CREATING AND ENFORCING NORMS,

WITH SPECIAL REFERENCE TO SANCTIONS

Richard A. Posner and Eric Rasmusen*

 

Abstract

Two central puzzles about social norms are how they are enforced and how they are created or modified. The sanctions for the violation of a norm can be categorized as automatic, guilt, shame, informational, bilateral-costly, and multilateral-costly. Problems in creating and modifying norms are related to which sanctions are employed. We use our analysis of enforcement and creation of norms to analyze the scope of feasible government action either to promote desirable norms or to repress undesirable ones.

 

I. Introduction

A norm is a social rule that does not rely on the government for either promulgation or enforcement. Examples range from table manners and the rules of grammar to country club regulations and standard business practice. Norms may be independent of laws, as in the examples just given, or may overlap them; there are norms against stealing and lying, but also laws against these behaviors. The two kinds of rule reinforce each other through differences in the mode of creation, the definition of the offense, the procedure for administering punishment, and the punishments themselves. Laws are promulgated by public institutions, such as legislatures, regulatory agencies, and courts, after well-defined deliberative procedures, and are enforced by the police power of the state, which ultimately means by threat of violence. Norms are not necessarily promulgated at all. If they are, it is not by the state, and often a norm arises by gradual consensus. Norms are enforced by internalized values, by refusals to interact with the offender, by disapproval of his actions, and sometimes by private violence.

Norms are an attractive method of social control because a rule may be desirable but too costly a project for the state to undertake relative to the benefits. A rule against poor table manners, for example, is hardly suitable for embodiment in law. At the same time, norms have a number of drawbacks relative to laws. A norm is even more of a public good than a law, since no one person or political party can claim credit for creating a norm. And the cost of inflicting penalties for violating a norm cannot be financed by mandatory taxation, and so must somehow be incurred voluntarily by those who enforce the norm. Because of these features of norms, it may seem obvious that norms would be, from a social standpoint, undercreated and underenforced.

Yet we shall see that the underprovision thesis requires qualification, and not only because norms, like laws, can be bad, so that the obstacles to their creation and enforcement may actually promote the social welfare. Many advantages and disadvantages of norms, including this one, have been discussed in the literature. We shall focus instead on the variety of sanctions that enforce norms, the degree of underenforcement resulting from each type of sanction, and the difficulty of creating norms enforced by each type of sanction.

The sanctions are various:

1. Automatic sanctions. The violator’s action carries its own penalty because of its lack of coordination with the actions of others. Someone who drives on the wrong side of the road crashes into another car.

2. Guilt. The violator feels bad about his violation as a result of his education and upbringing, quite apart from external consequences. Probably most people in our society, though certainly not all, would feel at least somewhat guilty about stealing even if they believed they were certain not to be caught.

3. Shame. The violator feels that he has lowered himself by his action either in his own eyes or in the eyes of other people. In contrast to guilt, the focus is on the violator’s status rather than on the violation, and consequently there can be shame even if there is no element of wrongdoing, no breach of a moral code; so one can be ashamed of doing something stupid that harms nobody. One can also be shamed for conduct that violates a moral code that is not one’s own, so that there is no question of guilt. During the Cultural Revolution in China, people paraded through the streets in dunce caps felt shame even if they thoroughly disapproved of the regime and therefore felt no guilt at violating its norms.

Shame like guilt is felt even if other people take no action. If a professor’s arrest for patronizing a prostitute is publicized he feels ashamed before his colleagues even though none of them mentions the arrest to him, perhaps because none of them mention it—their silence is evidence that his action was shameful and cannot just be laughed off.

4. Informational sanctions. The violator’s action conveys information about himself that he would rather others not know. A student wears casual clothing to a job interview, unintentionally signaling that he doesn’t really care about getting the job.

5. Bilateral costly sanctions. The violator is punished by the actions of and at the expense of just one other person, whose identity is specified by the norm. This expense could be the effort needed to cause the violator disutility, or the utility that the person imposing the punishment loses by punishing him. Examples of what we are calling bilateral costly sanctions are where an adulterer is shot by a jealous husband, where the husband divorces his wife after discovering her adultery.

6. Multilateral costly sanctions. The violator is punished by the actions and at the expense of many other people. A divorced man finds that he is no longer invited to dinner in the community.

