What You Don't See Can't Hurt You: An Economic Analysis of Morality Laws

Phil Curry () and Steeve Mongrain ()

Discussion Papers from Department of Economics, Simon Fraser University

Abstract: This paper provides an efficiency explanation for regulation of sex, drugs and gambling (the so-called ``morality laws''). The argument is motivated by the observation that the design an enforcement of these laws often promotes discretion by the people engaging in such activities. We propose that morality laws can be best explained by considering the proscribed activities to impose a negative externality on others when the activity is observed. In such a case, efficiency requires discretion by the individual who engages in such activities. When discretion is difficult to regulate directly, the activities can instead be proscribed thereby giving individuals incentive to hide their actions from others. We find conditions for the first-best levels of consumption and hiding to be implementable. In addition, since some level of activity is efficient, this paper provides another environment in which the optimal sanctions are not maximal.

Keywords: Crime; Externality; Laws; Morality; Enforcement (search for similar items in EconPapers)
JEL-codes: K42 K32 H32 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-law and nep-reg
Date: 2007-05
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Journal Article: What you don't see can't hurt you: an economic analysis of morality laws (2008)
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