Smudging and its Effects on Environmental Regulations

Research Project, 2021 – 2024

Increased scientific knowledge about substances that have a detrimental effect on human and environmental health is expected to lead to better policies and regulatory decisions. Empirical evidence indicates that industries worldwide are greatly expanding their sponsorship of research and that in some cases they have shaped the evidence about the risks generated by their products with the aim to slow down or even prevent regulation. In this project we will investigate if, and to want extent, industry has influenced environmental regulation by sponsoring or performing research associated with outcomes that are favorable to the industry. By using machine-learning algorithms, we will analyze the research literature and regulatory information to create an objective and unbiased view of evidence behind environmental regulations. We will also perform surveys and economic experiments to understand and quantify how regulators incorporate the scientific evidence available in their decisions. Finally, the use of economic modelling will allow us to investigate how, when and to which extent the shaping of information by interest groups can affect the ability to regulate and the stringency of the regulations.
Despite the expanding economics literature investigating how to address various environmental problems, no previous studies have addressed the nature and neutrality of the scientific information provided by interest groups and how it affects the implementation and stringency of regulations. Our project will thus contribute to
improve the design of environmental regulation by investigating how and to what extent the shaping of information by interest groups can affect the outcomes of regulatory processes and by analyzing policy
interventions that can correct this market failure.