Richard Zeckhauser Photo

Richard Zeckhauser

Frank Plumpton Ramsey Professor of Political Economy
Office Address
79 John F. Kennedy St. Littauer Bldg 312
Ramelli, Stefano, Alexander F. Wagner, Richard J. Zeckhauser, and Alexandre Ziegler. "Stock Price Rewards to Climate Saints and Sinners: Evidence from the Trump Election." HKS Faculty Research Working Paper Series RWP18-037, September 2018.


Donald Trump’s 2016 election and the subsequent nomination of Scott Pruitt, a climate skeptic and self-proclaimed opponent of the Environmental Protection Agency’s "activist agenda," to lead the EPA drastically shifted expectations on US climate change policy. Firms' stock-price reactions to these events reveal whether their climate strategies affected their valuations. As widely reported, firms in industries with high carbon intensity benefited, at least briefly. It might be expected that companies with "responsible" strategies on climate change would have lost value. In fact, investors actually rewarded such firms. The analysis shows that this observed climate responsibility premium is due, at least in part, to the strategic behavior of long horizon investors who look into the future to assess the valuation of corporations.