A single norm can be enforced by more than one sanction—indeed, by all six. A drunk driver weaves along the road and crashes into a bus, killing a child. He has wrecked his car, he feels guilty, he knows that all his neighbors look down on him, his employer discovers that he is an alcoholic, the child’s parents condemn him, and he is ostracized by the entire community.

All six sanctions have analogies in rewards for adherence to norms or for actions beyond the call of duty. A reward can take the form of a feeling of a duty well done, material gratitude from one or more people, the automatic gain from coordinated interaction with someone else, the signaling of desirable qualities, or the good opinion of others.

We shall consider the sanctions one by one, but it may be useful at the outset to mention some general properties of optimal nonlegal sanctions. A sanction should be of the appropriate magnitude; if it is too severe, people will be overdeterred and refrain from efficient actions. A sanction should not be too costly; the cost will depend largely on how often it has to be administered, that is, on the frequency of violation of the norm. Because of the informality of enforcement, it is important that the application of a sanction not require too much information. If many people need to have learned about the violation for punishment to be effective, there may be no punishment at all.

 

II. Sanctions for Violating Norms

Automatic sanctions. The classic example of an automatically enforced, or self-enforcing, norm is the convention of driving on the right side of the road. By violating the norm one increases the chances of an accident to oneself as well as to other people. Norm are often self-enforcing in the sense that the norm violator is punished automatically without the deliberate intervention of anyone, but not always to the right degree—even in the case of driving on the right—because the violator considers the cost only to himself, and not to other people. Drunk drivers sometimes drive on the wrong side of the road, even though they know they may hurt themselves, in part because they neglect the cost to other people. Coordination norms may also be suboptimal rules that are difficult to change, such as the way “though” is spelled in English. This, however, is a problem in altering rather than enforcing norms, so we defer it for now.

Guilt. Guilt is an internal sanction, and so does not depend on the dissemination of information. It could be thought a type of automatic sanction, since the violator perceives it as a cost to himself, just like the risk of being injured if he drives on the wrong side of the road. Since guilt is an element of the utility function, economics might seem to have little to say about it. That is not correct, however, because people do choose the degree of effort with which they instill the potential for feeling guilt into other people (sometimes even themselves), as well as the amount of guilt to instill.

The capacity to feel guilt may be largely innate, but it is also acquired at least in part by formal schooling, purposive moral influence by parents and relatives, and, possibly more important, the examples offered by both adults and peers. Parents have an interest, both selfish and altruistic, in instilling a certain amount of guilt in their children. (So they may instill too much guilt, from the standpoint of the child’s long-run self-interest, for offenses such impoliteness or ingratitude to one’s elders.) A child who has a sense of guilt is more likely to conform to norms, and other people’s knowledge of this will help him later in life by making him a more reliable transacting partner. Rational parents will choose the strength of the internal sanction to allow for some efficient breach of the norm, since often it is advantageous to violate a norm, especially if others are adhering to it. Parents also presumably try to maintain some marginal deterrence and therefore do not try to make a child feel just as guilty about not brushing his teeth as about shoplifting.

That a sense of guilt should be to the child’s long-run advantage illustrates one of the central insights of game theory—that reducing the potential payoffs that a player obtains in certain contingencies can increase his equilibrium payoff by inducing other people to alter their behavior. Consider the model illustrated in Figure 1. A child’s parents must decide whether to instill guilt about wrongdoing in him. When he grows up, an employer will decide whether or not to hire him and he, if hired, will decide whether or not to steal from the employer. Assume that the dollar value of the job to the son is 40, the benefit to the employer from the son’s production is 50, the dollar value of both the gain to the son and the loss to the employer from theft is 30, and the theft cannot be detected. The son’s net pecuniary gain from being hired and committing theft is then 70 (40+30), and the employer’s payoff from hiring the son is –20 (50–40–30). The son suffers guilt pangs that subtract G from his utility if he steals—provided his parents had instilled guilt in him. The parents and child are further assumed to have the same interests and the employer can observe whether the parents have instilled guilt. The equilibrium depends on the size of the guilt cost, G. If G<30, then the parents have no incentive to instill guilt. For, whether they do so or not, the son would steal if hired because the payoff to him from stealing, 70–G, would exceed 40. Knowing this, the employer will not hire him. If G>30, however, the parents would instill guilt. In that case, the son would refrain from stealing if hired, and so the employer would hire him, since the son’s payoff from honest working, 40, would exceed his gain from dishonest working and the employer would derive a net benefit from hiring the son of 10 (50–40).

