It is an age-old debate: are humans naturally selfish or altruistic? Every subject worth researching in economic sociology has at its core the question of homo economicus versus homo reciprocans.

The basic concept of motivation in economics assumes that if left unmonitored and without extrinsic benefits (such as bonuses or benefits, for example), one will slacken off and not work toward her or her maximum productive ability. This has expanded into the fundamental responsibility of a for-profit corporation, in which, according to the 1970 New York Times Manifesto of Milton Friedman, the social responsibility of business is to boost its profits.

When we try to redefine the purpose of business, investment, and financial markets, it is important to understand this. That is, we want to reconstruct finance for good, to expose the industry's ills and unethical practices... but are we good as human beings, even naturally? In the late 1970s and early 1980s, Daniel Kahneman and Amos Tversky expanded this idea when they embarked on a series of gambling studies to illustrate how the sense of winning or losing influences how one makes bets outside of what a calculated rational decision should have been. Their main contribution was the idea of framing: our backgrounds frame our ways of thinking; our decisions are framed by the particular situation we are in. Not everything is black and white.

More recent studies have shown that people can willingly choose immaterial utility such as happiness or satisfaction gained from ethical considerations within their maximization of utility, basically challenging the principle of value maximization by saying that the traditional economic utility measurement was incomplete. Some experiments involving retail investors have shown that, apart from financial returns when investing, investors care about social, environmental, and ethical issues. Others have shown that people are willing to pay more for ethical shares or accept lower financial returns for their investments in exchange for positive social returns, keeping profits constant. These studies have shown that in determining their investment choices, the strength of the personal values of investors is important. *

Indeed, there is also some practical evidence that responsible companies, or those with good ethical and sustainable practices, as well as the funds that invest in such companies, did not necessarily perform better per se during financial crises, but were at least 'stickier' or less volatile than their traditional counterparts. The first nine months of the 2001 US downturn, according to the Social Investment Forum, saw a 94 percent drop in the dollar’s investors put into all mutual funds, compared to just a 54 percent drop for socially screened funds. Similarly, there was a three-year period from the beginning of 2007 to the beginning of 2010, when broad market indices such as the S&P 500 declined and the wider universe of professionally managed assets increased by less than 1%. In the US, responsible investment assets increased by more than 13%. The same trend is shown by some early work on Responsible Funds during COVID-19. Such investments have attracted more and more investors because of this strengthening trend, even though they do not necessarily return a higher profit. Some scholars have called this the sustainability "insurance case."

And so, here's what we know: human beings are somewhat concerned with the ethical practices of companies in normal situations, depending on the way they are framed, and in crises, even more so because it's the best form of insurance, i.e. ethical attributes produce high levels of stability. However, this "even more so" fact brings to light the idea that people care about predictability and favor "less risky" investment plays, which, after all, still returns to being rational for investors. But at least, such rationality is guided by an intrinsic appreciation or value attached to businesses that, during periods of instability, happen to do better than everyone else because they have done good in the past.

But are investors motivated beyond profit, apart from risk reduction? The reply is "yes." But not everything is tree-hugging and pure altruism. Instead, human decision-complexities makings allow us to navigate between both worlds of self-interest and, as social beings, to be aware that this self-interest necessarily involves a concern for the well-being of others as well as our natural environments. Being picky and having long-term thinking in our investments is in our self-interest, and to our demise when we make decisions that are beneficial only in the superficial and short-term.