Laws and Norms

By Roland Bénabou, Jean Tirole. Social Science Research Network, 2012

295 citations recorded by the source corpus.

This paper analyzes how private decisions and public policies are shaped by personal and societal preferences ("values"), material or other explicit incentives ("laws") and social sanctions or rewards ("norms"). It first examines how honor, stigma and social norms arise from individuals' behaviors and inferences, and how they interact with material incentives. It then characterizes optimal incentive-setting in the presence of norms, deriving in particular appropriately modified versions of Pigou and Ramsey taxation. Incorporating agents' imperfect knowledge of the distribution of preferences opens up to analysis several new questions. The first is social psychologists' practice of "norms-based interventions", namely campaigns and messages that seek to alter people's perceptions of what constitutes "normal" behavior or values among their peers. The model makes clear how such interventions operate, but also how their effectiveness is limited by a credibility problem, particularly when the descriptive and prescriptive norms conflict. The next main question is the expressive role of law. The choices of legislators and other principals naturally reflect their knowledge of societal preferences, and these same "community standards" are also what shapes social judgements and moral sentiments. Setting law thus means both imposing material incentives and sending a message about society's values, and hence about the norms that different behaviors are likely to encounter. The analysis, combining an informed principal with individually signaling agents, makes precise the notion of expressive law, determining in particular when a weakening or a strengthening of incentives is called for. Pushing further this logic, the paper also sheds light on why societies are often resistant to the message of economists, as well as on why they renounce certain policies, such as "cruel and unusual punishments", irrespective of effectiveness considerations, in order to express their being "civilized".

Subfields: Economics and Econometrics, Safety Research

View Paper: https://www.semanticscholar.org/paper/575a93ff1eab76ab517600637dd64d412d05225f

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Citations in the corpus

Social norms and pro-environmental behavior: A review of the evidence (2017, background): “Like in Cialdini et al. (1990), salience is noted as a key determinant of the impact of a norm, and depends on situational factors (Bénabou and Tirole, 2006, 2012).”
Are the Neighbors Cheating? Evidence from a Social Norm Experiment on Property Taxes in Peru Job Market Paper (2014, background): “One particular channel that has been proposed is reputational concerns and the inference of motivations from actions (Bénabou and Tirole 2006, 2011).”
Neighbors, Knowledge, and Nuggets: Two Natural Field Experiments on the Role of Incentives on Energy Conservation (2013, unknown): “…and their relative position away from the norm, and that these enter peoples deep utility functions (see the evidence in Akerlof, 1982; Jones, 1984; Frank, 1985; Okuno-Fujiwara & Postlewaite, 1995; Ball et al., 2001; Arrow et al., 2004; Luttmer, 2005; Bault et al., 2008; Benabou & Tirole, 2011).”
Taxation and Development (2013, methodology): “The third marginal cost term in (16) is by now familiar.”
From Extreme to Mainstream: The Erosion of Social Norms (2020, result): “Our paper also adds to a recent theoretical literature on social norms (e.g., Bénabou and Tirole 2011, Acemoglu and Jackson 2017) by studying how new information may lead to erosion of such norms.”