The son thus benefits from the parental instillment of guilt feelings in him, assuming that the job with this employer is his best job opportunity. He obtains the job by having the potential for guilt, but does not suffer any actual pangs of guilt because he is honest. By having reduced the payoff to their son from stealing on the job, the parents have benefited him because of the reaction of the third party, the employer, to their action.

 

Figure 1:

How Parents Can Make Their Children Better Off

by Reducing the Children’s Payoff from Illegal Action

 

 

Notes:

1.Numbers indicate Payoffs to Parent/Child and Employer, Respectively.

2. Arrows denote equilibrium actions if G>30.

 

Shame. Shame differs from guilt in focusing on the status of the violator rather than on the act of violation. In its most common form, shame arises when other people find out about the violation and think badly of the violator. The violator may also feel ashamed, however, even if others do not discover the violation. He can imagine what they would think if they did discover it, a moral sentiment which can operate even if he knows they never will discover it. Also, he may feel lowered in his own eyes. As we pointed out earlier, the feeling of shame operates even outside the sphere of norms, moral or otherwise. Someone who spends a morning taking photographs and then discovers he forgot to take the lens cap off the camera may be ashamed of his stupidity, but he will not feel guilty, since he hasn’t committed an immoral act.

Shame is not an informational sanction (our fourth category), because it can arise even if the violation does not convey any new information about the character of the violator. Often, however, what we call shame is partly informational: the man caught drunk driving is revealing that he probably drinks heavily on a regular basis. This can even be true of purely internal shame; someone titillated by his first sight of sexually deviant pornography may be ashamed to discover inclinations within himself that he never suspected he had.

Shame may be triggered by bilateral or multilateral sanctions. If people criticize the violator, they are trying to impose a multilateral sanction, but the disutility of the criticisms to the violator, and thus the efficacy of the sanction, may be due entirely to shame. If the violator shrugs off the criticisms as a product of ignorance, malice, or envy, and in addition anticipates no bad effects on him from the reception of the criticisms by other people, the criticisms will fail as sanctions for the criticized act.

Shame, like guilt, is a product, in part at least, of education both formal and informal. Parents may actually have a greater incentive to instill shame in their children than guilt. The optimal strategy from the child’s selfish (which may be the parents’ altruistic) viewpoint is to violate norms but not get caught, and shame provides the right incentives for that.

Informational norms. If the violation of a norm is positively correlated with the possession of undesirable characteristics, people will be likely to punish the violator. The undesirable personal characteristic could be a tendency to violate the particular norm—as when a man beats a woman and is punished by not being able to find any other woman willing to associate with him—or to violate norms generally. The sanction is efficient not only because it imposes significant costs on the violator, but also because its cost to the enforcer is actually negative; he avoids a loss by avoiding dealings with a person who by his violation has revealed himself to be an unreliable transactional partner.

The personal (or commercial) characteristic revealed by the violation may be only distantly related to the violation yet convey valuable information, as when a person arrested for assault is believed to be less likely to work hard for whoever employs him. Consider the following game:

1. Nature chooses 90 percent of workers to be “steady,” with productivity p=x, and 10 percent to be “wild,” with productivity p=x–y.

2. A worker decides whether to marry or not. Marriage adds utility u=m for a steady worker and utility u=–z for a wild worker.

3. The employer, observing whether the worker is married but not whether he is wild, offers him a wage wm or wu in competition with other employers, depending on whether he is married or not. The employer has no intrinsic reason to care whether the worker is married or not. Wild workers are less productive, but whether they are married has no effect on their productivity. The only significance of marriage for the employer is its informational value as a signal of steadiness.

4. The payoffs received are pw for the employer if he succeeds in hiring the worker, wu for a married employed worker, w for an unmarried employed worker, u for a married unemployed worker, and 0 for an employer who does not hire and for an unmarried worker who is not hired.

What will the equilibrium be? Unlike many signaling models, here there is only a single equilibrium. If z is large enough (namely, greater than y), the employer will pay wages of wu=x–y and wm=x, the steady worker will get married, and the wild worker will stay single.

