The Law of Unintended Consequences

by on January 24, 2008 at 7:47 am in Economics | Permalink

Dubner and Levitt have an article in the NYTimes with three examples of the law of unintended consequences, the Americans with Disabilities Act made it more costly to hire people with disabilities and reduced their employment, ancient Jewish sabbatical law intended to help the poor has made them worse off, and the endangered species act has resulted in habitat destruction.

In light of this Andrew Gelman asks a deep question, What kind of law is the "law of unintended consequences?"

The law of unintended consequences is what happens when a simple system tries to regulate a complex system.   The political system is simple, it operates with limited information (rational ignorance), short time horizons, low feedback, and poor and misaligned incentives.  Society in contrast is a complex, evolving, high-feedback, incentive-driven system.  When a simple system tries to regulate a complex system you often get unintended consequences.

Unintended consequences are not restricted to government regulation of society but can also happen when government tries to regulate other complex systems such as the ecosystem (e.g. fire prevention policy that reduces forest diversity and increases mass fires, dam building that destroys wet lands and makes floods more likely etc.)  Unintended consequences can even happen in the attempted regulation of complex physical systems (here is a classic example involving turbulence).

The fact that unintended consequences of government regulation are usually (but not always or necessarily) negative is not an accident.  A regulation requiring apartments to have air-conditioning, for example, pushes the rental contract against the landlord and in favor of the tenant but the landlord can easily push back by raising the rent and in so doing will create a situation where both the landlord and tenant are worse off.

More generally, when regulation pushes against incentives, incentives tend to push back creating unintended consequences.  Not all regulation pushes against incentives, some regulations try to change incentives but incentives are complex and constraints change so even incentive-driven regulations can have unintended consequences.

Does the law of unintended consequences mean that the government should never try to regulate complex systems?  No, of course not, but it does mean that regulators should be humble (no trying to remake man and society) and the hurdle for regulation should be high.

bjk January 24, 2008 at 8:35 am

I don’t want to hijack this thread, but this is as good a place to ask as any: has anyone written a book/article about what the consequences, intended or unintended, would be of returning to a world of 5% tax rates and far fewer agencies? For instance, what would happen if the labor department, ag, social security, ADA, etc. were dismantled. That seems like a crucial thought experiment, but I’ve never seen anybody consider it.

critic January 24, 2008 at 8:49 am

The simple fact is that almost all of the time markets make the right decisions and consequently government interference with markets can’t avoid making things worse. Put simply, markets tell the truth and governments lie. Hence the ironical effects of government regulation.

Peter January 24, 2008 at 9:22 am

Yes, the percentage of disabled people holding jobs has fallen since enactment of the ADA, but that’s not necessarily because lawsuit-wary employers are reluctant to hire the disabled. An alternative explanation is that more and more healthy but lazy people are falsely claiming to be disabled in order to get Social Security disability and avoid having to work. I don’t know if there’s any way to prove this. One possibility is to see if easy-to-fake, hard-to-disprove disabilities (psychiatric, back pain, maybe others) have increased as a proportion of all disabilities, though even a significant increase wouldn’t necessarily be conclusive.

GreatZamfir January 24, 2008 at 9:32 am

Isn’t this effect largely the result of looking at ‘marginal’ regulations, regulations whose use is most disputed? there are enormous amounts of regulation that pretty mcuh achieve there goal, but these are rarely discussed.

Take aircraft safety regulations and the FAA. Goal: keep aircraft safe and the public trust in aircraft high. Works like a charm. Industry likes it because it gives them clear safety targets, airlines like trust the public has, passengers of course end up paying for the safety measures, but without regulations they probably wouldn’t dare to fly.

Is it perfect? No. There are constantly disputes, these get solved most the times but sometimes they linger on. Does it achieve the social optimum between cost and safety? Probably not, but few people are complaining. Could it be done without the government? Perhaps yes, an S&P type organization giving out AAA ratings to airliners might be possible. But that organization would just produce its own regulation, most likely very similar to the present one.

Of course, FAA regulation is hardly ‘simple’, it has lots of experts backing it up and good feedback channels. That’s the whole point. Good regulation can be useful, even if isn’t perfect. There’s loads of regulation around us. Some of it made by the government, some of it by private organisations. Ever heard of ISO norms?

