The role of preferences in disagreements over scientific hypothesis: An empirical inquiry into environmental and economic decision making

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 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. Males are also found to believe more in the Porter hypothesis while females are more uncertain. Education is found to be insignificant in explaining beliefs about the Porter hypothesis. Based on our results we also discuss if and how scientific and economic methodology can mitigate a preference-expectation bias.