The employer in this example might be “unthinkingly” obeying a norm of paying married workers more. Businessmen, like private individuals, follow many norms without inquiring into their rationality. In the example, following the norm is efficient even if no businessman understands the origin or rationale of the norm. And notice that unmarried workers will not marry in order to fool the employer into paying them a higher, for by definition these are the workers for whom the wage premium is less than the disutility (stemming from their “wildness”) of marriage. Notice also in this example that subsidizing marriage not only would not raise productivity, but would lower it by depriving employers of useful information about the marginal product of their workers.

Informational sanctions may seem too severe. A trivial violation of a norm, if the violation signals the offender’s probable unreliability as a friend or business acquaintance, may precipitate ostracism that will impose a cost on the violator which exceeds the social cost of his breach. But this need not be excessive punishment, since the sanction corrects an asymmetry of information and by doing so confers a social benefit that is distinct from its deterrent effect.

Bilateral costly sanctions. These require only a minimal dissemination of information; the designated punisher is the only person who needs to learn of the violation. The difficulty lies in getting the punisher to carry out the punishment, given that it is costly to him, unlike the previous cases that we have been considering. Providing motivation for the punishment may require second-order internal norms, or a system of punishing nonpunishers. Corsican norms of vengeance, for example, supplemented bilateral costly sanctions with multilateral ones by imposing complete social ostracism on anyone who was unwilling to carry out his duty of avenging an injury. Punishment can be facilitated by reducing its costs, as by releasing the punisher from the ordinary sanctions, formal or informal, for the punishing behavior and relying on his vengeful emotions, which may exist even without second-order norms, to create a perceived benefit of vengeances in excess of the now reduced costs. Ordinarily, a person who has insulted someone in public is sanctioned, but if his insults are punishment for the other person’s norm violation, the insults are excused. Children early discover the not always credible excuse: “But he started it!”

Multilateral costly sanctions. Multilateral punishments require more information than bilateral ones. The free-rider problem is exacerbated because more people are involved but ameliorated because each punisher’s cost of punishment can be less yet the same total deterrent be achieved. The Amish practice of shunning offenders against church rules is an example. Like other Mennonites, the Amish have norms against both violence and going to court. Excommunication, with resulting ostracism, is therefore the penalty of last resort. A consequence of their refusal to resort to law is an intensification of the retreat from participating in society generally to forming an isolated subculture from which exit is costly, since it is only against fellow Amish that agreements can be enforced.

 

III. The Creation and Destruction of Norms

A norm is a public good. Although exceptions can be imagined, ordinarily a norm is nonrivalrous, because its cost does not rise if more people use the norm; and it is nonexcludable, because people who do not contribute to its enforcement cannot be denied its benefits. The norm is therefore in danger of being underproduced. By the same token, once a norm is established, it is hard to change, because norm innovation is also a public good. Creating a norm requires promulgation of the norm and creation of sanctions for its violation. Eliminating a norm requires promulgation, too, and also the destruction of the expectations and tastes that support the sanctions for its violation—a process of taste-changing that may be as costly as their creation in the first place. Changing a norm, which requires elements of both destruction and creation, can be the most difficult trick of all, though often it is simple enough.

Consider changing a self-enforcing coordination norm, such as a rule of language. If “goodbye” became an inefficient form of farewell, individuals could shift to “take care” without cost. Any one person who changed would be able to convey the same meaning as before, and would not be thought worse of by other people. Many writers are now shifting from using “he” as the indefinite pronoun to “he or she,” “he/she,” or “she.” The writer’s meaning is still apparent, as in the case of shifting from “goodbye” to “take care,” but in the “he/she” case the violation of the grammatical norm distracts the reader and slows down communication.

In both these examples, changing an existing norm is feasible because it can be done gradually, and hence without centralized direction. An example of a coordination norm that cannot be changed gradually would be changing traffic signals so that red meant “go” and green meant “stop,” or changing from driving on the right to driving on the left. Such a norm change would have to be adopted by everyone at once, unlike minor language changes, in order to avoid enormous transition costs. The only—but considerable—cost of the norm changes in our traffic examples lies in the habitual character of compliance with these norms. Another familiar example is the ordering of keys on a typewriter or computer keyboard. The keyboard cannot gradually evolve, letter by letter, into a new arrangement. In the age of the computer one can remap the keys into different symbols one by one, so that the capital costs would be slight, but for someone who touch types the disruption from a change in even one key is severe because of habituation to the existing pattern. If the transitional costs to a new norm are high enough, we have the phenomenon of a norm “trap,” where society is stuck with a suboptimal norm because of the costs of changing it.

