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The Role of Preferences in Disagreements over Scientific Hypothesis: An Empirical Inquiry into Environmental and Economic Decision Making

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  • Mitesh Kataria

    (Max Planck Institute of Economics, Strategic Interaction Group, Jena)

Abstract

The Porter hypothesis suggests that environmental regulations, such as restricting firms to reduce pollution, stimulates innovations and create a win-win situation for the environment and for firms. It has received a great deal of attention from academics as well as bureaucrats who disagree about the applicability of the Porter hypothesis. This study tests if part of such disagreement can be explained by a preference-expectation relationship and if people are more likely to believe in a scientific hypothesis that appeals to their preferences. The results show that individuals' who care more about the environment are more likely to believe in the Porter hypothesis. We also discuss the capacity of economic methodology to mitigate a preference-expectation bias and how it relates to the current practice in environmental economics.

Suggested Citation

  • Mitesh Kataria, 2010. "The Role of Preferences in Disagreements over Scientific Hypothesis: An Empirical Inquiry into Environmental and Economic Decision Making," Jena Economics Research Papers 2010-088, Friedrich-Schiller-University Jena.
    • Handle: RePEc:jrp:jrpwrp:2010-088
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    References listed on IDEAS

    as
    1. Brännlund, Runar & Lundgren, Tommy, 2009. "Environmental policy without costs? A review of the Porter hypothesis," Umeå Economic Studies 766, Umeå University, Department of Economics.
    2. Brännlund, Runar & Lundgren, Tommy, 2009. "Environmental policy without costs? A review of the Porter hypothesis," Sustainable Investment and Corporate Governance Working Papers 2009/1, Sustainable Investment Research Platform.
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    Keywords

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    JEL classification:

    • B4 - Schools of Economic Thought and Methodology - - Economic Methodology
    • Q00 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - General
    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics

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