GreatZamfir January 24, 2008 at 9:33 am

Isn’t this effect largely the result of looking at ‘marginal’ regulations, regulations whose use is most disputed? there are enormous amounts of regulation that pretty mcuh achieve there goal, but these are rarely discussed.

Take aircraft safety regulations and the FAA. Goal: keep aircraft safe and the public trust in aircraft high. Works like a charm. Industry likes it because it gives them clear safety targets, airlines like trust the public has, passengers of course end up paying for the safety measures, but without regulations they probably wouldn’t dare to fly.

Is it perfect? No. There are constantly disputes, these get solved most the times but sometimes they linger on. Does it achieve the social optimum between cost and safety? Probably not, but few people are complaining. Could it be done without the government? Perhaps yes, an S&P type organization giving out AAA ratings to airliners might be possible. But that organization would just produce its own regulation, most likely very similar to the present one.

Of course, FAA regulation is hardly ‘simple’, it has lots of experts backing it up and good feedback channels. That’s the whole point. Good regulation can be useful, even if isn’t perfect. There’s loads of regulation around us. Some of it made by the government, some of it by private organisations. Ever heard of ISO norms?

MostlyAPragmatist January 24, 2008 at 9:55 am

When a simple system tries to regulate a complex system you often get unintended consequences.

Thank you, Alex, this is an excellent definition and I agree with everything you’ve written above. I wish more libertarians would realize that it applies to deregulation as well as new regulation. The law of unintended consequences is one reason I distrust the Fair Tax and abolishing the FDA (sorry, Alex!). I think the law requires that libertarians and de-regulators be more humble, too!

Lively Money January 24, 2008 at 10:07 am

this sounds similar to a black swan which are the highly improbable expected these consequences are kinda expected.
Lively Money

Cliff January 24, 2008 at 10:09 am

“I wish more libertarians would realize that it applies to deregulation as well as new regulation.”

I don’t follow this. Removing the regulation will restore the original complex system. Maybe there will be a period of adjustment as people get used to the return to the old regime… is that what you’re saying?

rtsevo January 24, 2008 at 10:27 am

When a simple system tries to regulate a complex system you often get unintended consequences.

I don’t see any evidence for this beyond the anecdotal. Lets try not to rely so much on an inferential distance that you assume your readers to have, but that make statements like this cry for real evidence and not just a collection of stories.

bronxilla January 24, 2008 at 10:39 am

Have unintended consequences been studied for congestion pricing? Does anyone know if there are any studies showing examples?

Matthew January 24, 2008 at 11:07 am

Superb, Alex!

Leo Petr January 24, 2008 at 11:21 am

Cliff: Have you lived under such a low-tax, low-regulations system? Even so, would you have a perfect memory of it? There are many reasons such systems were abandoned, and a lot of such reasons will lurk invisible until someone attempts to (re)create such a system.

Jody January 24, 2008 at 11:24 am

When a simple system tries to regulate a complex system you often get unintended consequences

While true, I think this is inherent to the overall complexity of the combined system and not a result of a simple system interacting with a complex system. Further, I would expect more unintended consequences as the regulatory structure becomes more complex.

PrestoPundit January 24, 2008 at 11:29 am

The flip side of this, of course, is that properly selected set of simple “regulations” or rules can create a complex adaptive system.

In other words, simple rules created by a simple system can create complex order.

Floccina January 24, 2008 at 11:45 am

GreatZamfir ariline safety is an interesting thing, because if it increases expense on flying and that causes more people to drive you could get more deaths.

BTW Does anybody know if any lives been saved in the last 20 year by using commersial jet seats as flotaion devices? IMO that spiel is a waste.

spencer January 24, 2008 at 12:24 pm

Yes, almost any action will generate unintended consequences. But the relevant question is not do government regulations generate unintended consequences–that is a given. The relevant question is what is the cost of the unintended consequences versus the cost of doing nothing and the benefits and/or cost of the regulation.

For example, many libertarians strongly favor imposing tolls to reduce congestion. They list many benefits from such a move and the may be right that the benefits may outweigh the cost. But they also ignore the possibility that such tolls could have unintended consequences that are worse then the original congestion or that all the toll would do is shift the congestion elsewhere.