Trying to change from one language to another, as opposed to changing usage within a single language, would present a similar problem on a vaster scale. The cost would be enormous and the benefits highly diffuse even though they might be enormous too. Country’s languages do change, but ordinarily it is through an intermediate stage of bilingualism. What has been more common is reform in writing, as in the simplification of Chinese characters in the twentieth century, the replacement of the Gothic alphabet by the Roman in Germany after World War II, and the increasing substitution in Korean writing of the highly phonetic Korean “alphabetic syllabary” for Chinese characters.

Yet often it is highly desirable that norms should change very slowly even when the change is in the direction of a superior norm. The superior norm may take time to phase in, leaving a gap if the older, inferior norm disappears before the transition is complete. Consider the gradual decline of vengeance as an extralegal normative system for deterring and punishing crime. The decline paralleled the increasing sophistication and efficacy of the legal methods of crime prevention. Had the vengeance norm collapsed suddenly, anarchy would have resulted because the legal methods were not yet highly developed. But dovetailing the fading and the emerging norm is difficult. Rapid change in the social environment may make norms dysfunctional before enough time has passed for the normative system to adapt fully to the change. The overdeveloped sense of honor (a residue of a vengeance culture) in white males of the Old South, the similar “macho” values of poor young black males in our cities today, and the surprisingly resilient “coolness” of cigarette smoking are all examples of apparently dysfunctional (under current conditions) but persisting norms. Without public intervention, many norms will tend to change only gradually, or not at all. This is only a tendency; Cooter gives the counterexample of a relatively rapid change in tribal norms in New Guinea which formerly allowed the “big man” to alienate property, a norm that became dysfunctional once an active land market developed.

At the opposite extreme, if frequent change is itself a norm, as in women’s fashions, the impression of frequent and easy norm change is misleading. The surprise would be if the “change norm” itself changed suddenly--- if one year women’s fashions were identical to the previous year’s. Where faddism is the norm, the rapid succession of fads indicates norm stability, not instability.

Norms enforced by guilt and shame are particularly difficult to create or to change. (This is a factor in the resistance of honor cultures to norm change: these cultures rely heavily on shame to induce norm compliance.) Guilt and shame are heavily influenced by social conditioning, which is not easily altered either by individuals or by governments. Organizations may be more effective than either individuals or governments in this regard, but it is not clear whether a society that gives ample scope to norm-changing organizations will have more or less norm creation and stability. Religious pluralism, for example, has a complex effect on norms. It facilitates norm shopping, both because a person can find a religion that does not constrain his activities and because he can find one that constrains them in a way that he finds desirable. Belonging to a church that punishes deviance can be as useful to one’s long-term welfare (in quite materialistic terms) as having parents who instill guilt. Moreover, a religious sect in a pluralist society can provide an alternative community to the society at large, with a nonstandard set of norms, reducing the influence of standard norms.

Understanding how norms change aids in understanding how they are created. When incremental change is feasible, even complex norms can evolve from meager beginnings, given enough time. If you compare the famous scene depicted on Achilles’ shield in Book XX of the Iliad with modern norms of judicial behavior, you can see how those norms could, over a period of more than 2,500 years, have evolved from those rudimentary procedures. The shield depicts informal, voluntary arbitration before a lay tribunal. This is remote from modern litigation (though not so remote from modern arbitration), yet it is easy to trace the evolution.

Heavy sanctions for violating a norm affects both norm change and who becomes a norm innovator. Kuran shows how norms that appear to be very strong can suddenly evaporate, enforced as they are by people’s beliefs that other people will continue to enforce them. And Tocqueville wrote that revolutionary crowds are led literally by madmen: people who through psychological illness are willing to risk danger and disgrace.

Some norms are easier to create than to enforce. It is relatively easy to create coordination norms, since their punishments are automatic, although, as we noted earlier, it is difficult to make such punishments efficiently great because the violator will ignore the costs of the violation to all other people except himself. On the other hand, a norm that requires multilateral punishment is hard to create in the first pace, but once the problem of inducing people to punish has been overcome there should be no greater problem in making the sanctions sufficiently severe to assure a reasonable level of compliance.

