The law-makers' fallacy

There’s a connection between the demand to criminalize mephedrone and Tim Loughton’s call to prosecute more teenagers for having sex. Both fail to see what the law does. The law does not ban things - at least not directly - but rather changes incentives. And these changes might not have wholly desirable effects. A law against selling mephedrone, in effect, raises the costs of supplying it - as these costs would now include the probability of a prison sentence. Some suppliers might respond by dropping out of the business. This would have the effect of raising the price of mephedrone, which in turn would tend to reduce demand. However, this mightn’t be a wholly good thing. Some consumers would switch towards other drugs, which become relatively cheaper, so the profits of cocaine dealers go up. That would attract more people into that business.Also, not all mephedrone dealers would drop out of the market. Others would take steps to increase the profits of their business, to compensate for the higher risks. This could mean that the mix the drug with other substances to make it go further. This is turn would increase the health risks faced by users. And/or it could mean that they take greater efforts to become a monopoly supplier, so gang wars break out as dealers use violence to drive out rivals.Criminalizing teen sex works similarly - it raises the costs of supplying it. At the margin, this will discourage some girls from supplying it.  But this could have the effect of causing more date rape, as frustrated teenage boys force themselves upon girls. And in both cases, we’d end up with some young people having criminal records who otherwise wouldn’t. This would worsen their labour market prospects, which in turn would lead some to commit crime; it is trivially true that lower returns to lawful work increases people’s incentives to undertake illegal effort.Now, I am not saying that adverse effects such as these offset the proposed benefits of such laws. That’s an empirical issue, which depends upon the elasticities involved. All I’m saying is that the “ban it” attitude is just unscientific.I guess that many of you - having an economist’s mentality - think what I’ve said is just trivial, and can probably think of more possible adverse effects yourselves. But there’s another question here: why do so many people not share our attitude?Partly, I think, there’s a mixture of egocentric bias and wishful thinking, which leads people to believe they can bend others to do their will.But there might also be a selection effect. MPs, from any party, are selected for an excessive faith in the power of law; you are more likely to want to spend your career making laws if you think that the law can be used to manage society for the better. In this sense, there is an innate bias amongst politicians to underweight the fact that laws have unforeseeable and perhaps adverse effects.