LemmusLemmus January 24, 2008 at 12:29 pm

Another problem with the article is that Levitt and Dubner confound three aspects: unintended, unwanted and unanticipated. I have gone into more detail on that here.

Christina January 24, 2008 at 1:08 pm

Take aircraft safety regulations and the FAA. Goal: keep aircraft safe and the public trust in aircraft high. Works like a charm. Industry likes it because it gives them clear safety targets, airlines like trust the public has, passengers of course end up paying for the safety measures, but without regulations they probably wouldn’t dare to fly.

This is a remarkable statement to me, the daughter of a GA pilot who liked to call the FAA the Federal Anti-Aviation Administration. One regulation in particular he thought was stupid was that penalizing pilots without instrument ratings for getting into bad weather. He said that it incentivized these inexperienced pilots to try and land on their own at little municipal airports, instead of flying to larger airports where they could be guided in safely by air traffic control, but stood to lose their licenses once they had landed.

I should mention that this was the rule years ago when my dad was flying (1940s – 1980s) so I can’t say whether the rule is still in place, or if it even still matters now that there’s much improved technology for weather monitoring.

TheRadicalModerate January 24, 2008 at 1:21 pm

markb, the point is that you can think as much as you want about non-linear, complex systems and you’ll still not understand what’s going to happen. (For that matter, you can simulate as much as you like and still get the wrong answer–it’s that fun butterfly effect.)

What you’re arguing for works fine in linear systems. The economy/society is not, never has been, and never will be a linear system.

Michael G.R. January 24, 2008 at 1:34 pm

Speaking of habitat destruction, I thought this one was funny:

http://www.treehugger.com/files/2008/01/habitat_destruction_deers_trampoline.php

Anonymous January 24, 2008 at 1:45 pm

I like what you wrote–that is, the information is interesting, but nothing above tells us what kind of law the law of unintended consequences is. You have established a definition, not what class the law is a member of, if there even is a class.

i_am_a_lead_pencil January 24, 2008 at 2:30 pm

PrestoPundit said:

“The flip side of this, of course, is that properly selected set of simple “regulations” or rules can create a complex adaptive system. In other words, simple rules created by a simple system can create complex order.”

How about:
1) Do all you have agreed to do, and
2) Do not encroach on other persons or their property.

Extremely simple rules with complex applications can create amazingly complex adaptive rules.

Quill January 24, 2008 at 3:01 pm

I agree with the overall idea of the thread, but there is one looming problem with all of it: it cannot be helped. The world may not be a zero-sum game, but in almost every instance in the real world someone is hurt in some way, predicted or not.
The government, for example, is forced to make overly-simplistic laws and regulations to deal with something that is really out of their control. Overall we just try to help as many as we can with what we can do, to equalize the externality.

Anon January 24, 2008 at 3:52 pm

The Tacoma Narrows collaspe was actually driven by a combination of resonance and aeroelastic flutter.

Rob January 24, 2008 at 8:48 pm

While perhaps not a perfect explanation of the Law of Unintended Consequences, this is the best and most succinct I have seen. The “real world” is complex beyond the power of humans to imagine or, these days, model with a computer. So a political system may indeed be complex, but this complexity pales in comparison to the world that it would regulate.

elbita January 24, 2008 at 11:11 pm

spencer – I don’t think all libertarians are against regulation of any kind. More likely, they oppose regulation by government agencies. Nothing wrong with groups like Consumer Reports. All kinds of non-government regulation available free on the web, so we also don’t have to dismiss it as a public good no one would pay for. That plus self-regulation plus the market/legal responses to bad behavior (company X sells a pill with poison in it, gets sued and no one buys their pills anymore so they go out of business) add up to a fair amount of regulation.

meter- Maybe a less dramatic way of saying it would be to say, “There is evidence that consumers and/or markets are not always rational.” The way you phrased it is a bit of hyperbole, don’t you think? Are you saying markets never ever provide what consumers want? Also, I think your nonchalant equation of politics with consumer economics is poor at best.

