Joint Lecture by the Department of Economics and the Research Center for Human Development Economics on May 29th by Professor Xu Yulong: A "Green Premium" or a "Brown Discount": Evidence from Experimental Asset Markets

Lecture Topic: A "Green Premium" or a "Brown Discount": Evidence from Experimental Asset Markets

Time: Thursday, May 29, 2025, 16:30–17:40

Venue: Conference Room 1610, Houzhu Building

Lecturer: Associate Professor Xu Yilong (Utrecht University, the Netherlands)

Host: Associate Professor Xu Hui (BNU Business School; Research Center for Human Development Economics)

Abstract

Sustainability preference is often measured at the individual level.

However, it is questionable whether individual sustainability preferences can manifest in a competitive asset market setting, whether they influence asset prices, and whether investors seek to generate social impact through investments.

To address these issues, we conduct a series of experiments, measuring sustainability preference at both the individual and market levels.

In our market experiments, investors may accept lower payoffs for assets that yield positive externalities (green) compared to those with neutral (grey) or negative (brown) externalities.

We observe a dual pattern: while green assets are hardly over-priced, investors consistently demonstrate an aversion to brown assets, leading to significant underpricing --- a “Brown Discount.”

When we eliminate speculative incentives through a 100% capital gains tax, even the minimal overpricing of green assets disappears, suggesting that any observed green premium is driven by speculative motives rather than pure sustainability preference.

Biography of the Lecturer

Xu Yilong obtained his PhD in Economics from Tilburg University in 2017.

Subsequently, he worked as a postdoctoral researcher at the Behavioral Finance Chair (Stefan Trautmann) of Heidelberg University.

In 2021, he joined the Department of Finance at Utrecht University in the Netherlands as an assistant professor and was promoted to tenured associate professor in 2025.

In addition to his teaching position at Utrecht University, he also serves as a researcher at the Economic Science Laboratory of the University of Arizona (USA) and the WEEL Laboratory of the University of Waikato (New Zealand).

His research interests mainly focus on experimental finance, inequality and morality, as well as behavioral motivations and economic decision-making.

His research achievements have been published in internationally renowned economics and finance journals such as Journal of Financial and Quantitative Analysis, Management Science, and European Economic Review.

He has served as a guest editor for Journal of Economic Surveys and as a consulting expert for the Joint Research Centre of the European Commission and AACSB (Association to Advance Collegiate Schools of Business)–NVAO (Dutch-Flemish Accreditation Organization).