Social Norms, the Invisible Hand, and the Law
21 Pages Posted: 21 Nov 2014 Last revised: 15 Apr 2015
Date Written: December 22, 2014
In this paper we argue that social norms are emergent orders, and that when they work well they function as invisible hands, leading each person to act in ways that inadvertently promote social welfare. While coercively enforced laws can achieve similar ends, we argue that lawmakers are apt to overlook the ability of social norms to solve collective action problems. Although there is no simple answer to the question of whether norms or laws should prevail, we outline some general principles to assess the moral trade-offs associated with each.
Keywords: social norms, invisible hand explanations, emergent order, law and economics
JEL Classification: K00, Z18
Suggested Citation: Suggested Citation