Grant January 25, 2008 at 12:37 am

meter,
If you do believe Bryan Caplan’s premise that the voter is irrational – and ‘voter’ in this case is more or less proxy for ‘consumer’ – what makes you think that the market is rational? There is absolutely no evidence to support the notion that markets are rational – though it does all sound like a wonderful bedtime story which is why so many of you believe it to be the case.

Have you read Bryan Caplan’s arguments at all? He believes that voters are irrational because the cost for them to hold irrational beliefs is extremely small; good government is after all a public good. The cost for the consumer of holding irrational beliefs is not at all small; they have strong incentives to consume rationally. Obviously people do more or less act rationally in markets, or the world wouldn’t be getting progressively richer every year.

BenjiRaps January 25, 2008 at 4:26 am

spencer,

Libertarians have it right, but not because they think that the market will provide an incentive to create safe drugs. It is because the market will provide things that people will pay for (if it is worth it). This includes tested, safe expensive drugs as well as untested, potentially dangerous cheap drugs. If a consumer needs a drug, but all the tested ones are too expensive, then it can and often will still be to their benefit to buy an untested, much cheaper drug. In this case, their ability to buy such a product increases total utility/efficiency.

Your problem is that you imagine that safe = good, forgetting that each person knows his own true interests better than any other human.

Tim January 25, 2008 at 9:23 am

I had a thought last night. The other day, Alex (iirc) was decrying the tendency to take selective examples of irrationality and generalise them to the whole economic field. When the point is these are interesting exceptions.
I wonder if he’s making just that mistake here?

GoodnessOfFit January 25, 2008 at 9:48 am

TheRadicalModerate said:
“I suspect that the political system is actually an ordered system, in that it is only partially self-organized and has extremely low adaptivity.”

I suspect that you have not spent any amount of time attempting to model the the entire macro political system form voters all the way to policy. It is an incredibly complex system. Full of all the characteristics of a complex adaptive system with emergent phenomena that I suspect are the “order” you see.

I also agree with Jody. I think that the entire system (both the market economics and the political economy) is one giant complex system that must be analyzed as a whole. This is the major shortfall of the last 50 years of public economics (absent the insights of public choice). This will of course take time to do in a systematic way becuase of the artificial divisions between political science and economics in the academy. I think that the “political economics” promoted by Persson and Tabellini is a big step in the right direction. Their approach is still limited by the modeling conventions of analytical models though. Toss some agent based modeling into their framework and you have one sweet witches brew.

Grant January 25, 2008 at 10:37 am

GreatZamfir,

…and the market would punish this private FAA if it made bad regulations, even if it did not know why the regulations were ‘bad’. This organization would have more incentives and more knowledge of what regulations are needed, however, than congress. A good example of this would be the numerous sanctioning bodies for all sorts of dangerous sports, complete with safety ratings on gear, licensing requirements, etc.

spencer January 25, 2008 at 2:47 pm

benjiRaps said” If a consumer needs a drug, but all the tested ones are too expensive, then it can and often will still be to their benefit to buy an untested, much cheaper drug. In this case, their ability to buy such a product increases total utility/efficiency.

That is one hell of an assumed conclusion that you can not support.
you have no idea if an untested drug will provide any benefit, let alone if it will provide a greater benefit per dollar of a tested drug. I’m sure there are cases where that is true. But I’m also sure that there are just as many cases where it is not true.

One of the reasons doctors feel free to experiment with approved drugs to treat a disease that is not on the approved list is that they are confident that it will not have severe unintended side effects. If it were not approved they would be much more reluctant to experiment with it.

Moreover, I can not accept this assumption:
Your problem is that you imagine that safe = good, forgetting that each person knows his own true interests better than any other human.

elbita — Consumer Reports is not a regulator.

All libertarians have established is that there are cost to regulations. I agree with that. But it does not justify the conclusion that regulations are bad.
To establish that the libertarians would have to establish that the regulation is worse then not having the regulation. In no way have libertarians established that.

GreatZamfir January 25, 2008 at 3:57 pm

Liberty, do you see laws and regulation as the same phenomenon, or as distict categories? If the latter, where would you ( approximately) draw the line?

Stephen M (Ethesis) January 25, 2008 at 11:19 pm

“Take aircraft safety regulations and the FAA.”

