The Political Economy of Scientific Uncertainty

We consider an industry organized as a lobby group whose activity generates pollution. This pollution may create damages. Scientists are unsure about the level of harm it might cause, and they can do research to reduce their uncertainty. The government may be benevolent, but populist. The industry wants to avoid being regulated. It can engage in costly communication efforts to affect public beliefs on the negative outcome. However, the effectiveness of the communication efforts depends on the level of scientific uncertainty. We find that there exists a certain level of scientific uncertainty above which the lobby communicates in order to influence the people's beliefs, and so the government's regulation. The more uncertain the science, the easier it is for the lobby to affect people's beliefs. Finally, we discuss about the possibility of government's research subvention to decrease this impact.