AgPa #76: ESG Myth Debunking

Applying Economics – Not Gut Feel – to ESG (2023)
Alex Edmans
Financial Analysts Journal 79(4), URL/SSRN

I like myth debunking and this week’s AGNOSTIC Paper is one from this category. Alex Edmans, one of the leading scholars in the field, takes on a few widespread ESG beliefs. He shows that economics already offers a lot of tools to deal with the issues. To me, this paper was therefore kind of a relief as it shows that ESG doesn’t have to be as complicated as many people make it.

  • #1: Shareholder value is a very long-term concept
  • #2: Shareholders care about more than just money
  • #3: Sustainability risks affect cash flows more than discount rates
  • #4: Sustainable stocks not necessarily outperform
  • #5: Climate risk is an unpriced externality, not investment risk
  • #6: Companies‘ ESG metrics not necessarily capture their impact on society
  • #7: More ESG is not necessarily better than less
  • #8: More investor engagement is not necessarily better than less
  • #9: Paying for ESG performance does not necessarily improve ESG performance
  • #10: Not all market failures justify regulation

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AgPa #34: Inefficient Christmas Gifts

The Deadweight Loss of Christmas (1993)
Joel Waldfogel
The American Economic Review 83(5), 1328-1336, URL

Welcome to the Christmas edition! As a rare exception, this AGNOSTIC Paper is not about finance and investing. Instead, we will look at the economics of Christmas gifts…

  • Many non-cash gifts are economically inefficient
  • The deadweight loss of Christmas is in the billions

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