Or banking and the reserve.

Or insurance and the guarantee funds.

Lots of low load regulatory agencies that exist to make it safe to use banks, buy insurance, drink milk.

They are like public roads and airwaves, easy to miss until you go some place without them.

You can always find an anarchist libertarian paradise such as modern post-communist Albania to compare.

TahoeBlue January 26, 2008 at 4:55 am

Interesting thread. Howver, the ‘law’ of unintended consequences is as much a ‘law’ as that of Murphy — i.e., not a law at all but a collection of observations.

In the case of Murphy’s Law the observed phenomona is what happens when the best of personal plans and intentions confronts the probabilities of encountering snags in the volatile and complex real world — where the probability of 100% success over a long series of sequentially linked, potential single points of failure is seemingly sabotaged by an event in just one of the links in the chain which re-routes the path of the intended plan. I say ‘re-routes’ because the adaptive and persistent human will usually finds ways to accomplish the objective in the face of obstacles and failures along the way — it is the way that the human will defies entropy much like the auto-immune system maintains a healthy organism.

In the case of unintended consequences, the observations (in the original post and in general) are demonstrably about the side effects (or standing waves) which appear in social systems when so-called regulatory rules or forces are made to impinge on an existing complex system. Classifications of simple or complex cannot themselves be easily made, however, without in fact over-simplifying or over-complicating. As many have pointed out, the regulatory processes of the government are not necessarily simple, and sometimes the objects of regulation are not necessarily complex.

It is perhaps a bit like frequency modulation, to take an altogether overly-simple metaphor. In frequency modulation, a control signal is used to modulate the frequency of the carrier. In situations where the control signal is, say, in the audio range, and the carrier is in the megahertz spectrum ( and carriers of different frequency are kept sufficiently apart from each other in terms of their center frequency) , we have the ability to selectively modulate and de-modulated audio content from a variety of sources in an FM radio. The actual harmonic content of the carrier modulated with the audio signal is itself “noise”, with no trace of the audio to the native ear.

If, on the other hand, the frequencies of the control (signal ) and the carrier are not so disparate, but, say, integer multiples of each other, then the harmonic content of the fully modulated wave can itself be perceived by the ear as audio content with natural sounding harmonic content, since the spectrum of the side-bands of the modulated carrier produced in such arrangements of signal and carrier frequencies are themselves integer multiples of each other (owing to the complex Bessel functions behind the spectral content of frequency modulated waveforms). The envelope of the harmonic overtone contour of the spectral content of the resulting modulated waveform is simply a function of the modulation index, or how hard the signal drives the carrier.

In one case we have a complex signal driving a simple carrier producing complex spectral content which is then demodulated back to the original signal; in the other case we have a simple signal driving a simple carrier which produces complex spectral content that is fully recognizable by the human ear. Yet both are examples of the same mechanism of frequency modulation. ( The second example is by the way the basis of FM Synthesis invented by John Chowning at Stanford and which was realized in the Yamaha DX-7 synthesizer).

And frequency modulation, when operated within parameters to accomplish either purpose, is in fact a continuous, linear system — quite simple in and of itself, whereas the types of systems and behavior surrounding the unintended consequences discussion are themselves complex and discontinuous. So what is FM doing in this discussion ? I did say it was a metaphor, but forgive me if it’s use is not apparent.

The key to the metaphor lies in the spectral frequency sidebands which accompanies modulation. Government regulation is an attempt, by definition, to modulate the behavior of the regulated system or sub-system. When the regulated sub-system is fairly well isolated from other sub-systems, like different carrier frequencies in FM radio spectrum, the side-bands of the modulated system are unlikely to bleed over and affect some other sub-system. When the modulating signal or entity is comparable in scope/frequency to the carrier, a tremendous amount of side-band dispersion can be created, depending on how hard the modulating frequency tries to drive the carrier.

I would suggest that systems with relatively small amounts of observed unintended consequences are similar to the use of FM in radio, where the scope of the underlying carrier system is itself more well-defined and constrained. Examples of this in the regulatory arena ? Perhaps controls on the accuracy of devices intended to measure such things as weight, volume, and flow. Pretty basic (and ancient) application of rules and regulations, wouldn’t you say ? And very few unanticipated ‘side bands’.