 

IV. Norms, Laws, and Government

Norms are difficult to establish, but the cost of enforcing them is, as we have seen, frequently very low. Norms are particularly effective, relative to law, in regulating conduct when individual violations of the norm (though perhaps not aggregate violations) are too trivial, or the difficulty of proving guilt too great, to justify the expense of trials, police, and prisons. On the other hand, the sanctions for violating norms are often too weak to deter all people from many offenses, while norm creation is too slow to provide for all the rules necessary for the governance of society—so laws have their place too.

Setting to one side the independent role of law, we may ask what involvement the government should have with norms. First, government can provide supplemental punishments if the informal sanction for violating a norm is inadequate. It does this for theft, for example. Indeed, it is a common observation that norms are more important than laws in deterring theft, though one might question whether the norms would long survive elimination of the laws. Some norms certainly do: commercial norms arose before they were enforced by courts. The government can often leave the promulgation of a desired norm to the private sector while providing sanctions for violations once the norm is established. Law is also important because many people are impervious to informal sanctions. They lack guilt and shame, do not mind ostracism (because they have no valuable transactional opportunities regardless of their norm compliance), or have no reputation to lose, but they are still vulnerable to the law’s tangible sanctions.

Second, the government can provide information. If multilateral or shame sanctions are to work, the violation must be publicized. With any nonautomatic sanction except guilt, incorrect information is a problem. Innocent people may be punished even if they did not really violate the norm. This is not just a problem for the information sanctions. Mistaken creation of shame is also possible. A person does not like to be found in a compromising situation even if he knows himself to be fully innocent and thus does not experience a feeling of guilt; this is possible even if there are no witnesses (as when one enters the other sex’s public restroom by mistake and is not seen by anyone).

Criminal trials—and civil ones too—are designed to minimize the likelihood of erroneously imposing sanctions. Elaborate protections of the innocent are not necessary with regard to most of the conduct that norms regulate, because the sanctions for violation are not severe; but when the norm violations are punished by especially severe—even though entirely informal—extralegal sanctions, a public hearing to correct the erroneous imposition of the sanction is warranted. This is the economic rationale for the law against defamation; defamation is a form of information sanction, discouraging people from dealing with the defamed person. But if the penalty for slander (oral defamation, as opposed to written, which is governed by libel law) is too high, people will be afraid to gossip for fear that they do not have the story exactly right. Gossip is an important facilitator of sanctions for violating norms.

This brings us to our third point: government should be careful about interfering with norm sanctions. Sometimes just staying out of the way is the best policy. If bilateral sanctions such as shotgun marriages are to work, the law has to relax its monopoly on force. Lott and Mustard have presented evidence that preventing ordinary citizens from carrying concealed weapons increases violent crime by hindering the bilateral costly sanction of self-defense.

Fourth, the government can supply incentives for administering private sanctions for violating a norm. Consider the enforcement of contracts. A contract is a set of rules constructed by two parties and enforced by the state. These norms, though not legal “contracts” unless enforceable in court, may be made equally binding by use of the norm sanctions that we have already discussed.

Fifth, the government can help with norm creation. In the case of coordination norms, the government can promulgate the new norm, as when Sweden decided to change its driving convention from the left to the right side. When guilt and shame are the sanctions, the government can help to instill these in children and adults alike. But because moral and intellectual education can work at cross-purposes, an increase in the resources devoted to education is not a dependable means of promoting governance by norms. Intellectual education weakens norms by revealing alternative norms and by providing the tools for the student to use in creating his or her own moral principles. “Liberal education” is “freeing education” and one of those freedoms is from norms. Indeed, if education is more effective at promoting individualistic thinking than at inculcating norms, the net effect of education may be to reduce the normative regulation of society. Whether education is effective at either task is, of course, the despair of teachers at all levels, so it may be that the net effect is small whichever effect preponderates. Nevertheless, what appears to be a long-term movement away from regulation by norms and toward regulation by law may reflect an inverse relation between a society’s level of education and the efficacy of regulation by norms. Moreover, education and income are positively correlated; privacy is a superior good; and privacy reduces the efficacy of norms by depriving neighbors, acquaintances, gossips, and scandal sheets of the information needed for shame, informational, and mutilateral sanctions.

