunk of economists for being naive.
I’d like to highlight the distinction between ‘impact investing funds would outperform funds purely optimized for profit’ and ‘SRI doesn’t undermine the bottom line’. In markets as efficient as I think publicly traded stocks are, the former is highly improbable and the latter is highly probable.
The blog post appears to make both claims. Habryka’s complaint may seem more defensible to you if it is entirely about the former claim.
--
Two technical notes on this distinction:
Given the existence of some low-quality evidence for the strong (outperformance) claim, you might argue that that too is not so naive.
Of course, SRI typically reduces diversification, with an effect somewhere between negligible and substantial depending on the strategy, making the weak (doesn’t undermine) claim misleading in some situations, even with efficient markets.
Kit, thanks for making that distinction.
All I (personally, can’t speak for Max) tried to convey was that there is substantial evidence that impact investing has not led to underperformance (can’t say anything about the future because as every financial disclaimer says: past performance is not indicative of future results).
Of course, studies showing historical outperformance from ESG are useful to make Kit’s latter point that SRI has not undermined the bottom line