On the other hand, where the mapping between the regulating system and the system which is being regulated is many-to-many, the behavioral cross-products of outcomes will be sufficiently robust so as to appear in noticeable ‘side-bands’ of consequences neither envisioned, anticipated, or intended.

Here is a good example of unanticipated systemic response to regulation: in Northern California, in an intended attempt to promote eco-conservation, consumers who purchased hybrids were awarded HOV fast lane permits even if only one person were driving the car. However, there was a limit of on the order of 30,000 such permits which were provisioned, largely based on a calculation of the degree of under-utilization of the HOV lanes and how much additional traffic they could accommodate. Futhermore, the permit was not transferable (could not use it for another car after getting it for the original hybrid). Guess what ? After the provisioned permits were exhausted, the USED hybrids with the permits are now commanding a higher price in the used-car market than NEW ones, and new permits are unavailable, and the HOV lane utilization has become fully allocated in part to a locked-in set of commuters !! Seemed like a good idea at the time ? In the FM radio analogy, this is like a pirate signal from offshore started to jam the morning talk show ! :^)

Now, a positive example of regulation and control of a complex system, as fashionable as it is to decry poorly thought-out and mixed-message regulation (sadly, the environmental concerns appear to be the biggest culprits ).

The human brain is composed of billions of cells. Much is written and spoken about the ‘self-organizing’ capability of the brain, but it is easy to overlook a key enabler of the ability of the brain to even function in a coordinated fashion. Decades ago, a remarkable discovery was made in patients suffering from cerebral palsy, a disease that makes it difficult to impossible for an individual to sequence and coordinate muscle activity ( e.g., in order to walk or talk ). When a small mesh of wire was placed on the surface of the cerebellum, and that grid was induced in a very low voltage electrical field at a frequency on the order of the alpha frequency ( 10 cycles/sec ), the subject who was afflicted by the disorder was in fact able to perform acts of coordination without the gross impediments. It turns out that the imposition of the signal allowed the neurons to fire in a reliable pattern, overcoming the chaos of misfires which causes the affliction, turning gridlock into more efficient propagation of signals and information through the neural network. Without such gating and regulation of neural activity, our brains would be a mess of anarchy and cross-purposes. So, let us not disparage the right kinds of regulation in cases where the application clearly meets and addresses the need !

casey January 26, 2008 at 10:13 am

@ liberty:

You said, “Laws for the ‘rules of the game’ create the structure within which the freedom for the agents of the system to interact is maximum. Laws or regulations that do this – such as those which punish fraud, breach of contract, theft, murder, slavery, etc – are part of what allows the complex system to self-regulate.

“Regulations that break the rules – that allow a force to dominate not bound by the same rules and instead manipulating the agents, giving advantages to some and not others (by taxation or regulation), repressing their freedom of interaction, cooperation and evolution (with anti-trust or monopoly law) or repression exchange (with price controls or quotas) make self-regulation and self-correction of the system impossible.”

That sounds good, textbook stuff, but isn’t it a bit simplistic? Couldn’t a free market system with “rules of the game” lead to situations in which highly empowered entities are able to break the rules with respect to less powerful entities? For example, a multinational corporation buys up some natural resource rights (say water) in a developing country, where most people are poor. The corporation does this because costs of production are lower there, and they wish to make a profit off this resource by selling it in an economy where people can afford to pay a higher price. What is the law, the rule of the “game”, that is protecting the poor locals’ right to survive? Or would that be a regulation? Note that by your rules, they would not be allowed to drink the water that flows from “their” hills (that would be theft). Shouldn’t one of the rules of the game be “Don’t take advantage of the weak?” But that would be problematic, wouldn’t it? And if, because of the predatory behavior of the corporation, the locals can’t afford the means to survive, wouldn’t the corporation then be guilty, at least indirectly, of murder? Self-regulation, market adjustments, and disgruntled consumers won’t bring people back to life you know. These are things that happen long after the fact. Regulation is an attempt to protect people while they are still breathing–from the predatory practices of other people playing by the rules. Is this not a valid distinction?

liberty January 26, 2008 at 12:44 pm

casey,

Who sold the land to the corporation? Did they sell 100% of all the land and food? What did they do with the money they got for it?

meter January 26, 2008 at 4:10 pm

How many people have lived in pain or died because they couldn’t use a drug that hadn’t been invented or hadn’t been approved? How many more drugs would exist if there were no FDA? These answers are unseen, but they’re probably greater than zero.,/i>

Let’s eliminate the FDA: how many people will be serving as guinea pigs for the Elixir of the day?

