What is meant by unintended consequences?
The law of unintended consequences, often cited but rarely defined, is that actions of people—and especially of government—always have effects that are unanticipated or unintended. The concept of unintended consequences is one of the building blocks of economics.
Can unintended consequences be positive?
Unintended consequences can be either positive or negative. A positive unintended consequence is an unanticipated benefit that emerges from an action. Adam Smith’s notion of the “invisible hand” is one example of a positive unintended consequence.
What is unintended consequences in economics?
The law of unintended consequences refers to how economic decisions may have effects that are unexpected. Usually, this refers to an economic law which distorts consumer or producer behaviour in a way that is not expected.
How do unintended consequences affect public policy?
Key findings. Unintended consequences are common and hard to predict or evaluate, and can arise through all parts of the policy process. They may come about through ineffective (null effect), counterproductive (paradoxical effect), or other policy mechanism (harmful externalities).
Why it is important to consider unintended effects?
The law of unintended consequences provides the basis for many criticisms of government programs. As the critics see it, unintended consequences can add so much to the costs of some programs that they make the programs unwise even if they achieve their stated goals.
How would you summarize the law of unintended consequences?
The law of unintended consequences, often cited but rarely defined, is that actions of people, and especially of governments, always have effects that are unanticipated or “unintended.” Economists and other social scientists have heeded its power for centuries; for just as long, politicians and popular opinion have …
What are the unintended consequences of price controls?
It is well established that price controls can create inefficiencies in the marketplace, for example, by preventing housing from being allocated to those willing to pay the most for it, or preventing jobs from being allocated to those willing to work for the lowest wage.