Tribune. As an economic recovery looms, directing a larger portion of French savings to the stock market is a major political objective for the government. After months of confinement, the savings of the French are indeed at historically high levels while companies have a vital need for equity capital to revive after the health crisis.
But the public authorities are encountering significant reluctance. The French have a low appetite for actions. They invest, on average, only 6% of their savings, even though it has been shown that these investments in equities are by far the most profitable in the long term, and especially in a period like the one we let’s go through it, with very low interest rates which make bond or money market investments unattractive.
Widening inequalities
Particularly few French people from modest backgrounds invest in equities. Afraid of the risk? Lack of stock market culture? Difficulty saving money for the long haul? In any case, the fact that the savings of modest people, all other things being equal, earns them on average much less than those of the most advantaged, is one of the frequently mentioned reasons for the widening of inequalities in recent decades.
Our research, « Responsible Investing and Stock Allocation » (Marie Brière and Stefano Ramelli, 2021) could help change the situation. We have indeed shown that the investment choices of individuals were not only linked to the causes usually put forward. These choices change when individuals have the opportunity to buy socially responsible stocks.
Specifically, we studied the behavior of 900,000 employees, of all levels and professions, belonging to some 6,500 companies using Amundi Employee Savings & Retirement services, who were given the opportunity to invest their employee savings in equity funds, labeled by a reliable organization (Finansol), as “solidarity funds”. These funds contribute to the financing of activities recognized as being of social and / or environmental utility.
And this proposal had a considerable impact: the portion of their savings invested in shares has increased by half in this new context!
Republicans and Democrats in the United States
Thinking that people from modest backgrounds do not buy shares simply for lack of means, for the need to keep cash to face a hard blow, is therefore an insufficient explanation. Otherwise, their behavior would not have changed in this way.
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