Monday, February 4, 2008

Looking For Loopholes In Law of Unintended Consequences

Stephen J. Dubner of Freakonomics wrote Toward a Better Understanding of the Law of Unintended Consequences on 1/25/08.

We recently published a column describing a few instances of the law of unintended consequences — specifically, what happens when well-meaning legislation winds up hurting the parties it is designed to help.

I thought it was a pretty good column. But I see now where it could have been better. Alex Tabarrok, writing on Marginal Revolution, , addresses the law of unintended consequences per se,

Alex Tabarrok of Marginal Revolution cites Statistical Modeling, Causal Inference, and Social Science which had the post on What kind of law is the Law of Unintended Consequences?

The Statistical Modeling ... blog is maintained by Andrew Gelman, Aleks Jakulin and Masanao Yajima.

This weblog linked to the original Freakonomics post back in October and has further considered the concept of unintended consequences with regards to the healthcare programs of the Gates Foundation and other related organizations.

Andrew Gelman does a u-turn on the citation back to Alex Tabarrok.

P.S. Interesting comments below. Also, Alex Tabarrok has further elaboration:

The law of unintended consequences is what happens when a simple system tries to regulate a complex system. The political system is simple, it operates with limited information (rational ignorance), short time horizons, low feedback, and poor and misaligned incentives. Society in contrast is a complex, evolving, high-feedback, incentive-driven system. When a simple system tries to regulate a complex system you often get unintended consequences.

I can agree with the concept of complex and evolving but would argue that we only know in hindsight what the system is evolving into. There may be high-feedback for the system as a whole but we don't have full access to that total system information so the problem of limited information remains. The alignment of incentives is also something it seems to me that is determined only after the event and can involve complex interactions which are often not always apparent. I also have problems with the implied concept that there is some overall arching system out there which is true and correct and our little political/economic systems are poor and inadequate copies. We also need to look at the alternative options that Andrew Gillman provides, "examples of intended consequences that actually happened? Or unintended consequences which, although unfortunate, were minor compared to the intended consequences," including as well "unforeseen adaptations".

There are a number of expanding links related to this subject running through the posts and comments and it's interesting to see the difference in approach between the economist and social scientists.

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