Sixth, the government has a role to play in combatting bad norms. It can do this by diminishing the benefits of compliance with such norms by creating effective legal remedies for deliberate injuries, which reduces the benefit of a vengeance norm based on (for example) personal honor. Or it can increase the cost of complying with the norm, most simply by affixing a legal penalty such as making duelling a crime. But since the heart of an honor-based vengeance system is a readiness to act without regard to the balance of costs and benefits, increasing the costs of compliance with a bad norm may not be so simple as it seems. Once a legal penalty is affixed, compliance with the norm may even more effectively signal the dueller’s honor. Costs of some sort always exist though, and honor implies indifference only to certain costs, in much the same way as indigence may make one indifferent to uncollectable fines, but not to imprisonment. As Lessig points out, the proper “currency” in which to punish duelling would be to make duelling dishonorable, as could be done by disqualifying the dueller from the public offices that a man of honor is duty-bound to fill.

Whether government has the capacity to carry out the functions sketched above is a question for another way. But it is worth emphasizing that governmental intervention in the supplementation and regulation of norms may be less intrusive than other forms of government regulation, since norms provide a private, decentralized, and competitive alternative to governmental control of social behavior.

 

ENDNOTES

 

* Posner: U.S. Court of Appeals for the Seventh Circuit, 219 South Dearborn Street, Chicago, Illinois 60604. Office: (312) 435–5806. Fax: (312) 435–7545. Rasmusen: Indiana University School of Business, Rm. 456, 1309 E 10th Street, Bloomington, Indiana, 47405–1701. Office: (812) 855–9219. Fax: (812) 855–3354. Email: [email protected]. Web: Php.Indiana.edu/~erasmuse. We thank T. Lynn Fisher, Kelly Lear, and Brady Mickelsen for their helpful assistance, and Michael McGinnis and participants in Indiana University’s Workshop in Political Theory and Policy Analysis for their helpful comments.

The literature on norms is large and growing. One branch looks at business dealings. The seminal article is Stewart Macaulay, “Non-Contractual Relations in Business,” 28 American Sociological Review 55 (1963), and illustrative recent contributions are Lisa Bernstein, “Opting Out of the Legal System: Extralegal Contractual Relations in the Diamond Industry,” 21 Journal of Legal Studies 115 (1992), and Robert D. Cooter, “Decentralized Law for a Complex Economy: The Structural Approach to Adjudicating the New Law Merchant,” 144 University of Pennsylvania Law Review 1643 (1996). Another branch, which develops an economic theory of social custom, begins with two articles by George Akerlof: “The Economics of Caste and of the Rat Race and Other Woeful Tales,” 90 Quarterly Journal of Economics 599 (1976), and “A Theory of Social Custom, of Which Unemployment May Be One Consequence,” 94 Quarterly Journal of Economics 749 (1980). A useful survey of theoretical and experimental work on the role of norms in solving collective-action problems is Elinor Ostrom, “A Behvioral Approach to the Rational Choice Theory of Collective Action” (1997 Presidential Address to the American Political Science Association, unpublished). Much recent work focuses on the relation between private norms and public laws. See, for example, Robert Ellickson, Order Without Law: How Neighbors Settle Disputes (1991); Avery Katz, “Taking Private Ordering Seriously,” 144 University Pennsylvania Law Review 1745 (1996); Eric A. Posner, “The Regulation of Groups: The Influence of Legal and Nonlegal Sanctions on Collective Action,” 63 University of Chicago Law Review 133, 155–161 (1996); Eric A. Posner, “Law, Economics, and Inefficient Norms,” 144 University of Pennsylvania Law Review 1697 (1996).

See, for example, Eric Posner, “Symbols, Signals, and Social Norms in Politics and the Law” (forthcoming in Journal of Legal Studies); Eric Rasmusen, “Stigma and Self-Fulfilling Expectations of Criminality,” 39 Journal of Law and Economics 519 (1996).

See Eric Rasmusen, Games and Information, ch. 10 (2d ed. 1994), and next footnote.