Even with regulation, you have people like Kevin Trudeau making the rounds with his promises of life-everlasting or whatever. Isn’t the proliferation of these sorts of scams a (very) large unintended consequence of eliminating the FDA? And not just scams, but outright dangerous or lethal concoctions?

Roy Funderburk January 27, 2008 at 11:18 am

In the last paragraph of Tabarrok’s original blog, he sums up my gut reaction to rest of his blog. He writes, “Does the law of unintended consequences mean that the government should never try to regulate complex systems? No, of course not†¦†. My sentiments exactly; don’t misunderstand, I realize what Tabarrok is trying to say or bring to light, but what is the answer†¦ NOT to do anything because when we try we end up making things work? “No, of course not.† It means, we need to reevaluate the original policy or legislation and edit/update it (if possible) to reflect what we have learned.

Seriously, what is the alternative? Give up before we try because we know that we are going to make matters worse? “No, of course not.† What about all the policies and legislation that brought about real change and positive outcomes? If you ask me (which you didn’t) the bar for regulation is already high enough. It takes months and sometimes years for government-inspired/regulated change to occur. I agree that the mark has been missed (as in the examples given), but those misses should only encourage BETTER change, not LESS change.

Anon January 28, 2008 at 2:16 am

The “law of unintended consequences” is meaningless. All of the things you cite are precisely the consequences that one should expect. Is it truly “unintended” just because the people who hass or favor certain laws are ignorant of their likely outcome, or refuse to see the implications of policies they deem favorable for other reasons?

In a literal sense they are “unintended,” but shouldn’t there be the equivalent of a “rational man” standard here? The so-called “law of unintended consequences” is just an inartful way of expressing the fact that one can’t enact a principle without accepting its implications.

ZenMasterThis January 30, 2008 at 12:25 pm

The Tacoma Narrows failure was due to resonance, not turbulence.

Had airflow across the bridge been laminar, would resonance still have arisen?

BrianDRPM February 5, 2008 at 4:58 pm

I can agree with the concept of complex and evolving but would argue that we only know in hindsight what the system is evolving into. There may be high-feedback for the system as a whole but we don’t have full access to that total system information so the problem of limited information remains. The alignment of incentives is also something it seems to me that is determined only after the event and can involve complex interactions which are often not always apparent. I also have problems with the implied concept that there is some overall arching system out there which is true and correct and our little political/economic systems are poor and inadequate copies. We also need to look at the alternative options that Andrew Gillman provides, “examples of intended consequences that actually happened? Or unintended consequences which, although unfortunate, were minor compared to the intended consequences,” including as well “unforeseen adaptations”.

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sarah June 13, 2008 at 2:03 am

Can u please site some examples of how the unintended law of consequences be applied to computer software. Thanks. I kinda need some ideas about it..

中古車 June 24, 2008 at 10:01 pm

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中古ビデオ July 2, 2008 at 11:32 pm

thanks…

OJones August 29, 2008 at 4:01 pm

Simple, clear purpose and principles give rise to complex, intelligent behavior. Complex rules and regulations give rise to simple, stupid behavior. – Dee Hock, founder of VISA (Isn’t it great that a man named “Hock” founded VISA?)

KicksOnFire October 5, 2008 at 7:39 pm

I disagree that the political system is simple. It is also a complex (adaptive) system with its own dynamics, heterogeneous agents, non-linear interactions, adaptation, positive and negative feedback etc… However, this only serves to increase not decrease the chance of unintended consequences. The resulting regulation or policy coming out of this complex political system is usually the simplistic thing that usually leads to the unintended consequences that make economist knowingly smile.

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Helen October 20, 2008 at 11:30 am

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