NBER WORKING PAPER SERIESCLIMATE POLARIZATION AND GREEN INVESTMENTAnders AndersonDavid T.RobinsonWorking Paper 32131http://www.nber.org/papers/w32131NATIONAL BUREAU OF ECONOMIC RESEARCH1050 Massachusetts AvenueCambridge,MA 02138February 2024We thank Marcus Opp,Philipp Krueger and seminar participants at the Stockholm School ofEconomics,University of Florida,Purdue University,the ZEW conference on Aging andSustainable Finance and the AFBC Sydney for comments.We are grateful to Eline Jacobs andAjitha Duvvuri for excellent research assistance and Vinnova,Mistra Financial Systems,theNasdaq Nordic Foundation and the Jan Wallander and Tom Hedelius Foundation for researchfunding.The views expressed herein are those of the authors and do not necessarily reflect theviews of the National Bureau of Economic Research.NBER working papers are circulated for discussion and comment purposes.They have not beenpeer-reviewed or been subject to the review by the NBER Board of Directors that accompaniesofficial NBER publications.2024 by Anders Anderson and David T.Robinson.All rights reserved.Short sections of text,not to exceed two paragraphs,may be quoted without explicit permission provided that fullcredit,including notice,is given to the source.Climate Polarization and Green InvestmentAnders Anderson and David T.RobinsonNBER Working Paper No.32131February 2024JEL No.G40.G51.G53,Q54ABSTRACTWe build a nationally representative sample of retirement savers in Sweden to study howasymmetric updating of beliefs about climate change affects investment decisions.After theintense heat wave of 2018,respondents in regions dominated by a right-wing,anti-climate partygrow less concered about climate change,while respondents outside these regions grow moreconcerned.Those growing more concerned rebalance their retirement portfolios toward climate-friendly mutual funds;those growing less concerned rebalance out of these funds,but to a smallerdegree.Financial sophistication and inertia interacts with political polarization in driving theseeffects.Anders AndersonStockholm School of EconomicsDrottninggatan 98Stockholm,SwedenAnders.Anderson@hhs.seDavid T.RobinsonFuqua School of BusinessDuke University100 Fuqua DriveDurham,NC 27708and NBERdavidr@duke.edu