Investing Ethics & Returns
By Jeffrey Strain, January 22nd, 2006 | 3 Comments »
I found this interesting data at usatoday:
More than nine in 10 investors say they would choose a financial services company with strong ethics; just 5% prefer higher returns
This is a classic case where people say what they think they should rather than the truth. Please don’t get me wrong. I’m sure that there are a lot of people out there who prefer ethics over returns. – I just don’t believe it’s 92%. If that was truly the case, investment funds would be touting their “ethics” and not their “returns” in advertisements and that is just not the case.
Now I believe that if investors were given a choice between an ethical investment and a questionable ethical investment that provided the same returns, they would overwhelming choose the company with ethics. My question is do you really believe that 92% would choose an ethical company that returns 4% less a year over one with questionable ethics? I just don’t see that happening to such a high percentage.
Am, I the only one who finds these numbers reflect investors choosing a “socially correct answer” rather than reality?
The only other possibility might be that people thought they were being asked if they would prefer a company that would deal honestly with them, or one that is questionable but give them higher returns.
That’s a bit of a stretch, though. I agree that people felt they should give the “right” answer.
I totally agree with your conclusion. No way 92% of people care that much about ethics…not in this society. I would actually need an example of what they mean by questionable ethics befor eI could answer, but honestly, I would probably choose the higher returns without knowing exactly what they meant.
In typical USA Today style, they don’t tell us a thing about how the survey was perfomed or its reliability. At my hotel this morning I had a choice between USA Today and the little Santa Rosa Press Democrat. I chose the Press Democrat, the reporting is better.