BUG #11986: psql uses pager inside Emacs shell buffer (not a terminal)

The following bug has been logged on the website:

Bug reference:      11986
Logged by:          Ed Avis
Email address:      eda@waniasset.com
PostgreSQL version: 9.3.5
Operating system:   Linux (Fedora 20)
Description:

GNU Emacs lets you run some commands inside Emacs - start it and do M-x
shell (that is, Alt-x, then type shell, then press enter).

This 'shell buffer' is interactive but it is not really a terminal, since it
doesn't support the normal terminal movement commands.  If you try to use a
pager program such as 'more' or 'less' it tends to get in the way.  Better
to print all of the output and let Emacs handle scrolling through it.

It would be friendler for psql to be aware of this and not use a pager if
running inside an Emacs shell buffer, or other dumb terminal: check if $TERM
is set to 'dumb'.