Unintended Consequences

Prof. Don Boudreaux explains what economists mean when they talk about unintended consequences.  Essentially, unintended consequences are the large outcomes that emerge from the actions made by many individuals.  These outcomes can be good or bad.  Therefore, when analyzing various polices, we must be extremely careful to distinguish between intentions and results.

7 Comments

  1. Matt Wavle

    Now I can see how these three things are similar:

    1. Not enough apartments for rent.
    2. Dead and Buried Endangered Species.
    3. Fewer Minimum wage jobs available.
  2. Brian Phillips

    Another unintended consequence of rent control is that it creates an incentive for the land lord to let the building simply fall apart.  With rising cost and no ability to raise rent, it becomes impossible to run the building, make regular repairs, and still make a profit.  Many neighborhoods have turned into ghettos as a result of this policy.

  3. Anonymous

    If this continues to happen it seems like more and more negative things would continue to happen, this seems like something that was good with good intentions but is in reality a bad idea.  I feel like if we did away with rent control we would see some improvement in this area.

  4. AnCapDalek

    if you on’t want to have unintentional consequences  then OBSERVE, OBSERVE, and OBSERVE!!!

  5. sid1138

    There are two features of unintended consequences. The first is the results of the consequences tends to be larger than the benefits. The second is the timeframe for the consequences is longer (and therefore less urgent) than the benefit.

    Since a politician’s goal is to get re-elected, the immediate result (which will garner the desired election result) outweighs the ultimate consequence (which will be an opportunity for further political action in the future). For a bureaucrat, the immediate result (growing the bureaucracy) outweighs the ultimate consequence (which will probably need a bigger bureaucracy in the future).

    So now we come to the ultimate problem with policies and unintended consequences. In order to identify the consequences of a particular policy, the people would need to understand deeply the subject matter of the policy. Since often even the experts disagree on potential consequences (consider alcohol as a fuel for cars), there is no way the lay person could understand the consequences. The policy makers have no incentive to enumerate potential consequences and the news media does not have the expertise to report the potential consequences. The net result is people make emotional decisions on policies that have a perceived immediate benefit while those people are mostly (or totally) ignorant of the future consequences).

    Sid1138

  6. asexymind

    Healthy Poltical Calculus:   Desireability of Policy = (the predictable incentives * actual results) + Intentions.

    “The take home lesson, not by its stated goals but by the incentives it creates,” and the results of those incentives. Beautiful.
    Incentives matter, and in the near and long term, they matter more than the intentions in the immediate term.

    We recognize this in every other area of life (a boss’ decision, our own choices), why is it so hard to get people to recognize it in politics?

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