Social investing makes immorality cheaper

If you invest in socially responsible companies and shun those who are not (such as tobacco manufacturers and sellers, big oil), you're losing out on great deals, says a new paper out of academia. This paper comes out at a time when "green" companies also seem to be enjoying a premium.

Let's follow this train of thought:

1. Investor desires to support socially responsible companies and shun ones they consider to be irresponsible.
2. They put their money into socially responsible companies, not because they maximize financial returns, but because they also have a non-monetary interest in social good.
3. Companies that are socially responsible are now valued higher, because of the social premium. Socially irresponsible companies have a lower price compared to their spreadsheet value.
4. Academics suggest that people should invest in socially irresponsible companies because now they are fiscally a great deal.

Mr. Academic, I think your boat just went by...