The analysis is more complicated, however, if z<y. For example, if z <.9y, wild workers will all get married and pretend to be steady. The employer will offer wages of wu=x–y and wm=.9x+.1(x–y), but no one will be paid the wage for the unmarried. If y>z>.9y, wild workers will split in their behavior, in a mixed-strategy equilibrium. The employer will pay wages of wu=x–y and wm=x+y+z; the steady worker will get married; the fraction f=.9(y–z)/z of the wild workers will marry; and the employer will earn zero profits when he hires a married worker—i.e., f solves .9x/(.9+.1f)+.1f (x–y) /(.9+.1f)–(x–y+z)=0.

A further complication, but not one that would alter the implications of our analysis, is that efficiency might require that the different types of worker (steady and wild) be sorted into different types of job (for example management and sales).

Jon Elster, The Cement of Society 127 (1989).

See Richard A. Posner, The Economics of Justice, ch. 8 (1981); Jack Hirshleifer, “On the Emotions as Guarantors of Threats and Promises, in The Latest and the Best 307 (John Dupre ed. 1987); Robert H. Frank, Passions Within Reason: The Strategic Role of the Emotions (1988).

For a theoretical discussion of costly ostracism in a repeated game, see David Hirshleifer and Eric Rasmusen, “Cooperation in a Repeated Prisoner’s Dilemma with Ostracism,” 12 Journal of Economic Behavior and Organization 87 (1989). Consider this example of governmental undermining of norms: Andrew Yoder was ostracized by church orders, and sued four church leaders for conspiracy to deprive him of civil liberties. He won, and upon the defendants’ refusing to pay damages one of the church leader’s farms was sold by the sheriff. The judgment might well have been reversed on appeal, but the norm against going to court seems to have prevented the hiring of defense counsel and the filing of an appeal. John Yoder, “Caesar and the Meidung,” 23 Mennonite Quarterly Review 76 (1949).

The difficulty of escaping from the keyboard trap may be exaggerated, however, as argued in S. Liebowitz and Stephen Margolis, “The Fable of the Keys,” 33 Journal of Law and Economics 1 (1990). See Nicholas Economides’ networks website at raven.stem.nyu.edu/networks.

See, for example, Insup Taylor and M. Martin Taylor, Writing and Literacy in Chinese, Korean and Japanese, ch. 8 (1995); Language Reform in China: Documents and Commentary (Peter J. Seybolt and Gregory Kuei-ke Chiang eds. 1979).

Kenneth Katzner, The Languages of the World 70–71 (new ed. 1995).

See Taylor and Taylor, note 9 above, pt. 2. Failed attempts to change languages abound. Consider Ireland’s attempt to expand the use of Gaelic, or Canada’s attempt to spread the use of French. There have been notable successes, but most have been the result of conquest; an exception is the revival of the dead language Hebrew as the national language of Israel.

Cooter, note 2 above.

Timur Kuran, Private Truths, Public Lies: The Social Consequences of Preference Falsification (1995).

Alexis de Tocqueville, Souvenirs 195 (1978 [1850]): “I have always thought that in the revolutions and especially in democratic revolutions, madmen, not those to whom one gives the name metaphorically, but real ones, have played a very considerable political role. This at least is certain, at least, that a half-crazy false messiah in this time and often goes on to success.”

On the importance of this norm, see George Akerlof, Janet Yellen, and Michael Katz, “An Analysis of Out-of-Wedlock Childbearing in the United States,” 111 Quarterly Journal of Economics 277 (1996). They find that the change in the 1960s in the norms governing births out of wedlock was due to the rise of birth control and abortion, which reduced the benefits of shotgun marriages. Most such marriages, of course, were not literally enforced by the threat of violence; nor do we suggest that permitting such threats would be warranted by the costs of out-of-wedlock births, substantial as those costs are.

John Lott and David Mustard, “Crime, Deterrence, and the Right to Carry Concealed Handguns,” 26 Journal of Legal Studies 1 (1997).

See “Sweden Tells Traffic to Keep to the Right,” Business Week, Sept. 2, 1967, p. 26.

As emphasized in Richard A. Posner, “Social Norms and the Law: An Economic Approach,” 87 American Economic Review Papers and Proceedings 365 (May 1997).

See Yuval Tal, Privacy and Social Norms: Social Control by Reputational Costs (unpublished diss., University of Chicago Law School, 1997).

Lawrence Lessig, “The Regulation of Social Meaning,” 62 University of Chicago Law Review 943, 971–972 (1995).