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What you don't see can't hurt you: an economic analysis of morality laws


  • Philip A. Curry
  • Steeve Mongrain


. This paper provides an efficiency explanation for regulation of sex, drugs, and gambling. We propose that these ‘morality laws’ can be explained by considering some activities to impose a negative externality when the activity is observed. 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. Since some level of activity is efficient, the optimal sanctions are not maximal. Ce mémoire propose une explication en termes d'efficacité des régulations sur les industries du sexe, de la drogue et du jeu organisé. On suggère que ces ‘lois de moralité' peuvent être expliquées quand on considère que certaines activités imposent une externalité négative quand l'activité est observée. L'efficacité réclame donc une certaine discrétion de la part de l'individu qui s'engage dans de telles activités. Quand cette discrétion est difficile à réglementer directement, les activités peuvent être prohibées, et de ce fait on donne aux individus une incitation à cacher leurs activités aux autres. On établit que des conditions de premier ordre sur les niveaux de consommation et de camouflage peuvent être mises en application. Puisque qu'un certain niveau d'activité est efficace, les peines optimales ne sont pas maximales.

Suggested Citation

  • Philip A. Curry & Steeve Mongrain, 2008. "What you don't see can't hurt you: an economic analysis of morality laws," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 41(2), pages 583-594, May.
  • Handle: RePEc:wly:canjec:v:41:y:2008:i:2:p:583-594
    DOI: 10.1111/j.1365-2966.2008.00476.x

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    References listed on IDEAS

    1. Arun S. Malik, 1990. "Avoidance, Screening and Optimum Enforcement," RAND Journal of Economics, The RAND Corporation, vol. 21(3), pages 341-353, Autumn.
    2. Polinsky, A. Mitchell & Shavell, Steven, 1984. "The optimal use of fines and imprisonment," Journal of Public Economics, Elsevier, vol. 24(1), pages 89-99, June.
    3. Gary S. Becker & Kevin M. Murphy & Michael Grossman, 2004. "The Economic Theory of Illegal Goods: The Case of Drugs," NBER Working Papers 10976, National Bureau of Economic Research, Inc.
    4. Kaplow, Louis, 1990. "A note on the optimal use of nonmonetary sanctions," Journal of Public Economics, Elsevier, vol. 42(2), pages 245-247, July.
    5. James Andreoni, 1991. "Reasonable Doubt and the Optimal Magnitude of Fines: Should the Penalty Fit the Crime?," RAND Journal of Economics, The RAND Corporation, vol. 22(3), pages 385-395, Autumn.
    6. Jeffrey A. Miron & Jeffrey Zwiebel, 1995. "The Economic Case against Drug Prohibition," Journal of Economic Perspectives, American Economic Association, vol. 9(4), pages 175-192, Fall.
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    Cited by:

    1. Tim Friehe & Thomas J. Miceli, 2016. "Law Enforcement in a Federal System: On the Strategic Choice of Sanction Levels," The Journal of Legal Studies, University of Chicago Press, vol. 45(1), pages 73-103.
    2. O'Flaherty, Brendan & Sethi, Rajiv, 2010. "The racial geography of street vice," Journal of Urban Economics, Elsevier, vol. 67(3), pages 270-286, May.

    More about this item

    JEL classification:

    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • H32 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Firm


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